Published: 4/29/14
In this decision, the European Commission determined that Motorola Mobility abused its dominant position under European competition law by seeking and enforcing an injunction against Apple for infringing a FRAND-encumbered SEP. The Commission explained that FRAND commitments are “designed to ensure effective access to a standard for all market players and to prevent ‘hold-up’ by a single SEP holder.” In agreeing voluntarily to license on FRAND terms a SEP holder foregoes the right to seek an injunction against a willing licensee and to accept reasonable monetary compensation as the remuneration for its patent: “By committing to license on FRAND terms and conditions, Motorola recognised that, given the standardisation context, it has chosen to monetise its standard essential technology through licensing on fair, reasonable and non-discriminatory terms and not to use it to exclude implementers of the GPRS standard provided that it is appropriately remunerated for the use of its technology.” The Commission explained that the threat of injunctive relief distorts licensing negotiations because it confronts a potential licensee with “the choice of either having its products excluded from the market or accepting the disadvantageous licensing terms requested by [the SEP holder] as a condition for not enforcing the injunction.”
The Commission concluded that seeking an injunction against a willing licensee of a FRAND-encumbered SEP – i.e., a company that is “willing to take a licence agreement on FRAND terms” – is an abuse of dominance under European competition law. A holder of a FRAND-encumbered SEP is entitled to threaten or invoke an injunction only where: “(a) the potential licensee is in financial distress and unable to pay its debts; (b) the potential licensee’s assets are located in jurisdictions that do not provide for adequate means of enforcement of damages; or (c) the potential licensee is unwilling to enter into a licence agreement on FRAND terms and conditions, with the result that the SEP holder will not be appropriately remunerated for the use of its SEPs.”