In court today, Birss J. handed down an important judgment on the interplay between competition law and the licensing of essential patents.
This is part of a significant patent infringement case where Unwired Planet, a “patent assertion entity” that has acquired essential patents used in smart phones and network equipment from Ericsson, has sued Samsung, Google and Huawei for infringing the essential patents. Ericsson has been joined to the action. Samsung and Huawei have raised various competition law defences, under Articles 101 and 102 TFEU.
Birss J. struck out one of Samsung’s Article 101 TFEU defences, but upheld two others.
The defence that he struck out related to a complaint about the effectiveness of the transfer from Ericsson of any obligations to license essential patents on Fair Reasonable And Non Discriminatory (FRAND) terms. Samsung argued, among other things, that the content of Ericsson’s original “non-discrimination” obligation would be circumvented by spinning off the patents to the patent assertion entity. Samsung also argued that the transfer of the patents failed to ensure that third parties could fully enforce FRAND obligations against the patent assertion entity.
The High Court dismissed Ericsson’s strike out and summary judgment application against Samsung’s other competition law arguments, which will now proceed to trial. One of these was that the terms of the transfer of patents involved anti-competitive influence by Ericsson over the patent assertion entity to charge high prices.
The other, related, argument was particularly important, and has been discussed in the economic literature and raised in US antitrust enforcement circles. It is that Ericsson had strategically sold part of its portfolio of standard essential patents to the patent assertion entity, while keeping a close ongoing involvement in the monetization of those patents. Samsung’s argument is that Ericsson’s transfer of the patents to Unwired Planet is an anti-competitive “privateering” arrangement and is void under Article 101 TFEU.
Birss J. commented that this is an important and developing area of the law which also raised fact sensitive issues needing to be addressed at trial.
He awarded Samsung a proportion of its costs, to reflect the fact that it had had the greater measure of success. He awarded costs too in favour of Huawei, which joined Samsung in arguing about the anti-competitive terms of the deal.
He also dismissed an application by Ericsson against Samsung to try to stay certain claims on the footing that these should be arbitrated in New York.
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