Tagged: intellectual property

Are Remedies for Breaching Standard Essential Patents Prohibited by Article 102 TFEU?

By Sam Abboud

In Case C-170/13 Huawei Technologies Co. Ltd v ZTE Corp & ZTE Deutschland GmbH, (Judgment of the 5th Chamber, CJEU, 16 July 2015)the CJEU was asked to rule for the first time on whether seeking an injunction and other associated remedies by the owner of a Standard Essential Patent (SEP) against a company in breach of the patent (but one willing to become a licensee) can amount to an abuse of a dominant position in breach of EU competition law (Article 102 TFEU). It concluded that an injunction or an action to recall products can amount to an abuse of dominance in certain circumstances.

 In this post, I first provide a primer on Standards and Standard Essential Patents (‘SEPs’) before summarizing the Court’s reasoning and setting out some initial observations on the judgment’s significance.

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The EFIM-case: no dominant position of printer manufacturers on ink cartridge aftermarket

Ink in cartridges for printers is often called ‘black gold’, or qualified as the ‘most expensive liquid in the world’. Manufacturers of printers sell their ink cartridges at (relatively) high prices, whereas they offer their printers for (relatively) low prices. The ‘cheap-appliance-expensive-consumable’-business model is used widely: coffee machines and pods, consoles and games, cars and spare-parts, etc. As a consequence of the relatively high prices on the aftermarket, independent suppliers try to enter such a lucrative aftermarket by offering generic products which are compatible with the machinery offered on the up-stream market. Not surprisingly, this leads to conflicts between those independents and manufacturers of appliances,  because of  the intellectual property rights over the machinery and consumables (e.g. generic producers offering coffee pads compatible with Nespresso[1]– and Senseo[2]-coffee machines and contesting the IP-rights in question, or – in the alternative – claiming that the refusal to license the IP-right is an abuse of a dominant position[3]) and associated litigation (e.g. the Toshiba/Katun-case over advertisement of generic consumables which referred to the brand of the machinery).

In the EFIM-case, producers of generic ink cartridges (independent suppliers) – associated in the European Federation of Ink and Ink Cartridge Manufacturers (EFIM) – complained to the Commission, mainly because they were denied access to the intellectual property rights by the four, so-called ‘original equipment manufacturers’ (OEMs) of printers: Hewlett‑Packard, Lexmark, Canon and Epson. Without access to those intellectual property rights, producers of generic ink cartridges argued that they could not effectively compete with the OEMs on the (after)market for ink cartridges. EFIM considered that behaviour to foreclose the market for ink cartridges and therefore an abuse of a dominant position, which is prohibited under Art. 102 TFEU.

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Duty to give reasons under EU procurement law and EU trademark law: is there a contradiction?

Even if they may seem two – rather disconnected – areas of legal practice, reading cases on EU public procurement and on EU trademark law sometimes offers interesting insights into broader issues of EU economic law or, more generally, EU law. For instance, some recent case law on the duty to provide reasons under each of the specific adminsitrative procedures that govern contract tendering and trademark registration shows what, in my view, is rather a contradiction.

On the one hand, and as commented recently here, the General Court issued his Judgment in Sviluppo Globale GEIE v Commission where it imposed a very demanding standard for the duty to give reasons in procurement cases. Continue reading

C-406/10 SAS Institute v. World Programming Ltd (WPL)

The ECJ issued an important ruling last week regarding how far copyright protection for software should extend.

The case involves two software development companies: SAS and WPL. SAS Institute developed a set of computer programs used for data analysis (the ‘SAS System’) that allows users to write and run their own Scripts in an SAS-specific programming language (para. 24).

WPL developed a competing program called the World Programming System that sought to emulate the SAS System as close as possible. In the process, it obtained a license to the “Learning Edition” of the SAS program and manuals, which it studied, but did not access or copy the SAS source code. The World Programming System is written in the SAS Language, and is designed to allow the use of Scripts originally written for the SAS System (para. 25)…

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Cases C-162/10 Phonographic Performance (Ireland) Limited (PPL), and C-135/10 Società Consortile Fonografici (SCF)

Last week, the ECJ released two judgments regarding the issue of copyrights on music broadcasts. According to EU law (specifically, Directive 2006/115), artists have a right to remuneration when recordings of their work are communicated to the public. But what exactly does ‘communication to the public’ entail?

In the PPL case, an Irish court asked the ECJ for a preliminary ruling to clarify whether ‘communication to the public’ includes broadcasts by a hotel to guests in hotel bedrooms, and whether Ireland was therefore in violation of European law when it exempted hotels from paying remuneration for these broadcasts. In the SCF case, an Italian court asked the ECJ to clarify whether ‘communication to the public’ includes background music played by a dentist in a dental practice.

The Court held that determining whether the hotel’s or the dentist’s broadcasts were ‘communication to the public’ would require an individual, case-specific analysis focused on three overlapping factors:

  • the role of the user, which engages in ‘communication’ when it intervenes to give access to a protected work
  • the concept of the public, which refers to an “indeterminate number of potential listeners” and “implies a fairly large number of persons”
  • whether the communication is of a profit-making nature, as judged by whether the user benefits, whether the user targets the public, and whether the public is receptive in some way, rather than merely listening by chance

While both the hotel and the dentist were ‘users’ engaging in communication, the ECJ found that the two situations differed with respect to the second and third criteria. The hotel’s customers were a ‘public’ because they were of ‘indeterminate number’ and were ‘a fairly large number of persons’ (PPL, paras. 41-42). The dentist’s clients, on the other hand, were not a ‘public’ because they formed a consistent, determinate group, and because only a small number would be present in the office listening to the broadcast at the same time (SCF, paras. 95-96). Similarly, the hotel’s broadcast was of a ‘profit-making nature’ because it was “an additional service which has an influence on the hotel’s standing and, therefore, on the price of its rooms” and “is likely to attract additional guests who are interested in that additional service” (PPL, para. 44). The dentist’s broadcast, on the other hand, was not of a ‘profit-making nature’ because the dentist “cannot reasonably either expect a rise in the number of patients because of that broadcast alone or increase the price of the treatment he provides” and because the patients are not ‘receptive’, but rather listen to the music merely by chance (SCF, paras. 97-98).

As a result, the dentist is not making a ‘communication to the public’ and is not required to pay remuneration. The hotel, however, is making such a communication, and is required to pay remuneration. According to the ECJ, therefore, Ireland should not have exempted hotels from this requirement.