Global licences under threat of injunctions: FRAND commitments, competition law, and jurisdictional battles

Abstract

This article examines three, intertwined questions arising from the recent case law on global FRAND licences under threat of injunction. First, whether the obligation of an implementer to enter into a global licence of all the standard-essential patent (SEP) owner’s relevant SEPs on pain of a national injunction is consistent with the policies underpinning a SEP owner’s obligation to grant a FRAND licence. Secondly, whether the conduct of a SEP owner insisting on an implementer entering into a global licence under threat of an injunction is compatible with the UK Chapter II prohibition and Article 102 TFEU. Thirdly, whether the assumption and exercise by national courts of the power to settle the terms of global licences is a rational way of resolving global FRAND licensing disputes. On all three counts, the conclusion is that departing from territorial jurisdiction in the matter of FRAND licences is not advisable as it has the effect of distorting the incentives of SEP owners and implementers in such a way that FRAND licences and FRAND negotiations are less likely to reflect, or be driven by, the value of the underlying technology. As a result, global FRAND licences may apply excessive royalties or royalties for SEPs that are invalid, not essential, or not infringed. A system of national enforcement is better suited to striking a right balance between the interests of SEP owners and implementers, producing better outcomes in terms of effects on social welfare and productivity.