If the requirements of Art. 102 TFEU are met, a patent user can use this as a defense against the enforcement of the claims based on a standard-essential patent by the patent proprietor. Since the rights of the patent proprietor which are guaranteed by the constitution are limited by such a defense, case law has repeatedly set high standards for the defense of compulsory license under antitrust law.
3.1 Orange Book Standard (German Federal Court of Justice)
In the decision Orange Book Standard of May 6, 2009 (case no. KZR 39/06), the German Federal Court of Justice decided that a patent proprietor only acts in an abusive manner if the patent user provided them with an unconditional offer for concluding a license agreement to which they feel bound, and which the patent proprietor, if they want to adhere to the prohibition of discrimination and unfair hindrance, must not reject, and if the patent user meets the obligations to which the license agreement to be concluded subjects the use of the subject-matter to be licensed for the period during which they have already used the subject matter of the patent.
3.2 Huawei v. ZTE (European Court of Justice)
The European Court of Justice rendered its first decision on the defense of compulsory license under antitrust law on July 16, 2015 in the proceedings of Huawei v. ZTE (case no. C 170/13). The European Court of Justice ruled as followed on the questions referred to it by the Regional Court of Duesseldorf:
1. Article 102 TFEU must be interpreted as meaning that the proprietor of an SEP [standard-essential patent], which has given an irrevocable undertaking to a standardisation body to grant a licence to third parties on FRAND (fair, reasonable and non-discriminatory) terms, does not abuse its dominant position, within the meaning of Article 102 TFEU, by bringing an action for infringement seeking an injunction prohibiting the infringement of its patent or seeking the recall of products for the manufacture of which that patent has been used, as long as:
- prior to bringing that action, the proprietor has, first, alerted the alleged infringer of the infringement complained about by designating that patent and specifying the way in which it has been infringed, and, secondly, after the alleged infringer has expressed its willingness to conclude a licensing agreement on FRAND terms, presented to that infringer a specific, written offer for a licence on such terms, specifying, in particular, the royalty and the way in which it is to be calculated, and
- where the alleged infringer continues to use the patent in question, the alleged infringer has not diligently responded to that offer, in accordance with recognised commercial practices in the field and in good faith, this being a matter which must be established on the basis of objective factors and which implies, in particular, that there are no delaying tactics.
2. Article 102 TFEU must be interpreted as not prohibiting, in circumstances such as those in the main proceedings, an undertaking in a dominant position and holding an SEP, which has given an undertaking to the standardisation body to grant licences for that SEP on FRAND terms, from bringing an action for infringement against the alleged infringer of its SEP and seeking the rendering of accounts in relation to past acts of use of that SEP or an award of damages in respect of those acts of use.
According to the decision of the European Court of Justice, the proprietor of a standard essential patent does not abuse its dominant market position by asserting claims for an injunction or recall if, firstly, they notified the alleged infringer of the patent infringement before bringing the complaint and made a license offer on FRAND terms to the alleged patent infringer, provided that the latter had declared their willingness to take a license, and if, secondly, the alleged infringer did not react diligently to the license offer, i.e., particularly, did not make a counter-offer, did not render account regarding the infringement and did not provide security.
3.3 FRAND-Einwand (German Federal Court of Justice)
On May 5, 2020, in its decision FRAND-Einwand (case no. KZR 36/17), the German Federal Court of justice rendered the first decision on the defense of compulsory license under antitrust law after the decision by the European Court of Justice. In said decision, the German Federal Court of Justice first confirms its Orange Book Standard decision. Additionally, the German Federal Court of Justice states that asserting claims for injunction, recall and destruction by way of a complaint can also constitute an abuse if the infringer has not (yet) declared its willingness to conclude a license agreement on certain reasonable terms, but the patent proprietor, in turn, can be accused of not sufficiently endeavoring to facilitate the conclusion of a license agreement on reasonable terms for an infringer that is generally willing to take a license. In contrast to the previous case law of courts of lower instances, however, the German Federal Court of Justice defines stringent requirements for the infringer’s willingness to take a license. The German Federal Court of Justice holds that the infringer has to declare its willingness to conclude a license agreement with the patent proprietor on reasonable and non-discriminatory terms in a clear, unambiguous and unconditional manner, meaning specifically that they subject themselves to any terms which turn out to be FRAND (“a willing licensee must be one willing to take a FRAND license on whatever terms are in fact FRAND”). Additionally, a willing licensee also has to contribute to the negotiations of the license agreement in a purposeful manner even afterwards.