Chapter 2: FRAND, hold-up and hold-out
This chapter will start out with an overview of the changes in the mobile telephony industry, how these changes have affected the patent litigation landscape, and in particular how they have given rise to the ‘smartphone patent wars’. It will then describe how antitrust enforcement authorities, in particular the European Commission, have recently relied on the ‘hold-up’ theory to limit the ability of a holder of a standard essential patent (SEP), which is subject to a FRAND commitment, to seek injunctive relief against potential licensees. In this context, the concept of ‘willingness’ will be addressed, including how it should be defined and whether it can serve as an appropriate criterion for determining the permissibility of injunctions. The relation between standard essential patents (SEPs) in the mobile telecommunications industry and antitrust law has not been an easy one. Competition authorities have already had to deal with issues of patent ambush, in other words, the failure to disclose one’s patents reading on the candidate standard. These issues have generally been resolved, with both antitrust law and the rules of standard setting organizations generally being understood as imposing an obligation to disclose in good faith patents that (are likely to) read on a candidate standard. Similarly, the question of what constitutes FRAND licensing terms has been scrutinized, albeit without a conclusion having been reached.
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