German Federal Court of Justice rules on antitrust defense to infringement of standards-related patents

On 6 May 2009 the German Federal Court of Justice handed down a landmark judgment (KZR 39/06 – Orange-Book-Standard) concerning the use of the competition law defense regarding compulsory licensing in patent infringements cases brought by patent owners.

Such competition law defense can be successfully raised provided a patent user demonstrates that:

  • he unsuccessfully tried to get a license on reasonable licensing terms; and
  • by refusing to grant such a license, the patent owner abused his dominant position as he discriminated against other undertakings or impeded them without an objective justification.

The Court further stated that even if the refusal to conclude the offered licensing agreement is illegitimate, the patent user has no right to use the patent without adequate consideration, notably the patent user must pay “reasonable” license fees on a regular basis or deposit the appropriate amount.  The reasonableness of the licensing fees can be determined in a later procedure, if initiated by the alleged infringer, as the defense is sufficient for dismissing the patent infringement action.

Therefore, a patent claim brought by a patent holder will be dismissed (as well as a request for an injunction to stop the use of a patent) in future cases if a user pays or deposits a reasonable license fee, as the patent holder is bound to accept the offered license agreement and to determine the license fee based on equitable discretion (whether the determined fee is in accordance with competition rules might be verified by the licensee in a subsequent lawsuit). Such a patent claim as well as the refusal to conclude the licensing agreement represent an abuse of the patent owner’s dominant position.

In the dispute before the Court, the defendant produced and sold writeable and re-writeable optical media (CD-Rs and CD-RWs), without having the required license to use the patents, arguing that the license fees demanded by the patent holder were too high, and discriminating, since other companies were offered more favorable conditions. The Court did not have to examine whether the patent holder had abused his dominant position, because the patent user had not paid or deposited the license fee that he owed to the patent owner, as he should have done to use the patents.  The defendant was ultimately ordered to stop the use of the patent and to pay damages. [Gabriele Accardo]