[A2k] 2009 story on Germany compulsory licenses on standards relevant patents

Jamie Love james.love at keionline.org
Tue Mar 19 06:22:52 PDT 2013

I missed this earlier, but it is quite relevant today.  Jamie


German Supreme Court allows "compulsory licence defence" in patent
infringement claim (Competition newsletter, June 2009)

On 6 May 2009, the German Federal Supreme Court (FSC) reported in a press
release that it had found that the owner of a patent which set an industry
standard, and accordingly was essential for the manufacture of a product,
held a dominant position and therefore could be obliged to license the
patent to a third party. The full judgment is not yet available.

It appears that in this case the third party had, without a licence, used
patented technology owned by Philips which was fundamental for
manufacturing CD-R and CD-RW disks. Two lower courts had upheld Philips'
claim that there had been an infringement of its patents.

The FSC dismissed the appeal against this finding. However, the press
release states that the FSC found that a company using a patented industry
standard without having been granted a licence can, in principle, defend
itself on the basis of the so-called "compulsory licence defence".

The court found that Philips owned a basic patent, which any manufacturer
of CD-R or CD-RW products must use, and that therefore Philips had a
dominant position in the licensing of this technology. It was also
undisputed that Philips operated a worldwide licensing programme. The court
found that in this situation there could be an abuse should Philips refuse
to license its technology and/or claim that its patent rights had been
infringed by an unlicensed third party.

However, the press release indicates that the court also made clear that
the technology owned by a dominant company is not available for free. The
patent user must show that it had applied for a licence on the basis of a
reasonable offer and had paid or tried to pay an appropriate fee. It would
only be allowed to use the patent in the absence of a licensing agreement
being in place if it was paying a reasonable fee or depositing such a sum.
In the present case, this would suggest that the third party would be able
to make use of the patent going forward if it pays or deposits an
appropriate amount.

It appears that the court did not have to reach a conclusion as to the
appropriate level of royalty in this case since the third party had not
paid or deposited any sum of money and therefore could not rely on the
compulsory licence defence.

Case law in Europe relating to compulsory licensing of intellectual
property rights is still developing. This judgment, from Germany's highest
court, is a significant addition to the existing precedents as it provides
further clarification of the circumstances in which the national courts (at
least in Germany) will order a compulsory licence of intellectual property
rights as a matter of competition law.

James Love.  Knowledge Ecology International
http://www.keionline.org, +1.202.332.2670, US Mobile: +1.202.361.3040,
Geneva Mobile: +41.76.413.6584, efax: +1.888.245.3140.

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