What is FRAND? A progress report

Law & Economics Workshop organized by Concurrences Review in partnership with Shearman & Sterling and Compass Lexecon.

Hold-up: a reality or a mere threat?

Trevor Soames started the debate by asking the panellists to discuss whether there is any empirical evidence of so-called “hold-up” by holders of SEPs. Antitrust agencies proceed on a case-by-case basis, but do they enforce antitrust provisions on the basis of empirical evidence that there is, in fact, a hold-up problem or merely on the assumption that economic theory suggests that it may be (or is likely) a problem, e.g., the mere threat of injunctions enables SEP holders to obtain licensing terms at a “hold-up” value?

According to Thomas Kramler, some indications of hold-up cannot be ignored. As time goes by, there are more and more SEPs, which leads to more litigation. Increasingly, following the disintegration of patent portfolios, patent rights are being enforced by non-practising entities (NPEs). Thomas Kramler underlined that the European Commission does not need to demonstrate a systemic problem in order to bring cases: rather, the European Commission enforces the EU competition rules on a case-by-case basis. According to Thomas Kramler, in the Commission’s Samsung and Motorola cases, there was evidence that the recourse to injunctive relief by an SEP holder resulted in hold-up. In Motorola, Apple was forced to accept terms that it would not otherwise have done in order to provide an Orange Book compliant offer. As a result of those cases, the European Commission has now developed the concept of a “willing licensee”, which provides the authority with a framework to assess cases on the basis of the evidence in front of the Commission.

Photos © Emilie Gomez

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  • DG COMP (Brussels)
  • Quinn Emanuel Urquhart & Sullivan (Brussels)
  • Compass Lexecon (Brussels)
  • Quinn Emanuel Urquhart & Sullivan (Brussels)