What You Need to Know
Key takeaway #1
Standard-Essential Patent holders that give a “take it or leave it approach” to licensing SEPs may expect responsive suits alleging monopolistic conduct.
Key takeaway #2
The NETGEAR complaint raises a frequent legal question regarding the limits of antitrust liability for Standard-Essential Patents holders.
Key takeaway #3
Standard-Essential Patent holders and those who wish to practice those standards should be mindful of the
On
NETGEAR asserts that Huawei reneged on its commitments to provide access to its standard-essential patents (“SEP”) for its Wi-Fi technology to its competitors at a fair, reasonable, and non-discriminatory price (“FRAND”). NETGEAR further accused Huawei of monopolizing standard-essential technology and engaging in racketeering by using a “worldwide scheme” to “dominate global markets by unlawfully taxing successful standards at anti-competitive rates” in order to maintain its market power and boost profits. NETGEAR's complaint follows patent infringement lawsuits filed by Huawei against NETGEAR in
Background
Huawei and NETGEAR participate in the
The standards that SSOs set frequently involve an essential patented technology or SEPs. As such, SSO members are required to inform the SSO if they own patents that may be or may become essential to a standard in a timely fashion. While it is possible that some patent claims are directed to required potions of the standard and others to optional portions, a claim is technically essential to the standard if it is not possible to make products that comply with the required portion of the standard without practicing the claim.
In exchange for its patented technology being accepted as the standard, the patent holders must submit a declaration to the SSO committing to license their SEP's to competitors and industry players for a reasonable and non-discriminatory price. Whether asserted SEPs are truly essential and whether the patent owner offered a license under FRAND terms are heavily disputed issues in patent infringement matters. Here, NETGEAR does not seem to dispute that Huawei's patents are essential to the standard but that Huawei did not offer FRAND terms as required.
NETGEAR's Complaint
NETGEAR specifically claims that Huawei provided fake letters to IEEE and made promises to members representing that it would license its SEPs for FRAND, but secretly never planned to do so. NETGEAR claims that Huawei aggressively exploited its significant power against NETGEAR by, among other things, refusing to license its patents on FRAND terms, demanding excessive and discriminatory royalties, and seeking injunctions internationally and at the Unified Patent Court.
NETGEAR asserts that this conduct is part of a scheme to dominate markets and qualifies as monopolization and attempted monopolization in violation of Section 2 of the Sherman Antitrust Act. NETGEAR also claims that Huawei is engaged in multiple unlawful schemes using unlawful means and influence to enrich Huawei at the expense of NETGEAR and others in violation of civil RICO statutes. NETGEAR also asserts breach of contract, fraud, negligent misrepresentation, promissory estoppel, and unfair business practices.
Takeaway
While the suit against Huawei raises a growing concern with Huawei's hold on
It also remains to be seen whether the current administration's
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