Pages 193-195

NATIONAL JUDGES' PRESENTATIONS

NL Netherlands

NL Netherlands - Rian KALDEN - Vice-President, District Court of the Hague - Philips v. SK Kassetten/FRAND¹ - Koninklijke Philips Electronics N.V. v. SK Kassetten GmbH & Co. KG, Infringement, FRAND, - SDistrict Court The Hague, The Netherlands, 17 March 2010, Joint Cases No. 316533/08-2522 and 316535/08-2524

Facts

District Court The Hague held that the defendant, SK Kassetten, infringed several essential patents owned by the plaintiff, Philips, relating to CD and DVD technology included in the Orange Book Standard.

Defedant's arguments

SK Kassetten argued – under reference to the Orange Book decision of the German BGH – that it was entitled to a licence under FRAND (Fair, Reasonable And Non-Discriminatory) terms, and that this would preclude Philips from enforcing its patents. In addition, in the context of patent infringement proceedings, SK Kassetten claimed that Philips' behavior amounted to an abuse of a dominant position and therefore an injunction should be denied.

Decision

The court held that as long as SK Kasseten does not have a licence, there is no legal ground to allow SK Kassetten to use the patented technology or to deny Philips the enforcement of its patents. A system that would allow a competition law defence (i.e. that SK Kassetten is entitled to a compulsory licence on the ground that Philips is abusing its dominant position) with the effect that the patentee cannot enforce its rights, was held to be not in accordance with Dutch law, which provides for the possibility to obtain a compulsory licence (under certain circumstances) but does not allow use of the patent before such licence has been obtained.

It was also considered that allowing a party the use of a patent before a final decision has been taken on the entitlement to a FRAND licence would lead to uncertainty. Up to the moment a decision is rendered, it remains unclear whether a party is indeed entitled to a FRAND licence and also there is uncertainty as to the conditions thereof, in particular the amount of royalty due.

As a general rule, in order to obtain a FRAND licence, the consent of the patentee – or a court decision replacing that – is required. SK Kassetten should therefore have asked for a FRAND licence before it started to use the technology. If that licence not been granted, SK Kassetten should have gone to court in order to obtain a compulsory licence. SK Kassetten had not done so – it also had not filed a counterclaim to that effect. The court realised that such proceedings on the merits to obtain a compulsory licence may take quite some time. This was not considered to entail an unreasonable negative effect on SK Kassetten's business, as in the Netherlands it is possible to initiate summary proceedings (kort geding) and claim a temporary licence for the duration of proceedings on the merits. In addition, the court considered that – should Philips's refusal to grant a licence be considered to be an abuse of a dominant position - Philips would still be liable for damages due to an unjust refusal of a FRAND licence. Thus, Philips may enforce its patents, even if it were eventually held that SK Kassetten was entitled to a FRAND licence.

The court referred to the German Orange Book decision and explained that a different ruling was given in the Netherlands, as the German approach was considered:

• contrary to Dutch law;
• a cause of uncertainty;
• not necessary to protect the interests of SK Kassetten.