Sunday, November 23, 2014

ZTE Welcomes Advocate General's Opinion on Patent Licensing; Clearer Legal Standard Could Stop Injunction Abuse by NPEs

ME NewsWire/Business Wire

SHENZHEN, China - Saturday, November 22nd 2014

ZTE Corporation welcomes the opinion issued today by the Advocate General of the European Court of Justice in the ongoing ZTE v. Huawei case. This opinion is a further step towards clarifying that the EC law restricts the availability of injunctions under standard essential patents (SEPs). It makes clear that if the patent holder has given a FRAND licensing commitment, seeking an injunction to leverage licensing deals may have the effect of distorting competition.

The Advocate General’s opinion is a detailed legal assessment which could serve as a guidance for the European Court of Justice in this matter, which will publish the final decision in the coming months.

ZTE believes that all companies should have the right to enforce their intellectual property rights. However, if the holder has promised to grant licenses under fair, reasonable and non-discriminatory (FRAND) conditions, injunctive relief should be limited and available only under specific circumstances. SEPs cover technology that must be used in order for a product to comply with technical standards, and thus provide the holder with significant market power. Therefore, specific safeguards should be in place to allow fair negotiations to reach the license that has been promised by giving the FRAND commitment.

Guo Xiaoming, Chief Legal Officer of ZTE, said: ‘ZTE is delighted that the position of the Advocate General is so closely aligned with its own position on injunctions under SEPs. There seems to be a convergence between ZTE’s and the AG’s approaches towards a good compromise between rewarding innovation whilst not unfairly blocking companies from providing standard compatible products. The position of the Advocate General would also reduce the ability of Non Practicing Entities to act unfairly in negotiations with technology companies.’

ZTE particularly welcomes the Advocate General's position that the holder is obliged to inform the standard user about the alleged infringement and to make a detailed FRAND license offer. ZTE also welcomes the Advocate General’s stance on the right for a licensee of a Standard Essential Patent to challenge the validity of patents and to deny license payments for products which do not infringe the patent.

ZTE hopes that the Court will take the Advocate General’s opinion into consideration and establish a clarified legal framework on licensing of Standard Essential Patents. The framework would help support innovation, and in particular would reduce the ability of Non-Practicing Entities to use injunctions to leverage unfair settlements. ZTE recently made a complaint to the European Commission against Vringo, a Non-Practicing Entity, arguing that its use of litigation and the threat of litigation constitutes a breach of EU antitrust law.

ZTE is a world-leading technology innovator, and both a licensor and licensee of IPR. ZTE is one of top SEP holder in the EU, filing the most patent applications in 2011 and 2012 according to WIPO and being among top 10 patent applicants in Europe in 2012 according to the European Patent Office.

About ZTE

ZTE is a publicly-listed global provider of telecommunications equipment and network solutions with the most comprehensive product range covering virtually every telecommunications sector, including wireless, access & bearer, VAS, terminals and professional services. The company delivers innovative, custom-made products and services to over 500 operators in more than 160 countries, helping them to meet the changing needs of their customers while growing revenue. ZTE commits 10 per cent of its annual revenue to research and development and has leadership roles in several international bodies devoted to developing telecommunications industry standards. ZTE is committed to corporate social responsibility and is a member of the UN Global Compact. The company is China’s only listed telecom manufacturer that is publicly traded on both the Hong Kong and Shenzhen Stock Exchanges (H share stock code: 0763.HK / A share stock code: 000063.SZ). For more information, please visit


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