Date

May 16, 2014

Case number

2013 (Ra) 10008

Court

Intellectual Property High Court,Special Division– A case in which the court found that the appellee's products fall within the technicalscope of the appellant's patent right.
– A case in which the court found that the appellant's exercise of the right to seek an
injunction based on the patent right constituted the abuse of right.
References: Article 1, paragraph (3) of the Civil Code, and Article 100 of the PatentAct
1. Background
This is the case wherein the appellant (obligee) alleged that the appellee's(obligor's) production, assignment, import or other acts in relation to the products
specified in the attached Lists of Products (hereinafter referred to as the "Product")constitutes the infringement of the appellant's patent right under the Patent No.
4642898 for the invention titled "method and apparatus for transmitting/receiving
packet data using pre-defined length indicator in a mobile communication system"(hereinafter referred to as the "Patent"), and filed a petition for a provisional
disposition order for an injunction against the appellee's production, assignment,
import, etc. of the Product and custody of infringing products by a court execution
officer. The right sought to be preserved by this provisional disposition is the right toseek an injunction of the Patent Right.
In the decision in prior instance, the court held that the Product fall within thetechnical scope of the invention pertaining to the Patent Right; however, the court
dismissed the appellant's petition holding that the appellant's exercise of the right toseek an injunction based on the Patent Right constituted the abuse of right. The
appellant filed this appeal against such decision.
2. Outline of the facts on which the court decision is premised(1) The Product conform to the UMTS (Universal Mobile Telecommunications
System) standard, which is the telecommunications standard developed by 3GPP
(Third Generation Partnership Project). 3GPP is a private organization established
for the purposes of the dissemination of the third-generation mobile
telecommunication system or mobile telephone system (3G), as well as theinternational standardization of the related specifications.
(2) ETSI (European Telecommunications Standards Institute), one of the standard

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organizations which established 3GPP, provides the "Intellectual Property Rights
Policy" as the guidelines for the treatment of intellectual property rights (IPRs).
(3) On August 7, 2007, the appellant, in accordance with the ETSI IPR Policy, notified
ETSI that the IPRs including the Patent were or were highly likely to be essential
IPRs for the UMTS standard, with an undertaking that it was prepared to grant anirrevocable license on fair, reasonable and non-discriminatory terms and conditions(such terms shall be hereinafter referred to as the "FRAND Terms," and thisdeclaration as the "FRAND Declaration").
3. Summary of the decision(1) Issue of whether the Product fall within the technical scope of Invention 1
In this decision, the court found that the Product fall within the technical scope ofInvention 1.
(2) Issue of whether the exercise of the Patent Right constitutes the abuse of right
In this decision, the court held as follows, determining that the appellant's exerciseof the right to seek an injunction based on the Patent Right constitutes the abuse ofright.
"A party intending to engage in the manufacturing, sale, etc. of a UMTS
standard-compliant product would recognize that, among the patent rights
essential for the manufacturing, sale, etc. of such product, at least those owned
by ETSI members require the timely disclosure in accordance with ETSI IPR
Policy Clause 4.1 and the FRAND licensing declaration under ETSI IPR Policy
Clause 6.1. Such party would rely on the availability of a FRAND license
through an appropriate negotiation with the patentee. Such reliance is worth
protecting. Accordingly, in connection with the Patent subject to the FRAND
Declaration, allowing the unconditional exercise of the right to seek an
injunction would be detrimental to the reliance of parties who manufacture orsell the UMTS standard-compliant product on the availability of such license.
Owing to such reliance of the UMTS standard users, the patent rights(including the Patent Right) incorporated into the UMTS standard can be
widely disseminated among a large number of business enterprises in all part ofthe world. As a result, an owner of a Standard Essential Patent can benefit fromroyalty income, which would be unavailable if the patent was not adopted aspart of the UMTS standard. In addition, a party which makes a FRANDdeclaration as required by the ETSI IPR Policy, including the appellant's
FRAND Declaration, declares on a voluntary basis that it is prepared to grant2

an irrevocable license under the FRAND Terms. So, it is considered that suchparty does not anticipate the exercise of the right to seek an injunction tomaintain its dominance over the market, so long as such party can obtainconsideration for the FRAND license. For such party, it is not so necessary toallow the exercise of the right to seek an injunction to protect its dominanceover the market.
Whenever parties intending to engage in the manufacturing, sale, etc. of any
product complying with the UMTS standard, including the appellee,implements the UMTS standard, there is no choice but to work the Patent, and
it is impossible for them to adopt alternative technology or to change theproduct design. Therefore, if the patentee is unconditionally allowed to exercise
the right to seek an injunction based on the Patent Right, the standard users may
be put into a situation where they are forced to pay a high royalty or to agree toextremely unfavorable license conditions which are not FRAND Terms, or toabandon the business project itself, so as to avoid the damage that may arise
from such injunction. In addition, the UMTS standard contains a large numberof patents owned by different owners (1800 or more patent families aredeclared as essential by 50 or more patentees). It is considered extremely
difficult for a standard user to obtain the licenses in advance, after confirming
whether each of such large number of patents is essential or not. Therefore, if
the patentee is unconditionally allowed to seek an injunction based on theStandard Essential Patent, the use of the UMTS standard would become
practically impossible. Such situation would have a negative impact on thedissemination of the UMTS standard and run counter to the purpose of theETSI IPR Policy aimed at the harmonization and dissemination of thecommunication standards. Further, if such situation arises, the general publicwould be unable to enjoy a variety of benefits which would be available if theharmonization and dissemination of communication standards was achieved.
In relation to a Standard Essential Patent, it is not appropriate to allow a party
who made a FRAND declaration to exercise the right to seek an injunction
based on the patent right against a party willing to obtain a license under theFRAND Terms. ""Meanwhile, the injunction should be allowed against a party engaged inmanufacturing, sales, etc. of an UMTS standard-compliant product without any
intention of receiving a FRAND license, as such party with no intention ofobtaining a FRAND license is not considered to comply with the standards

3relying upon the FRAND declaration, and the patentee would not be adequately
protected if the exercise of right to seek an injunction even against such parties
is restricted. Nevertheless, as allowing the patentee to exercise the right to seek
an injunction involves potential adverse effects as mentioned above, scrutiny
shall be made before determining that the prospective licensee has no intentionof receiving a FRAND license. ""Considering the totality of the above circumstances, the exercise of the rightto seek an injunction based on the Patent Right by the appellant who made theFRAND Declaration would constitute the abuse of right (Article 1, paragraph(3) of the Civil Code) and therefore is not allowed, if the appellee successfully
alleges and proves the fact of the appellant having made the FRAND
Declaration and the appellee's intention of receiving a FRAND license. ""Apple Inc. and the appellee can be considered as the parties who have theintention of receiving a FRAND license, as Apple Inc. has made specificroyalty rate proposals with a calculation basis several times, …., and held
several conferences with the appellant for intensive licensing negotiation. "(3) Conclusion
On the premises of the foregoing, in this decision, the court concluded that thepetition should be dismissed without the need to discuss the other points in issue,
as the appellant failed to make a prima facie showing in regard to the right sought
to be preserved. The court therefore held that this appeal should be dismissed,finding the decision in prior instance which reached the same conclusion to beappropriate.

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