Patent hold-out

Patent hold-out describes an alleged strategy of delaying or avoiding a licence while using patented technology. For SEPs, the question is whether the implementer genuinely engages in reaching FRAND terms. Disagreement over price, requests for information or validity challenges do not, by themselves, establish delaying tactics.

The European framework: sequence and context

In Huawei v ZTE (CJEU, 16 July 2015, C-170/13, paragraphs 60 to 71), the court considers an injunction sought by a dominant SEP owner that has made a FRAND commitment. The owner must identify the patent and alleged infringement; following an expression of willingness to license, it presents a specific written offer stating the royalty and calculation method.

The implementer responds diligently, in accordance with recognised commercial practices and good faith. If it rejects the offer, the court describes a prompt, specific written FRAND counter-offer. Where use continues, appropriate security is envisaged from rejection of that counter-offer, taking past use into account and allowing an account of those acts. Timing and substance both matter.

Indicators supporting or weakening a hold-out allegation

• Investigate: unexplained silence, missed response commitments, repetitive requests unrelated to assessment, failure to make concrete proposals or discuss security.
• Consider alongside them: the notice’s detail, information actually disclosed, availability of comparables, confidentiality difficulties, reasons for delay and the owner’s conduct.
• Preserve: the right to challenge validity, essentiality or actual use alongside negotiations, expressly recognised in paragraph 69.

The judgment supplies neither a universal deadline in days nor a checklist turning every delay into an automatic loss of defence. Courts may differ in assessing the chronology and willingness to negotiate.

Distinguish the consequences

Delaying conduct can weaken a defence against an injunction under the applicable framework. It does not, by itself, establish patent validity, infringement or the FRAND character of any demanded rate. Injunctive relief, licence valuation and compensation are separate issues.

Build a clear negotiation record

Keep a dated chronology of offers, responses, requested and disclosed documents, confidentiality arrangements, counter-offers and security. Explain each outstanding request and the next proposed step. Concrete, consistent actions are more informative than a general statement of willingness; allegations of hold-out also need evidence.

Source

CJEU, Huawei Technologies v ZTE, C-170/13, paragraphs 60 to 71.

Related concepts

Patent hold-up · FRAND rates and comparable licences