Huawei Technologies Co. Ltd. V. ZTE Corp.

Huawei Technologies Co. Ltd. (Huawei) (plaintiff) obtained a European patent for a telecommunications technology. The technology became key to standards established by the European Telecommunications Standards Institute (ETSI). The patent was therefore a standard-essential patent, meaning a patent for an invention that was essential to compliance with a technical standard established by a governing body. Huawei agreed to grant licenses to third parties on fair, reasonable, and nondiscriminatory (FRAND) terms so that the third parties could use Huawei’s patented technology in their products and thus continue to comply with ETSI standards. ZTE Corp. (defendant), which sold products that required Huawei’s technology to remain ETSI compliant, began using the technology without a license. Huawei notified ZTE of its patent infringement and began negotiations to enter a licensing agreement on FRAND terms. However, the parties could not agree on a royalty rate and did not execute an agreement. ZTE continued to use Huawei’s technology without paying royalties. Huawei sued ZTE for patent infringement, seeking an injunction preventing future use and damages for past use. ZTE argued that the suit was an abuse of Huawei’s dominant market position in violation of Article 102 of the Treaty on the Functioning of the European Union. The German court in which the infringement suit was filed referred questions to the European Union Court of Justice to clarify the scope of Article 102.