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French competition law is codified in Book IV of the French Commercial Code (FCC). It is largely similar in substance to EU competition law, which directly applies in cases that may affect trade between EU Member States. The most important French antitrust provisions are Articles L420-1 and L420-2 of the FCC, which are the domestic equivalents of Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) respectively. There is no domestic legal or statutory provision dealing specifically with the interplay between intellectual property (IP) law and competition law. As a result, the rules applicable in this domain are largely based on European and French case law.
Over recent years, the main developments affecting the interplay between IP and antitrust laws have occurred at the European level, with the General Court's first rulings on 'pay-for-delay' agreements in the Lundbeck2 and Servier3 cases, endorsing the Commission's decisions. Appeals are currently pending before the Court of Justice of the European Union (CJEU) for the Servier case. The CJEU also issued a preliminary ruling referred to by the UK Court following a decision of the UK Competition and Markets Authority holding that agreements between GlaxoSmithKline and generic manufacturers infringed competition law.4 The CJEU has responded to 10 preliminary questions providing a guidance on the analysis of such agreements, which aim to be fact-specific. Finally, the Commission fined Teva and Cephalon for agreeing to delay the market entry of a generic drug, finding that the agreement eliminated Teva as a competitor and allowed Cephalon to maintain high prices to the detriment of patients and healthcare system.5 An appeal is currently pending before the General Court.
Past years have also seen a significant uptake in litigation involving standard-essential patents (SEPs). As time has passed since the Huawei v. ZTE decision of the CJEU, which had laid down a road map for SEP owners and implementers of standards,6 new issues have arisen. In a global context characterised by races to courts by patentees as well as implementers, French courts have recently gained popularity, and have opened the door for making decisions on what terms are or are not in fact fair, reasonable, and non-discriminatory (FRAND).
Under French law, anticompetitive restraints imposed in the context of licensing agreements fall under either Article L420-1 or Article L420-2 of the FCC or under the corresponding EU provisions, respectively Article 101 and Article 102 of the TFEU. This includes, among other things, non-compete obligations, resale price maintenance, market and customer allocation. In addition, Regulations No. 330/2010 and No. 2022/790 (block exemption regulations applicable to vertical restraints, applicable respectively until 31 May 2022 and from 1 June 2022 on), No. 316/2014 (technology transfer block exemption), No. 1218/2010 (specialisation agreements) and No. 1217/2010 (research and development agreements) are directly enforceable where EU competition law applies, and the positions taken in the set of guidelines7 published by the European Commission may be relied on by the French Competition Authority (FCA) and the courts in their assessment.
Anticompetitive restraints in the context of licensing agreements may take several forms, such as abusive tying. In the audiovisual broadcasting rights sector, the FCA has found that Canal Plus, a provider of pay-TV services, abused its dominant position by subjecting its pre-purchase of exclusive broadcasting rights for French films to the producers' commitment not to transfer the broadcasting rights for pay-per-view during Canal Plus's exclusivity period.8 The French Supreme Court upheld this decision.9
Furthermore, resale price maintenance is prohibited by Article L420-1 of the FCC and its EU equivalent, Article 101 of the TFEU. This rule applies to distribution agreements involving products or services protected by IP rights.
Although French law does not make any specific provision on the refusal to license, it may be considered an abuse of dominant position under Article L420-2 of the FCC and its EU equivalent, Article 102 of the TFEU.
In an opinion10 relying on Magill,11 the FCA considered that an IP right could be considered an essential facility. The FCA went on to find that software could be an essential facility, except where the undertaking requesting to be granted access operates without the software, or if equivalent software could be developed under reasonable economic conditions. However, on 25 March 2021, the CJEU considered that the demonstration of the lack of existence of a substitute to the essential facility is only required in the presence of a refusal to access, but would not be required when access is granted on unfair terms.12 The FCA13 and the Paris Court of Appeal14 consider that the price at which access is granted to the essential facility must be oriented towards costs, regardless of whether the essential facility is protected by IP rights.
The FCA also accepted commitments from Nespresso to remove certain barriers to entry to the market for coffee capsules. The FCA found that Nespresso engaged in technical curtailing of the interoperability between its coffee machines and its competitors' coffee capsules, and that it gave customers legal and commercial incentives to use Nespresso coffee capsules exclusively.15
Unfair or discriminatory licensing may fall under either Article L420-1 or L420-2 of the FCC and their EU equivalents, Articles 101 and 102 of the TFEU. The FCA recently held that ongoing IP litigation with regard to certain rights cannot justify abusive discrimination on the part of a dominant undertaking. As a result, the FCA considered that a dominant undertaking abused its position by refusing to license its leading database to laboratories using the software manufactured by a specific company, while it simultaneously agreed to license the database to laboratories using the software manufactured by competitors.16 This decision was upheld by the Paris Court of Appeal as well as by the French Supreme Court.17 However, the Supreme Court found that the abuse was established because the refusals to license were part of a broader policy; it left open the possibility that the existence of such an IP dispute could justify a refusal to license in a specific case, as it may constitute 'a legitimate defence [of the IP right owner's] rights'.
Whether the fight against counterfeit products can justify limitations on IP rights licensing is likely to be addressed in the context of the FCA's awaited decision in the Sony PS4 controllers case, where the FCA investigation services held that Sony could have abused its dominant position by implementing a system whereby de facto only third-party controllers that use Sony's proprietary technical components, which can be obtained through a paid licence, can be used on the PS4, and Sony did not systematically inform third-party manufacturers of the outcome of licensing requests nor justifications for refusals. Interestingly, the FCA's Collège resumed the investigation on the merits by refusing Sony's commitments consisting of implementing objective criteria and technical standards for third-party manufacturers, applying these criteria and standards on a non-discriminatory basis, and systematically providing justifications in the event of a refusal to license a third-party manufacturer, as the Collège believed Sony was 'adequately addressing' the competition concerns identified.18
In addition, the FCA ordered the French National Rugby League and Canal Plus to suspend an agreement granting Canal Plus exclusive broadcasting rights for the Top 14 games for a period of five years, and the National Rugby League to re-attribute TV rights on FRAND terms.19
Furthermore, in an opinion,20 the FCA took the view that an undertaking could not use an IP right to justify engaging in a margin squeeze that would result in private operators not being able to market, at an economically reasonable price, specific products for which a demand exists.
Finally, in a decision on 9 April 2020, the FCA ordered interim measures against Google, considering that Google's free licensing policy with press publishers and agencies may constitute a circumvention of the law of 24 July 2019, which transposed into French law the Directive 2019/790 on copyright and related rights,21 as well as unfair trading practices and a possible discrimination between press publishers.22 This decision was upheld by the Paris Court of Appeal, allowing news agencies and press publishers to enter into negotiations with Google to discuss the terms and conditions of the reuse and display of their content, as well as the remuneration that may be associated with it.23 In the context of the investigation on the merits, the FCA has market tested Google's proposed commitments and a decision as to whether such commitments are accepted is awaited for the middle of 2022.
Patent pooling may have as its object or effect the restriction of competition, and may therefore fall under Article L420-1 of the FCC or Article 101 of the TFEU, or both. In a thematic study published in 2004, the FCA recognised that cross-licensing between competitors gives the undertakings concerned an opportunity to collude by partitioning the market between them or by engaging in price-fixing. However, the FCA has also considered that such agreements may be pro-competitive, among other things where the cross-licensed technologies are complementary.24 Although this position is not binding and should not be construed as a statement of the law applicable to patent pooling, it nonetheless provides guidance on how the FCA could approach the issue in a dispute. The Commission's guidelines on the application of Article 101 of the TFEU to technology transfer agreements also outline that patent pooling cannot benefit from an automatic exemption under the Regulation No. 316/2014 and set out cumulative conditions for the agreements not to be considered as anticompetitive.25
As highlighted in Section III.ii, concerning refusal to license, software may be considered an essential facility by the FCA or by French courts. This question was addressed extensively in a series of judgments and decisions involving the Nouvelles Messageries de Presse Parisienne (NMPP). The FCA ordered NMPP to set up a connection between its software and that of Messageries Lyonnaises de Presse (MLP).26 The Paris Court of Appeal dismissed the appeal,27 but its judgment was overturned by the French Supreme Court considering that the Court of Appeal failed to establish whether alternative and economically reasonable solutions, even less advantageous than those of NMPP, could be used by MLP.28 The case was remanded back to the Paris Court of Appeal, which rejected the request for interim measures finding that, in the absence of the connection between the software, the data contained in NMPP's software could be manually entered into MLP's software. In addition, NMPP's software could be reproduced at a not-unreasonable cost, and MLP could set up its own distribution network.29 The French Supreme Court dismissed the appeal filed against that judgment.30 The case nonetheless continued on its merits, and the FCA eventually accepted commitments from NMPP, which granted MLP the requested access in exchange for its contribution to the development, exploitation and access costs.31
In a subsequent case, the FCA found that conduct by Oracle could amount to an abuse of dominance. This conduct consisted of refusing to develop new versions of its relational database management system on certain Intel processors and, as a result, on certain Hewlett-Packard servers.32
With regard to import control, Article L713-4 of the French Code of Intellectual Property provides that:
In this context, the French Supreme Court held that the grey-market commercialisation of products, usually distributed through a selective distribution network, does not constitute a legitimate reason to oppose acts of marketing.33
To the best of our knowledge there is no domestic case law explicitly addressing the issue of whether SEPs confer a dominant position on their owner. However, the Paris First Instance Court accepted that the owner of a number of SEPs must be bound by the FRAND undertaking given to the standard-setting organisation.34 Despite the issue not being explicitly decided, the Court appears to have assumed the existence of a dominant position.
Recently, the Paris Court of Appeal held that the counterclaims for antitrust violations, raised by the defendant against whom alleged SEPs were asserted, fail in the absence of a dominant position because none of the asserted patents were, in fact, essential; therefore, there is no dominance.35 It does not seem to have been argued, however, that the mere assertion of a patent as a SEP would in itself confer a dominant position; whether a court would entertain such a theory remains open.
Before the CJEU Huawei v. ZTE decision, there had been a string of decisions by French courts issuing injunctions against implementers of SEPs.36.
It is however to be noted that licences seem to have been made available by the patentees on standard terms, and there was no FRAND challenge; still, a preliminary injunction concerning an SEP was upheld up to the French Supreme Court.37
In contrast, in recent years, French courts have expressed a growing reluctance to issue preliminary injunctions preliminary injunction in SEP cases. In Samsung v. Apple,38 the president of the Paris First Instance Court found that, in the circumstances of the matter, the seeking of a preliminary injunction was 'disproportionate'; and that the determination of FRAND terms was too complex for preliminary injunction proceedings, thus suggesting that any case implying such a determination39 would need to be brought in main proceedings. Courts have also highlighted that the issuance of a preliminary injunction would disturb the FRAND negotiations and give one of the parties too much of an advantage.40 This has culminated in the recent decisions in IPCom v. Lenovo and Xiaomi,41 where the court found that it needs to take into account the irreparable harm that would result from the issuance or refusal of the preliminary injunction for each of the claimant and defendant; on that basis, the court refused to issue preliminary injunctions. Although the court's findings remain fact-specific, the criteria that it developed and the way in which these criteria were applied to the cases presented, strongly suggest that preliminary injunctions would only be available in very specific cases, whose circumstances set them aside from habitual disputes in the field.
Another topic with which French courts have come to grapple with is that of 'anti-anti-suit' injunctions. In IPCom v. Lenovo, where an anti-suit injunction was been sought in the US, the patentee sought an anti-anti-suit injunction from French courts to be able to enforce its SEP in France. The first instance judge,42 approved by the court of appeal,43 found that anti-suit injunctions in patent cases are contrary to public order, an interference into the jurisdiction of French courts and an encroachment on property rights. Hence, an anti-anti-suit injunction, ordering the withdrawal of the US motion for an anti-suit injunction.
There has been little French case law addressing the substance of what FRAND terms are. However, in Samsung v. Apple,44 the judge referred to the fact that the determination of a FRAND rate would imply some degree of patent counting to assess the importance of the patentee's portfolio against the standard overall, and taking into account the overall stack of royalties payable for all standards implemented by the particular product.
In a recent case, the Paris Court of Appeal was asked by both the patentee and the standard implementer to set FRAND terms for the patentee's portfolio, even if the patents were not considered essential by the first instance court.45 The Paris Court of Appeal dismissed both parties' claims for a FRAND determination; the Court's decision might have been different if the implementer had accepted that it needs to pay something, which he refused to do in this case.46
More recently, the Paris First Instance Court had to decide whether it had the jurisdiction to hear a FRAND determination brought by TCL against Philips and ETSI.47 In that case, TCL was seeking, inter alia, an order that Philips must grant TCL a FRAND licence, and that ETSI must facilitate the conclusion of that licence. The Court allowed the French FRAND declaration action to proceed and therefore opens an avenue to parties who would like to have FRAND terms determined by French courts. A similar decision was rendered more recently in between Philips and Xiaomi.48 These cases further appear to recognise the existence of a tripartite contractual arrangement, further to the essentiality declarations made by the SEP owner,49 between the patentee, the implementer, and the standard-setting organisation; in that respect, these decisions could be influential in foreign SEP disputes, as some foreign courts have not necessarily applied a contractual framework of analysis.
In the Conversant v. LG dispute, the defendant made repeated pretrial requests for the production of previous licences that the patentee had entered into. That request was initially dismissed by the Court of Appeal.50 However, following new confidentiality measure provisions, a later order decided that prior agreements entered into by the patentee need to be provided if the lawsuit is about the setting of FRAND terms and that prior licence agreements concerning other patent portfolios pertaining to the same standard, are not relevant for the FRAND determination and need not be provided.51
The setting of the FRAND rate was also addressed in a case involving Intellectual Ventures and a number of phone carriers as well as their suppliers. It was decided to try the issues of patent validity and infringement before those pertaining to the setting of a FRAND rate. The judge also granted Intellectual Ventures' request for trade secret protection for the disclosure of its comparable licence materials.52
In one case,53 the Paris First Instance Court, ruling in summary proceedings, accepted that a change of licensing terms, which made them more onerous to the licensee, could possibly amount to an abuse of a dominant position. The possibility that such an abuse might exist led the Court to refuse to issue an injunction.
Under French merger control law, acquisition of control over IP rights may constitute a merger provided that the rights 'constitute an activity that results in a presence on a market, to which a turnover can unambiguously be attached'.54 Such was the case, for instance, when the FCA reviewed the acquisition by Sara Lee of certain brands and industrial equipment from Benckiser.55
The FCA has already accepted remedies involving divestiture of IP. In the context of the acquisition of certain television channels, Groupe Canal Plus had to commit to divest its free-to-air broadcasting rights for important sporting events.56 In 2019, the FCA authorised the acquisition of Alsa by Dr Oetker (Ancel) by approving a commitment that addressed competition issues in advance ('fix-it-first' commitment), by granting a credible market player a licence for the Ancel brand.57
As a rule, sham of vexatious IP litigation is sanctioned through an award of legal costs and, possibly, by civil damages for abusive litigation.58 It is, however, worth mentioning a decision of the Paris First Instance Court of 26 January 2005,59 in which the alleged infringer counterclaimed for nullity of the asserted patent, for abuse of proceedings, but also for abuse of a dominant position. The Court declared the asserted patents invalid and ordered the patent holder to pay the defendant €750,000 as damages for abuse of proceedings. The Court held that launching actions on the basis of 'illusions of claims' against a competitor is to be seen as an abuse of the right to sue. After reviewing the counterclaim for abuse of a dominant position, the Court referred the matter to the FCA for it to investigate the issues. The FCA rendered an opinion60 finding the patentee to be in a dominant position, but it seems that the litigation stopped there.
In the Luk Lamellen v. Valéo case referred to above,61 one of the concerns of the Court with the patentee's behaviour resulted from the change in the wording of the claims of the asserted patents so as to make them match the products of the defendant. However, the particular circumstances of the case – lack of merit of the patent assertions, invalidity of the patents – played a very significant role in the finding of the Court. In many other cases, similar behaviour was not found problematic.
It is also noteworthy that the Nespresso case partly involved a sophisticated patent acquisition strategy,62 which formed part of the behaviour scrutinised by the FCA.
Another worth-noting judgment comes from the Paris Judicial Tribunal, which considered that a patent hoarding strategy was likely to constitute an abuse of dominant position as it can aim at, or have the consequence of, locking the market. The Tribunal however dismissed the argument absent any dominant position from the company at the origin of such strategy.63
IP dispute-settlement agreements may be found anticompetitive under Article L420-1, or Article L420-2 of the FCC or under EU law, or both, if they have an anticompetitive object or are liable to have anticompetitive effects. In an opinion published in 2013, the FCA noted that the 'rule of reason' approach adopted in this context by the US Supreme Court is based, among other things, on a regulatory context very different from what exists in Europe and in France. Although this should not be construed as an official statement of the law applicable to pay-for-delay agreements, it could suggest that the FCA would adopt the same position as the European Commission and the General Court, which both considered that these agreements have a restrictive object.64
Many questions that have been addressed at the European level or in other EU Member States have yet to be tackled under domestic law. It would not be unreasonable to expect the FCA and the French jurisdictions to draw inspiration from the recent findings made by the European Commission and the European courts, in particular, in the pharmaceutical sector. The recent case law recognising that French courts have jurisdiction to determine FRAND rates is apparently inspiring some litigants to choose France as a forum to resolve their dispute.
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