Exclusive – EU tweaks draft patent rules making it easier for patent holders to sue

By Foo Yun Chee

BRUSSELS (Reuters) – The European Commission has tweaked draft patent rules to make it easier for patent holders to sue companies over royalty disputes following criticism that an earlier draft favoured users while restricting patent owners from seeking injunctions.

The EU executive, which will announce the draft rules on Wednesday, is hoping the move will end costly legal spats over patents essential to key technologies for telecoms equipment, mobile phones, computers, connected cars and smart devices.

Mobile technology was a hotbed of patent litigation in the previous decade involving Apple Inc, Microsoft, HTC Corp, Motorola, Samsung Electronics and Nokia.

EU officials say worries of a patent war involving the automotive industry and the Internet of Things technology as well as China’s growing share of key patents were key reasons for the Commission’s proposed rules.

The latest draft seen by Reuters allows patent holders to ask a court for injunctions against infringing companies even while the two sides negotiate on fair, reasonable and non-discriminatory (FRAND) royalties under the auspices of the European Intellectual Property Office (EUIPO).

An earlier draft blocked such legal action until the conclusion of the FRAND-setting process within nine months.

“The obligation to initiate FRAND determination should not be detrimental to the effective protection of the parties’ rights,” the latest proposal said.

“In that respect, the party that commits to comply with the outcome of the FRAND determination while the other party fails to do so should be entitled to initiate proceedings before the competent national court pending the FRAND determination.”

Patent owners say injunctions help to protect their rights while opponents say such bans can inflate royalties and stifle competition.

The draft rules need to be agreed with EU countries and the European Parliament before they can become law.

(Reporting by Foo Yun Chee; Editing by Sonali Paul)