The intersection between intellectual property and competition law is always on the agenda of lawmakers. Since there is an imbalance between the exclusivity rights ensured by intellectual property law and anti-competitive practices that the competition law protects, the notion of standard-essential patents (SEP) and a commitment to license these patents on a fair, reasonable and non-discriminatory (FRAND) basis are accepted to preserve the competitive landscape with regard to licensing issues. However, licensors and licensees still have discrepancies on the FRAND terms, and this keeps authorities and courts busy with handling each party’s requests. While it is nearly impossible to satisfy both parties’ demands, recently, we observed that there are footprints of significant regulatory initiatives that would likely shape the nexus between intellectual property and competition law. Indeed, the most influential jurisdictions, the European Union (EU) and the United Kingdom (UK) have launched fresh inquiries concerning the framework of SEP and FRAND. Below we discuss these developments and then elaborate on the Turkish stance related to the matter.

European Commission’s New Framework for Standard-Essential Patents

The European Commission (EC) commenced the evidence and public consultation phase on February 14, 2022 which will last until May 9, 2022, in relation to the new proposed framework regarding SEPS. The EC had previously adopted an intellectual property action plan in November 2020, which gave rise to the need to establish a new framework on SEPs to strike a balance between the protection of intellectual property rights and the promotion of innovation, and not hindering companies’ access to intellectual property.

Right now, the patent law of the EU is rather limited and fragmented, which has led to the development of a three-fold package on supplementary protection certificates, compulsory licensing and SEPs, aiming to increase legal certainty and transparency which will inherently strengthen the EU patent system. This goes hand-in-hand with the FRAND terms and conditions, where any person or company claiming SEP on its patents commits to license the patents on a FRAND basis. Three pillared packages are as follows:

With the above steps, the new framework is essentially supporting and complementing the existing the SEP framework of the EU, leading to a more transparent, predictable, and efficient process. This regulatory initiative will probably improve competition and the legal certainty in the SEP-related issues.

Standard-Essential Patents and Innovation: UK Intellectual Property Office’s Call for Views

The UK Intellectual Property Office (“IPO”) has held meetings with the industry and academics within the scope of its consultation process commenced in December 2021, which has ended on March 1, 2022, where it has called for views to understand the current SEP framework with regards to innovation and competition and to set a future framework. It has also been stated that the IPO has been working with the UK Competition and Markets Authority within the scope of the review, along with the participation of the UK Department for Media, Culture and Sports and the British Standards Institute. Now, the government is assessing the responses it has received and will publish a summary of responses. The inquiry is covered the below-mentioned topics:

Considering the coverage of the inquiry, we believe that the UK’s regulatory initiative will be highly important and may influence the other jurisdictions.

Turkish Stance on the Framework for Standard-Essential Patents

Turkey usually prefers to carefully follow the EU’s approach before adopting a new regulatory framework. This assumption is also true in relation to the framework of SEPs. However, the Turkish Competition Authority (TCA) does not hesitate to enforce the competition rules, even if there are novelty issues at stake. Indeed, the TCA has investigated SEPs for the first time within its investigation on whether Koninklijke Philips N.V. (Philips) has violated the Law No. 4054 on the Protection of Competition (Competition Law) by not abiding its commitment to the relevant standard-setting organization that it would license the SEPs related to subtitle technology for digital video broadcasting on FRAND terms. Upon the investigation, the TCA rendered its final decision dated December 26, 2019 and numbered 19-46/790-344:

The Board’s reasoning for finding a violation was as follows:

That said, the Ankara 11th Administrative Court (“Court”) has accepted Philips’ appeal to the case and has annulled the Board’s decision with its decision dated June 3, 2021 and numbered E. 2020/1525, K. 2021/1121. The Court annulled the decision by drawing the following conclusions:

Upon the annulment of the TCA’s decision, the case has been carried to regional court for an appeal and is still pending.

As assessing SEPs and FRAND terms in Turkey is fairly new and there is no established doctrine and precedents on the matter, the EC and the UK inquiries and their future frameworks will undoubtedly be utilized in Turkey within the scope of possible future disputes, which will affect the Turkish case law on this matter from here on. It is possible to benefit from these developments in the ongoing clash between the TCA and Philips if the outcome of the initiatives is published in a timely manner. This would inevitably enrich the Turkish stance on the intersection between intellectual property and competition law.

Article by Caner K. Çeşit and Ulya Zeynep Tan

[1] Case C-170/13 Huawei Technologies Co. Ltd v ZTE Corp., ZTE Deutschland GmbH.