SEPs: The FRAND Commitment, Competition Law, and the Principles of the Brazilian Economic Order

Abstract

The incorporation of a technology into a standard grants the holder of a Standard Essential Patent (SEP) the effective power to prevent the implementation of a standard in its entirety, whereby the exercise of its rights, including the right to seek injunctive relief in court, produces effects that extend beyond the litigating parties and impact competitors, implementers, consumers, and the innovation process itself. This article demonstrates that, in judicial disputes involving SEPs, the granting of injunctive relief cannot be treated as a strictly private matter governed solely by the Industrial Property Law. Under the Brazilian legal system, patent protection is not absolute: it is conditioned upon the social interest and the country’s technological and economic development and is subject to the constitutional principles of the social function of property and free competition (Article 5, XXIX, and Article 170 of the Constitution), with the collective being the holder of the legal interests protected by Law No. 12,529/2011. Industrial property rights have a constitutionally defined purpose, and their exercise is conditioned upon the generation of expected efficiencies for the benefit of the collective. This implies that the holder of a SEP, before obtaining injunctive relief, must demonstrate a set of elements— especially the essentiality and validity of the patent, the existence of a prior written and economically substantiated FRAND offer, and the unjustified refusal by a willing licensee—failing which the measure may operate as an instrument of hold-up and abuse of dominant position (Article 36 of Law No. 12,529/2011), in violation of the constitutional principles governing the economic order. In conclusion, the granting of exclusionary remedies without examining these elements disregards the economic function of standardization, undermines competition, and is incompatible with the Constitution and antitrust legislation.