This paper looks at the holdup problem stemming from the apparent incompatibility between Standard Essential Patents—those subject to fair, reasonable and nondiscriminatory (FRAND) licensing—and the use of injunctions, and analyzes the potential complementary use of antitrust rules to strike the right balance to optimize competition and innovation.

I conclude that in the U.S., patent law and the ruling in eBay provide courts with sufficient tools to avoid the holdup problem, though the FTC could still have a policing role under Section 5 of the FTC Act. In the E.U., the fragmentation of remedies in patent law calls for antitrust enforcement by the European Commission, in line with the safe harbor approach adopted in the Samsung case.

Prior to eBay, antitrust enforcement in the United States was limited to the scope of Section 5 of the FTC Act and its associated remedies, i.e. cease and desist orders. However, current patent law counts on judicial tools to identify and prevent holdups created through the threat of injunctions. In particular, the eBay test has enabled courts to limit the potential anticompetitive effects of an injunction sought against a willing licensee. Once courts have signaled the unlikelihood or practical impossibility of obtaining an injunction against such a licensee, holdup issues disappear and any threat to seek injunctions losses all credibility. Courts can then establish damages for past infringement and to set ongoing royalties.

In Europe, remedies for patent law breaches diverge across jurisdictions and while some seem more in line with the eBay balancing test (the Netherlands), others still use injunctions as the default remedy (Germany). The potential benefits of an Ebay-style balancing test are thus not available across the E.U. Meanwhile, patentees can continue to leverage the threat of injunctions to obtain unfair licensing terms. The European Commission has stepped up to take a decisive stance against injunctive relief in the presence of Standard Essential Patents as stated in its decisions in the Motorola Mobility and Samsung cases. The European Commission has the authority to establish an adequate framework for negotiation under FRAND under the Samsung decision. It should exercise this power to set an ex ante expectation that no injunctive relief will be granted and that parties will have to reach to an agreement sooner or later or leave it for the courts to decide the FRAND terms.