Sony Games Consoles Seized in Patent Dispute

This article was included in our Spring/Summer 2011 edition of Inside IP magazine.

Dutch customs recently seized Sony Playstation 3 (PS3) game consoles as they arrived into the EU via the Netherlands.  The seizure by customs was requested by LG, based on their patents relating to Blu-ray technology.  LG was also granted permission on 28 February 2011 to seize Sony PS3s at a Dutch distribution centre.  In total, it is believed around 300,000 products were seized in this high-profile matter.

The dispute between LG and Sony appears to centre on the agreement of a licence for Sony to use Blu-ray technology allegedly covered by LG’s patents.  The patents are considered by LG to cover technology that is prescribed by the Blu-ray technical standard, developed by the Blu-ray Disc Association, of which both Sony and LG are members.  As the patents are considered “essential” for operating the standard, LG are obliged to offer licences under fair, reasonable and non-discriminatory (FRAND) conditions.  It appears that Sony and LG had not agreed on the terms of the licence, leading to LG’s request for the PS3 seizures in the Netherlands.

The seized PS3s were released ten days later, on 10 March, following an inter partes hearing at the Hague court.  In the written decision of the court, issued on 24 March 2011, significant consideration was given to the by-laws of the Blu-ray Disc Association.  The court lifted the detention order, noting that the by-laws contain provisions intended to lead to a licence between the relevant members.  The judge indicated that infringement action is not appropriate during the period that the parties were still agreeing on the details of the licence under FRAND terms.

This case is a reminder that customs in the Netherlands, the UK, and other EU countries have the power to seize goods arriving into the EU based on alleged infringement of an IP right.  The IP rights include patents, trademarks, copyright and design rights.  The goods can generally be detained for an initial period of ten working days, and on request, a further ten working days.  Legal proceedings initiated within this time can allow the detention to continue.  The initial detention of the goods is merely at the request of the rights holder and does not require a court decision.  The detention allows inspection of the goods, potentially providing information to decide on initiating legal proceedings.

Alex Bruce 24 May 2011

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