Posts in Licensing

The simplest facts are sometimes the most difficult to comprehend. Patent suits are not as pervasive as they are portrayed in the media or by defendants. Remarkably few are filed relative to the number of patents that are active. The necessity to litigate patent disputes to get the attention of potential infringers and hold a meaningful licensing discussion has likely increased the total number of suits filed. If it has, it has not had much of an impact on the net total. This suggests that many patent holders who should be suing are not.

In commercial contracts, especially with foreign entities, it is very common to agree on arbitration as a dispute resolution method. A typical arbitration agreement specifies arbitrable matters, arbitration institution, place of arbitration, and arbitration rules. In crafting an arbitration agreement, especially when the arbitration clause is embedded in the main body, contracting parties normally write into the contract the applicable law and dispute resolution authority for the main contract, but rarely do the same for the arbitration agreement itself in addition to the main contract. In general, if a dispute involves issues surrounding the validity (or arbitrability) of an arbitration clause, whereas the arbitration agreement does not provide anything about arbitrability, two questions may come up in practice: (1) what is the applicable law on resolving the arbitrability issue? (2) who has jurisdiction over the arbitrability issue – a court or an arbitration institution?

Perhaps after their favorite theory was blown apart again, as it has been every time it’s been trotted out over the past 20 years, the critics of the Bayh-Dole Act learned a painful lesson. Their carefully constructed thesis that the law contains a hidden provision allowing the government to set prices on successfully commercialized products has been summarily rejected by every Democratic or Republican Administration which has considered it. They say the definition of insanity is doing the same thing repeatedly while expecting a different result. But that didn’t keep the proponents from refiling the same petition which was rejected three times in the Obama-Biden Administration. So once again, the National Institutes of Health (NIH) denied the request that it should “march-in” under the law against the prostate cancer drug, Xtandi, because critics felt it is not “reasonably priced.” Apparently, the petitioners thought that the fourth time would be the charm. Now they know better. And this time, NIH included a subtle, but fatal blow to attempts to go down this path again.

Standard-documentation from online sources maintained by standard setting organizations (SSOs) is usually an important source of relevant prior art. Such prior art can include technical specifications, technical reports, change requests, liasioning statements, work item descriptions, study documents, recommendations and RFCs. However, accessing this documentation available in SSO websites is often not easy.

In Part I of this two-part article, we provided an analysis of the Wi-Fi 6 litigation and technology landscape. This Part II discusses important changes to the IEEE rules governing the reasonable and non-discriminatory (RAND) licensing encumbrances on SEPs held by participants in IEEE standardization work. Unfortunately, these rule changes fall short of clarifying what RAND means for Wi-Fi licensors and implementers. Instead, fueled by Wi-Fi 6’s growing valuation and adoption of heavily patented core technologies from LTE and 5G, the rule changes arguably will only heat up the current litigation trend.    

Lenovo has been ordered to pay InterDigital a lump sum of $138.7 million for a global FRAND (fair, reasonable and non-discriminatory) license covering sales of cellular devices from 2007 to December 31, 2023, in the second full FRAND trial to be decided by the UK courts, following the landmark Unwired Planet case. (Interdigital Technology Corporation & Ors v Lenovo Group Ltd (FRAND Judgment – Public Version) [2023] EWHC 539 (Pat).) In his redacted judgment published on March 15, Mr. Justice Mellor found that neither InterDigital’s August 2021 license offer (which amounted to $337 million) nor Lenovo’s counter offer (which comprised a lump sum of $80 million +/-15% for all sales in the six-year term to the end of 2023 with a full release for all past sales for no additional consideration) were FRAND or within the FRAND range.

Wi-Fi 6 shares new technologies with LTE and 5G that are subject to heavy patenting. The firms and institutions that currently monetize their standard essential patents (SEPs) against LTE and 5G will likely be looking to increase their royalty income from Wi-Fi 6 and 6e. This could mean that the recent disputes over LTE and 5G standardization participants’ fair, reasonable, and non-discriminatory (FRAND) SEP licensing commitments will spill over into Wi-Fi. Current Wi-Fi litigation trends suggest that this is already afoot, and the recent licensor-friendly changes in the IEEE IPR rules are feared to only fuel this trend.

Artificial Intelligence (AI) is providing enormous productivity and increased value in many applications. But AI is no panacea and is not yet sufficiently well developed to be precise or dependable everywhere. For example, much better AI training data is required to reliably estimate patent essentiality to standards such as 4G and 5G, where AI is being advocated by various experts and has already been adopted by one patent pool. There is also a lot of room for improvement in inferencing.

Patents essential to standards are surrounded by discussion, dispute and litigation. A key focus of this activity is how to decide on what is a fair, reasonable and non-discriminatory (FRAND) rate for using standard-essential patents (SEPs), and arrive at a number that both licensor and licensee can accept. In other words, we need a “path to success”. To accomplish this, I think what is needed first is a good method or approach to doing the calculation of a rate, a method which both parties can agree on. Once the parties have agreed on how to calculate, the licensing negotiations will likely be streamlined and there might be an easier and speedier path to success.

In teaching Intellectual Property (IP) licensing for the Licensing Executives Society (USA & Canada), Inc., we often open with the first principle of contracts: the “contract” is the meeting of the minds between the parties. What did they actually agree to? The work of the written agreement is to memorialize that meeting of the minds. It is necessarily imperfect. Sir Ernest Gowers aptly describes the challenge of good writing generally, saying it is “the choice and arrangement of words in such a way as to get an idea as exactly as possible out of one mind and into another.” (Sir Ernest Gowers, Plain Words: Their ABC, Alfred Knopf, New York, 1955). In IP licensing, it is the difficult task of reducing to writing an idea from two or more minds such that it conveys to both what each conceived of as the agreement.

Companies rely on copyright protections to shield their software, data sets, and other works that are licensed to their customers; however, a reframing of what constitutes a “transformative use,” and the extent a license can restrict such fair uses, may whittle away all avenues of protections. On October 22, 2022, the Supreme Court of the United States heard arguments for Andy Warhol Foundation v. Goldsmith. The question before the Court is where does a copyright holder’s right to create derivative works stop and “fair use” of the work begin? Companies that license data sets or data feeds should pay close attention, as the Court’s decision could narrow contractual remedies. 

The Global Innovation Policy Center (GIPC) of the U.S. Chamber of Commerce issued its 11th annual International IP Index today, striking what seems like a more dismal tone than usual compared with past reports. While 18 economies saw modest progress on IP protection improvements, 28 economies, including many of the high-scorers, like the United States and the United Kingdom, had a 0% change in score. Only two countries had a 0% change in the 10th edition of the Index. The Index covers 55 economies that represent “most of the global economic output, together contributing over 90% of global GDP.”

When it comes to how to best increase access to medicines in l0w and middle-income countries (LMICs), compulsory licensing gets most of the attention. Academic articles, non-governmental organization (NGO) campaigns, conferences and United Nations (UN)-endorsed technical symposia assert it is the best approach. Certain World Trade Organization (WTO) members are pushing for COVID-19 treatments and diagnostics to be included in the waiver of intellectual property rights under the Agreement on Trade-Related Aspects of IP Rights (TRIPs waiver), which revolves around compulsory licensing. Brazil has recently amended its IP laws to make compulsory licensing easier. Despite its high political profile, compulsory licensing has rarely been used (mainly by a handful African countries in the mid 2000s to address the HIV pandemic). Even then, IP-respecting treatments available from global procurement bodies have proven cheaper. No country has yet seen the need for a compulsory license for a COVID vaccine.

The past year has proven a difficult one for many. Russia’s invasion of Ukraine and the death of the UK’s longest reigning monarch are among the things for which the year will be remembered. But amid those dark days, one less known event shines like a tiny candle of hope: the end of the Whisky War. For 50 years, Canada and Denmark have been in dispute over the ownership of Hans Island: a battle in which the principal weapons have been strong drink and a sense of humor….. The standard essential patent (SEP) wars may feel like they have been going on for almost as long as the Whisky war. They are not as close to resolution, but 2022 has seen some progress.

While 2022 was somewhat less eventful than 2021 in terms of significant developments in fair/reasonable and non-discriminatory (FRAND/RAND) licensing occurring in the United States, the past year still did not disappoint and underscores the continued and growing interest from government in the standards related patents space. In 2022, the most progress was made on matters and issues we wrote about last year: i.e. government policy developments, Continental v. Avanci, the IEEE’s standards-related Patent Policy, and Ericsson v. Apple / Apple v. Ericsson  (see here and here)