Posts Tagged: "FRAND"

When licensing standard essential patents (SEPs), the SEP licensor and the standard implementer (also known as the SEP licensee), go through two phases of negotiation. The first phase is the technical phase, followed by the second phase, the commercial discussion. In the technical phase, the SEP licensor must provide evidence that at least one patent of its portfolio is valid and standard essential. This is done by providing rigorously conducted claim charts that map claims against the standard’s sections, providing evidence that all claim elements read on the technical standard specification. Typically, only a few claim charts are needed in this first technical phase, since only one patent must be valid and essential to make the case that the standard implementing party is infringing. The second phase, the commercial discussion, is much more complex. Here, the SEP owner must provide evidence of the value of its SEP portfolio for a given standard supporting why the proposed royalty rate is FRAND (fair reasonable and non- discriminatory).

In the book / movie “The Shining”, the Overlook hotel is haunted by ghosts involved in past wrongs committed on the property, presumably to make the current inhabitants atone for such sins. Notwithstanding this transcendental precedent, Judge Rodney Gilstrap recently declined to extend such a notion to patents subject to Fair, Reasonable and Non-Discriminatory (FRAND) licensing related obligations.

The most significant development in IP in Europe in 2023—indeed arguably the most significant in nearly 30 years—was the launch of the Unitary Patent and Unified Patent Court on June 1. The full implications of this are explored here. Beyond the UP and UPC, however, there were a number of. important developments in Europe affecting all the main IP rights.

In Part I of our year end summary of key developments regarding patents subject to a commitment to license on a Fair Reasonable and Non-Discriminatory (FRAND) or Reasonable and Non-Discriminatory (RAND) basis, we looked at various developments involving patent pools and reviewed some interesting damages awards and interlocutory decisions. In this installment, we consider a pair of antitrust cases dismissed in 2023 and explore what may come next on the policy front.

With respect to patents subject to a commitment to license on a Fair Reasonable and Non-Discriminatory (FRAND) or Reasonable and Non-Discriminatory (RAND) basis, 2023 saw many interesting developments. This includes several new pool-based licensing programs being launched, and others gaining traction, various interlocutory decisions, the dismissal of some antitrust suits, and, as always, the specter of possible government intervention.

On  April 27, 2023, the European Commission published its proposal for how the licensing of standard essential patents (SEPs) should be governed in the EU. The draft regulation states that the initiative aims to incentivize participation by European firms in the standard development process and the broad implementation of such standardized technologies, particularly in IoT industries. The developments are of interest to any business that develops, implements or markets connective technologies.

IPWatchdog will host the 5th Annual Standards, Patents and Competition Masters™ program on November 14-15, 2023. The program will take place at IPWatchdog Studios in Ashburn, Virginia, approximately 10 minutes from Dulles International Airport. The purpose of this high-level, interactive, limited enrollment program is to discuss what is happening in the Standard Essential Patents (SEP) industry today, from FRAND, to bilateral licensing, patent pools, multi-jurisdiction enforcement strategies and more.

A UK judge in May determined in a non-public judgment that has been widely reported on that Apple should pay Optis a total of $56.43 million plus interest for a worldwide FRAND license to Optis’s portfolio of 4G standard essential patents (SEPs). In the most recent development in the overall case, Apple yesterday reportedly lost its appeal in one of the four technical trials pending between the parties, meaning it could still be liable for fees related to infringement in the range of $7 billion.  

The UK High Court today issued an Approved Judgment in Interdigital Technology Corporation & Ors v Lenovo Group Ltd [2023] EWHC 1578 (Pat). While Lenovo was declared the “overall winner,” InterDigital was awarded interest, increasing their previous award by $46.2 million. In March, the Hon. Mr Justice Mellor issued a judgment ordering Lenovo 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. It was the second full FRAND trial to be decided by the UK courts, following the landmark Unwired Planet case.

The European Commission (EC) is at it again, threatening to regulate standard essential patent (SEP) licensing relationships, despite a lack of evidence that such regulation is appropriate. The economically harmful nature of this regulatory framework (and its prior draft) has been highlighted by many expert commentators, including contributors to IPWatchdog (see here, here, and here) and Truth on the Market (see here and here). Fortunately, the EC’s proposed regulatory framework is still open for public comments. Mindful of that opportunity, on May 23, Mercatus Center scholars Christine McDaniel, Satya Marar, and I filed a public interest submission with the European Commission, focusing on three sets of problems posed by the framework. I summarize our submission below.

Previously, we wrote about how alleged concerns of “hold-up” and a lack of “transparency”, two non-legal terms without accepted definitions, are being used to advocate for special rules applicable to patents subject to declarations regarding Fair, Reasonable and Non-Discriminatory (FRAND) licensing. These vague concepts are specifically chosen to obfuscate the real issues impacting FRAND licensing and used in an effort to shift traditional burdens of proof, regulate behavior previously found not to violate antitrust / competition law, and rewrite the express language of the commitment made by patent owners to the European Telecommunications Standards Institute (ETSI). The European Commission (EC) is the latest bull to enter the FRAND licensing China shop.

The European Union is reportedly considering sweeping new regulations for the licensing and litigation of standard essential patents (SEPs), which make fair-minded observers wonder whether any sane adults are in charge at the European Commission (EC). The EU’s proposed new regulatory regime is scheduled to be released on April 26 by the Directorate for the Internal Market, Industry, Entrepreneurship and SMEs (DG GROW) of the European Commission (EC). And recently leaked drafts suggest that proposal will contain sweeping new regulations that will effectively put an end to the licensing and litigation of SEPs as it exists today.

In late March, news broke that the European Commission was drafting sweeping regulations on the licensing of standard essential patents (SEPs). Commentators predict the draft will be released in late April and, although this is an early draft that will likely evolve, below we offer the following initial observations. In its current form, the new regulatory framework would encourage increased transparency in SEP licensing through several new policies and procedures. In particular, the regulations would establish a “competence center” at the European Union Intellectual Property Office (EUIPO) to act as a sort of clearinghouse for SEP issues (both technical and economic). The EUIPO does not currently have patent expertise; EP patents are the purview of the European Patent Office (EPO), which is separate from the European Union and includes non-EU members.

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.