Posts Tagged: "implementers"

On Wednesday, July 5, the United Kingdom Intellectual Property Office (UKIPO) released a summary of the responses it has received to its request for views on whether the country’s system for standard essential patents (SEP) is functioning properly. The goal of the request for comments and the subsequent report is to determine whether the UK government needs to make policy changes in this area. The Office received comments on a variety of topics related to SEPs, including the balance of the system, competition, transparency, patent litigation, and more. While both SEP holders and implementers reported problems in the system, the UKIPO found that there was little consensus among stakeholders as to the efficiency of the system and whether government intervention was needed.

In the United States, the issue of whether or not one has complied with a licensing-related commitment made to a standards setting organization is often treated as a matter of contract. As we have written about before (here and here), some implementers wish to interpret such commitments so as not to lose entitlement to fair, reasonable and non-discriminatory (FRAND) licenses despite not negotiating in good faith or, as we like to say, to have their FRAND cake and eat it too. In a recently prepared article, we explore how such an interpretation lines up with basic contract law principles, particularly having reference to the language of the European Telecommunications Standards Institute’s (ETSI) Intellectual Property Rights Information Statement and Licensing Declaration [“the ETSI Licensing Declaration”].

IPWatchdog held its Standards, Patents and Competition Masters ™ 2022 Program this week, November, 14-15, in Ashburn, Virginia, covering topics from how to define “fair reasonable and non-discriminatory” (FRAND) rates to litigating standard essential patents (SEPs) in South America and Europe. Almost all of the panels touched on how courts around the world are viewing the practices of implementers and patent holders in the SEP debate and how standoffs between implementers and patent owners in FRAND cases can be better resolved.

This is the fifth and final article in a series of articles analyzing statements made by various entities in the cellular industry regarding licensing Standard Essential Patents (SEPs) on a Fair, Reasonable and Non-Discriminatory (FRAND) basis. The fourth article focused on the obligations of SEP owners in the process of FRAND licensing. This article considers the obligations of implementers.

In a previous article, we laid out the basics of “patent pools”, which license patents that are declared essential for technology standards. A recent article published in the University of San Diego Law Review, titled Glory Days: Do the Anticompetitive Risks of Standards-Essential Patent Pools Outweigh Their Procompetitive Benefits? (Glory Days), criticized patent pools, alleging inefficiencies and anticompetitive risks of pools for standard essential patents (SEPs). While the authors make several rebuttable suggestions, the crux of the authors’ complaints about SEP patent pools is that SEP pools should bear all the burdens and expenses of verifying with a litigation-grade level of certainty that all patents in the pool are essential and valid before an implementer will even engage in a licensing discussion with the pool. This approach is not economically or practically realistic and is designed to justify hold out and provide cover for implementers to refuse to engage in licensing discussions.

Implementers of standard essential technology such as Long-Term Evolution (LTE) are constantly attempting to reduce costs for implementation. This behavior has led to certain inefficiencies in the marketplace, such as innovators not being compensated for their contributions to technological standards. The symbiotic relationship between innovators and implementers cannot continue where one side takes all the risk and the other side reaps all the reward. One construct put in place by innovators to extract compensation from the marketplace are patent pools that license patents that are declared essential for technology standards.

Two days ago, TechCrunch published an article touting an important victory by Cloudflare against an evil patent troll—Blackbird Technologies. In the article there is no mention of any inappropriate tactics used by Blackbird, and there is nothing to suggest that Cloudflare was not infringing the patents they were accused to have infringed. In fact, that article seems to practically admit that Cloudflare was infringing on the patents because the defense tactic used by Cloudflare was not to argue that they were not infringing, but instead to argue that the patent claims asserted were invalid. Indeed, on November 4, Cloudflare published a description of their strategy, which does not mention anything about demonstrating that they were not infringing the patents issued by the United States Patent and Trademark Office (USPTO). Instead, the strategy was to: (1) not settle; (2) make a public cry for help and seek the submission of prior art that might invalidate the patent claims they were facing; and (3) file ethics complaints against the attorneys representing Blackbird. In this case, the Blackbird patent claims were found invalid. Cheering for Cloudflare, who had no reason to know that at the time they recklessly infringed those claims, is beyond the pale and speaks volumes as to why innovators are leaving America and heading to Europe, China and elsewhere around the world.

What I tried to do for this presentation is figure out in about seven or eight minutes how I could convey to you what’s really going on in the United States. Because, frankly, it is a mess. The patent system in the United States, for those of you who are unfamiliar, is extraordinarily weakened from where it was 12 years ago. Getting an injunction in the United States is simply not possible anymore in litigation, except for in the most extreme situations. Over the last 12 years, the U.S. patent system largely has become a compulsory licensing system, and increasingly so. This obviously has ramifications for all patent owners. And during this time period, Congress also passed the America Invents Act, which created what’s known as the Patent Trial and Appeal Board (PTAB), which has made it more easy to invalidate patents in the United States. As it turns out, 90% of patents that actually get to a final decision at the PTAB are found to have a mistake.

Here we go again! Another day, another ridiculous attack on the U.S. patent system. This time the attack comes from the R Street Institute, who claims that patents are too strong and are inhibiting American companies from achieving success in the race for leadership in the 5G marketplace and continued leadership in Artificial Intelligence (AI). R Street will hold a panel discussion on their wildly outlandish theory, for which they can’t possibly have any factual support, on Tuesday, October 15, in the Capitol Visitor Center. In the announcement they claim that patents are inhibiting American companies because Chinese telecommunications company, Huawei, asserted more than 200 patents against Verizon Communications earlier this year. Therefore—and ipso facto—patents are too strong and American companies are suffering. There may be legitimate security concerns around Huawei’s infrastructure, but to suggest that the company’s patents are at the root of these threats is in a word—Absurd!

Standard Setting Organizations (SSOs) exist to identify and select the best innovations entire industries will build upon. Those contributing patented technologies are asked to provide fair, reasonable and non-discriminatory assurances. In essence, patent owners contributing technologies are committing to provide access to their Standard Essential Patents (SEPs). Whether one thinks it is good or bad, it is an inescapable truth that over the last decade the patent system in the United States has become weakened. The weakened patent system, and a patent grant the Supreme Court now considers to be a “government franchise,” has shifted leverage from patent owners to technology implementers. Amidst this uncertainty, in September IPWatchdog.com held a two-day symposium to discuss the state of standard essential patents in the United States. During this symposium, overwhelming consensus was achieved by the Patent Masters™ faculty and symposium attendees on a variety of principles and recommendations.

Standards-declared patents have been challenged in ex parte and post-grant review for years as part of enforcement efforts and other strategies, though the volume of patents declared essential and their largely unlitigated status has limited the appeal of post-grant challenges against them.  One such standard, High-Efficiency Video Coding (HEVC), promises to be the successor to the current H.264 standard used by most streaming visual media.  As all parties seek to clear risk and license as they implement, developing patent pools have been utilizing new strategies for licensing standard-declared patents. Recently, Unified Patents launched an HEVC zone aimed at encouraging adoption and shedding light on the standard-essential patent (SEP) landscape, and has conducted damages studies, landscape models, and analysis of the patent landscape around the HEVC standard. As part of those efforts, Unified has been challenging patents related to the standard. To date, only a handful of litigations have been filed related to HEVC patents. 

Speaking at IPWatchdog’s Patent Master’s Symposium today, Professor Kristen Osenga of The University of Richmond School of Law gave attendees a glimpse of her upcoming paper examining problems with the Institute of Electrical and Electronics Engineers – Standards Association’s (IEEE-SA) 2015 amendment to its intellectual property rights (IPR) policy. In reference to the title of the panel on which she was speaking, “Balance, Transparency & Reasonableness: Converging Approaches to SEP Licenses and FRAND Royalties,” Osenga explained that “balance transparency, and reasonableness simply were not part of the process” by which IEEE adopted the new policy. Osenga’s paper, which is due to be published on the Social Science Research Network (SSRN) by the end of 2019, will examine the actions leading up to the adoption of the 2015 amended policy, as well as the aftermath. Below is an abstract of the paper; many of the issues it will touch upon were also covered in Osenga’s 2018 paper, “Ignorance Over Innovation: Why Misunderstanding Standard Setting Organizations Will Hinder Technological Progress.”