Standard Essential Patents: Statistics and Solutions to the Real Party in Interest Problem
As I noted in part one of my talk at the IPWatchdog Patent Masters Symposium, the validity statistics for SEPs do not look very good at first glance. Thus, according to a 2017 PricewaterhouseCoopers study, plaintiffs in U.S. courts (ignoring patent type) have on average a 33% chance of success—only a 27% chance in the case of telecommunications patents. This chance of success is probably overstated for Standard Essential Patents (SEPs), based on the easy availability of prior art. Indeed, according to RPX’s 2014 study, in the United States, SEPs are likely to be less than half as successful as non-SEPs.In my talk, I pointed to the high invalidation rates in Europe to buttress my point that, at first glance, SEPs seem particularly vulnerable to validity challenges. Thus, in Germany, a supposed nirvana for patent assertion, the authors of the study “Patent Paper Tigers” reviewed the case law of the German Federal Patent Court and the German Federal Court of Justice in nullity matters in the period from 2010 to 2013 and found that: The nullification rate of all Senates of the German Federal Patent Court is 79.08% in total; and the nullification rate at the German Federal Patent Court regarding Software and Telecom patents which are (currently) of particular relevance from an economic point of view is 88.11%. Returning to the point made in the first part of my talk, having noted that most SEP nullification comes from obviousness, and not novelty, there should be no public interest exception to my argument that: unprovoked—that is, without first having made a FRAND offer or counteroffer—serial nullification of SEPs is contrary to the duty to negotiate in good faith and should remove a party’s defense against an injunction to SEPs.
Now, there is a flaw in this theory, and that is that, in the past few years, third parties have emerged that will—for their members or other contracted entities—kill patents.