DISCLOSURES OF ESSENTIAL PATENTS TO SDOs: THE CASE OF ETSI
SDO IPRs policies can vary according to their goals, their membership, and the needs of the industry in which they commercialize their standards. Hence, there is no across-the-board harmonized approach regarding disclosures of essential patents. Nevertheless, some patterns can be identified: (a) for SDOs that require disclosures of essential patents individually, such as ETSI, those SDOs allow members to be over-inclusive by identifying individual patents and patent applications that may be potentially essential, (b) essentiality is defined as technical essentiality, and (c) there is a temporal requirement for the disclosures.
The IPRs Policy of the European Telecommunications Standards Institute (ETSI) offers a good illustration of regulating disclosures of essential patents. ETSI is central to the collaborative standardization ecosystem for several reasons. First, ETSI is an officially recognized European Standardization Organization (ESO) which under EU Regulation 1025/2012 is responsible for issuing European Standards (ESs) and Harmonized European Standards.9 Thus, products implementing ETSI standards can obtain a “certificate of conformity” with the so-called essential requirements (the “CE” mark on many consumer products) and can circulate freely within the EU internal market. Second, ETSI developed some of the most important and commercially successful standards in the domain of information and communications technologies (ICT), such as the 2nd generation GSM wireless standard (2G-GSM). Finally, ETSI is one of the founding and most active members of the 3rd Generation Partnership Project (3GPP), a joint venture of seven SDOs developing the ubiquitous 3G, 4G, and currently 5G standards.10 Because these wireless telecommunications standards are the most patent-intensive in the ICT sector, and most licensing declarations for 3GPP standards are submitted to ETSI, the ETSI IPR policy is, in fact, the governing framework for disclosures of essential patents and licensing declarations worldwide.11
As a preliminary remark, the ETSI IPRs policy is to be understood and interpreted within the overall aims of the IPRs policy, which is, according to Article 3, to create standards and technical specifications incorporating the best solutions available to meet a particular technical need.12 Hence, the aim of the ETSI IPRs policy is not to create royalty-free standards, nor to incorporate the least costly, from an IP licensing perspective, technical solutions. In fact, ETSI members are actively discouraged to take licensing considerations into account during standard development work, or even discuss those issues in ETSI technical group meetings, as is made clear in the ETSI IPRs Guide.13 Moreover, the disclosure obligation under Article 4 in the ETSI IPRs policy is to be viewed in close connection with the obligation on the part of SEP owners to submit an IPR licensing declaration under Article 6bis and the corresponding Appendix.
In ETSI IPRs policy, essentiality is defined, under Article 15.6, as follows: “ESSENTIAL as applied to IPR means that it is not possible on technical (but not commercial) grounds… to make, sell, lease, otherwise dispose of, repair, use or operate EQUIPMENT or METHODS which comply with a STANDARD without infringing that IPR.” Although technical essentiality is preferred by most SDOs in their own definitions, ETSI goes beyond that, in explicitly excluding commercial considerations to be factored in determinations of essentiality. Moreover, one further consequence of ETSI’s essentiality definition is that unlike patents, patent applications cannot be “Essential IPRs,” because as a general rule, patent applications cannot be “infringed.” This has significance when considering ETSI’s disclosure obligation on its members, as discussed further below.
The disclosure obligation is laid down in Article 4.1 ETSI IPR policy which reads:
Subject to Clause 4.2 below, each MEMBER shall use its reasonable endeavours, in particular during the development of a STANDARD or TECHNICAL SPECIFICATION where it participates, to inform ETSI of ESSENTIAL IPRs in a timely fashion. In particular, a MEMBER submitting a technical proposal for a STANDARD or TECHNICAL SPECIFICATION shall, on a bona fide basis, draw the attention of ETSI to any of that MEMBER’s IPR which might be ESSENTIAL if that proposal is adopted. (Emphasis added)
Moreover, the ETSI IPR policy makes clear that members are not obliged to conduct IPRs searches (Article 4.2). Thus, the disclosure obligation under the ETSI IPRs policy entails that the subject of a disclosure to ETSI is “ESSENTIAL IPRs” and “IPR which might be ESSENTIAL if [a] proposal is adopted.” In both instances, the reference is to patents, not patent applications, since patent applications are not “ESSENTIAL IPRs” (i.e., infringeable) and cannot “be ESSENTIAL” (i.e., infringeable). Still, members are expected to inform ETSI of essential IPRs “in a timely fashion,” particularly during standards development.
Depending on the meaning of “timely,” this could require the disclosure of an essential patent, even before its grant. However, the meaning and scope of what is “timely” would be governed by the laws of contractual interpretation designated in Section 12 of the ETSI IPR Policy (i.e., those of France). Under French rules of contractual interpretation, in the absence of clear and unambiguous contractual terms, the term at issue is to be interpreted according to the common intention of the parties. If that cannot be discerned, the term would be interpreted in the sense which a reasonable person placed in the same situation would give it. With regard to unclear or ambiguous terms in the ETSI IPR Policy, the common intent of the parties, and the reasonableness of an interpretation, could be discerned from the policy objectives of the Policy as well as industry practice.
In this regard, the overarching purpose of the ETSI IPR Policy is to assure users that essential patents will be accessible on FRAND terms. Historically, industry has overwhelmingly provided, and ETSI has accepted, disclosures months or years after the development of a standard, as long as a FRAND commitment is forthcoming. If no such FRAND commitment will be forthcoming, however, it would seem reasonable in light of ETSI’s Policy objectives to expect a member to notify ETSI of such a negative declaration while ETSI and its members still have an opportunity to circumvent the IPR, regardless whether the IPR is still a patent application at the time.
With regard to the mechanism for disclosing “ESSENTIAL IPRs,” ETSI allows members to be over-inclusive. In accordance with Article 6bis and the corresponding IPR Licensing Declaration forms at the Appendix, ETSI allows its members to identify, according to their “present belief,” IPRs that “may be or may become ESSENTIAL.” In this manner, ETSI allows members to identify relevant and potentially essential patents and patent applications, without requiring an identification of what patents actually are essential. Members are then required to indicate whether they are prepared to grant licenses on FRAND terms under those disclosed patents and patent applications, but only “[t]o the extent that the IPR(s) disclosed in the attached IPR Information Statement Annex are or become and remain ESSENTIAL.” By design, IPR Licensing Declaration forms therefore allow for over-inclusiveness beyond what is actually essential.
Thus, identifications of potentially essential IPRs to ETSI are not meant to include only actually essential IPRs, nor to be used as input to academic and policy research, or to inform licensing negotiations between private parties.14 This is a caveat worth keeping in mind in the context of debates on issues of transparency in disclosures of potentially essential IPRs.