This Summer, the European Commission asked for comments on the proposed regulations that are wending their way through the European Parliament (see, e.g.), and I (here for mine) and some 150 other individual and entities submitted comments for consideration.
As I believe that my submission is still timely given that is seems to be open submission season for standards all around (see, this and this, for example) I present it below in full for the wider internet’s consideration.
I. Background:
On April 27, 2023, Director-General (DG) Grow in the European Commission (“EC”)[1] (via the European College of Commissioners) published a new proposed regulation[2] to allow mandatory government intervention to resolve private disputes in licensing patents that may be essential to certain technical industry standards (“standards essential patents” or “SEPs”). Public commentary on the proposed regulation has been allowed up to August 10, 2023. It is understood that then the DG will then summarize and present to the European Parliament and Council of 27 European States to consider as they evaluate, possibly modify, and vote whether to implement the regulation. While the extent of the proposed regulation and short timing for public comment might be surprising, the underhanded effort to use political games to undo years of consensus about SEPs holds no surprise for seasoned observers of the SEP scene.[3]
The following statement comprises the response of David L. Cohen, president of Kidon IP Corporation in his personal capacity. David L. Cohen has been an expert in the area of standards essential patents for over fifteen years. Mr. Cohen has been named world-leading IP strategist in the 2021, 2020, 2016, and 2016 editions of the IAM Strategy 300 and The World’s Leading IP Strategists. He writes the Kidon IP blog that provides deep analysis of intellectual property issues including standards essential patents and policies related to them.[4]
II. DG Proposal’s Unexpected Scope Raise Concerns and Suspicions
Prior to this proposal, the DG’s public and private consultations with stakeholders focused on a process for determining the likelihood that patents are essential to a standard given the tendency of participants in a standard development organization (SDO) to over identify (or “declare”) to the SDA many patents as potentially essential to the standard (“over-declaration”) out of concern that failing to identify a patent could later render that patent unenforceable under a waiver defense.[5] As a result, stakeholders expected the DG’s proposed regulation to relate to the over-declaration problem.
Unfortunately, the DG’s proposed regulation goes much further and requires owners of European patents that the owners believe may be essential to a standard to identify those patents in a specific EU database regardless of whether those patents already have been identified in the corresponding SDO’s patent database. Further, the DG’s proposed regulation has three processes for alternative dispute resolution (ADR) performed by a limited set of “neutrals” in a licensing dispute between an SEP owner and particular entities that sell standard-compliant products (“implementors”), where the ADR outcome will make non-binding proposals of (1) an aggregate royalty rate for all SEPs that may cover a particular standard; (2) a FRAND (fair, reasonable and non-discriminatory) royalty rate for the implementer to the SEPs in dispute, and (3) identify which specific patents registered as potential SEPs are essential.
Key Conclusions
The DG’s proposed regulations are unbalanced, containing complicated one size fits all mandatory provisions that will unfairly skew the ADR negotiation and its likelihood of success. Flexibility and tailoring of individual disputes has been the key to ADR success. Flexibility allows for discussion of business concerns that may drive settlement. Flexibility is not really present in this regulation. For example, the regulations require the patent owner to register its SEPs and to participate in one or more ADR processes before pursuing any court action, but places no similar requirements on implementers: e.g., they do not need to register when they are selling standard-compliant products and they can choose not to go through the ADR process (which would then relieve the patent owner from going through the ADR process). And there are concerns that the mandatory, untested DG proposal may have significant unintended consequences as it deviates from existing, more established, and voluntary ADR options. Examples of these unintended consequences include public disclosure of confidential business information of third-party licensees (not found in existing ADR processes).
Indeed, the scope of the proposed regulations necessarily makes one wonder why they are being proposed, why now, and what need is being met. As has been detailed extensively in the literature, the cumulative royalty of most devices that infringe SEPs is less than 5% of the average sales price.[6] Florian Mueller on his FOSS Patents blog has been relentless in detailing the various reasons why the proposed regulations are unnecessary, unneeded, and counterproductive.[7] Even a casual review of SEP litigation filed in Europe will show that SME’s are almost never targeted in EU courts by SEP owners. Moreover, almost the entirety of the automotive industry is licensed under the Avanci 4G pool[8] and the vast majority of all SEP litigation in Europe involve large, multinational corporations. So the classic question – is cui bono? Who benefits? Given the massive lobbying by Big Tech implementers and their astroturfers, it is reasonable to conclude that all this effort is really for their benefit.[9]
Why now? The simple answer is that Huawei v. ZTE and their progeny[10] has created a very stable and understandable series of rules and practices which created obligations for both SEP owners and implementers when SEP licensing disputes arise. Indeed, the enormous success of the Avanci patent pool in 4G and recent launch of their 5G pool,[11] (which pool smart observers believe will have even more SEP owner participation and thus a greater share of total licensable SEPs) than the 4G pool, elegantly proves that SEP licensing in Europe and the rest of the world is working quite well. This success is unfortunate for both the hordes of academics and service providers who cater to implementers and to the Big Tech implementers who try to cut costs and minimize competitors (and not pass on as savings to their customer).[12] It is no wonder that there has been a big push in support of the DG Proposal by Big Tech and their astroturfers. The proposals benefit Big Tech by causing delay and uncertainty in SEP licensing assertions.
As anyone who has spent even a small amount of time litigating patents will attest, speed and certainty of process (irrespective of outcome) favor patent owners, while uncertainty and delay favor accused infringers.
To understand better how the uncertainty in DG’s proposal benefits SEP implementers, it is important to understand that licensing SEPs to multinationals is very hard. To understand why this is so, some background in the practicalities of SEP licensing is necessary.
III.Background to SEP Licensing
There are three main types of stakeholders in SEP licensing: Standard Development Organizations (SDOs), SEP Licensors, and SEP Licensees (often called SEP implementers).
SDOs are voluntary organizations in which specialized industries contribute technology to be considered and adopted in technical standards that will permit products sold by different companies to be compatible or interchangeable with each other. SDOs often adopt policies on whether/how a participant identifies potential SEPs and their willingness to license their SEPs on the SDO’s “FRAND” terms. (FRAND means Fair Reasonable and Non-Discriminatory, and the acronym is defined with some differences in various SDOs). Participation in SDOs and any agreement to contributed patented innovations are voluntary, so SDOs develop policies to incentivize patent owners to agree that their patented innovations may be used in the standard—i.e., SDOs want their standards to have innovative technology worthy of widespread adoption. Without a promise to license essential patents, the SDO’s standards may not be implementable, so the compromise to adhere to non-exclusive licensing under FRAND terms rather than maintaining the right to exclusivity is the generally accepted compromise for the social good that has been commonly adopted. Some SDOs also offer services to certify whether a product is actually standard-compliant so that consumers may purchase the product with assurance it will be compatible with other products/systems that use the standard.
SEP Licensors own SEPs and often (but not always) have participated in an SDO’s development of a standard and indicated their willingness to license their SEPs on FRAND terms. Some SEP Licensors are companies that essentially serve as the primary R&D effort for an industry by investing significant resources to create the next generation of technology to propose a technical standard under the incentive that, if adopted, they will receive fair and reasonable licensing fees from those implementing the standard.
SEP Licensees sell products that implement a standard. Many have participated in the SDO’s development of a standard, but there also are many SEP Licensees who had no role in developing a standard. A particular SEP may have different value to different SEP Licensees or different products that practice a standard. For example, an automatic pet feeder may need to be WiFi compliant to send a short text notice over WiFi that it is empty but would not benefit from specific WiFi SEPs that optimize streaming video.
Some companies may both own SEPs that they license as well as sell standard-compliant products that need an SEP license. But the business model of such companies still trend toward being more of either SEP Licensor or SEP Licensee.
IV.Negotiating SEP Licenses
I personally have been heavily involved in the world of SEP licensing since 2007; first, when at Nokia (2007-2012) as part of the team managing some of their SEP key disputes, then as Chief Legal and IP Officer at Vringo[13] (2012-2017) where I developed and managed all Vringo’s SEP activities, and now as president of Kidon IP (2017- to date) where I advise clients on SEP and FRAND issues and provide public commentary through my blog. While there was a time that the fear of an injunction may have in fact motivated potential SEP licensees,[14] in my experience the possibility that a SEP owner may be able to enjoin an implementor with an SEP has rarely been an issue, let alone a significant issue in negotiating an SEP license. I believe that this is so because both SEP owners and licensees are very much aware that for the past decade, against a determined defendant, it is almost impossible for an SEP owner to acquire an enforceable injunction.
Please note that I do not include as part of “negotiations” the public posturing and chest thumping that often occurs in public SEP disputes prior to the parties meeting face-to-face (or virtually) to, in good faith, ascertain whether negotiations over a license is even feasible. These are not negotiations in any normal sense of the word, but either are preliminaries prior to any negotiation being able to occur or play acting for the benefit of third parties such as regulators. In fact, this play acting has been a major reason as to why SEP injunctions are so hard to obtain.
Because injunctions are so remote, once the parties to a SEP dispute have decided to meet and negotiate, in my experience, the discussion is either technical (e.g., the SEP owner’s assets are irrelevant or not as relevant as they think to the implementer) or financial (e.g., royalty rates, royalty bases, license scope, the impact a possible license on other licensees or potential licensors, etc.). I make these observations as someone who has overseen his employer receiving multiple SEP injunctions against an implementer in multiple jurisdictions around the world.[15]
There is always a possibility that a party’s chest thumping or play acting will continue in parallel to (a typically confidential) true negotiation process. This chest thumping is “red meat” to motivate the chest thumper’s agents (e.g., lawyers, PR folks) or public shareholders, or to gain an advantage with regulators or sway the courts. But there is never any mistake among the parties in the true negotiations as to the significance of what is being said in the chest thumping: the “fear of an injunction” is a way to get courts and regulators to give implementers an advantage in their litigation positions, not a real business fear.
To be clear, this is a major problem.
As noted above, licensing SEPs is very hard.[16] Attempting to license SEPs absent a genuine potential of an enforceable injunction is extremely hard. It is important to remember that while it is often assumed that a patent creates value for its owner by allowing its owner to exclusively make and use the patented invention, this assumption is demonstrably false. For example, there may be other patents owned by third parties that cover similar subject matter and can potentially block the patent owner from making, using or otherwise practicing the subject matter described in the patent (or, at least, make it prohibitively expensive to do so).
Instead, patents are simply a right to exclude others from making, using or otherwise practicing the subject matter described in the patent (e.g., a right to sue and receive an injunction and/or damages upon victory) but a patent does not confer a positive right to make, use or otherwise practice the invention described in the patent itself. Since the patent simply confers a right to exclude, the value of a patent to a potential licensee is tied to the fiscal cost to the licensee of that exclusion. Stated another way, a patent’s licensing value is virtually non-existent until such a time that the right to exclude would cause financial pain to the licensee. This is true even when licensing is conducted on the friendliest of terms. Simply, patent licenses from a licensee’s perspective are all about mitigating risk. Or put differently, a patent value is closely tied to its in terrorem value. If there is no risk to a licensee, the patent will be assigned no value by the licensee. When the complicated FRAND superstructure is added to any attempt to receive royalties on a patent, any risk to the licensee from the patent is mitigated even further. Indeed, as a result of the FRAND superstructure, even if a court might award large damages in an SEP dispute, an implementer has multiple ways to appeal or collaterally attack the award.
DG’s proposal seems to not only ignore prior EU case law and other case law, but years of hard won practical experience with SEP licensing from judges, lawyers and licensing executives.
V. DG’s Proposal Ignores Hard Won Precedent and Expert Opinion
The DG apparently did not consult the chief judge of the European Patent Court (EPC). The EPC is charged with providing a forum for litigation and ADR for all of the new “Uniform European Patents” in an attempt to streamline and efficiently resolve patent disputes. Moreover, existing EU case law (starting with Huawei v. ZTE) has developed a process for negotiating FRAND licenses on SEPs. Further, the EU is a party to the World Intellectual Property Organization (WIPO) that already has an established ADR program to resolve SEP licensing FRAND disputes, and many courts (e.g., in US, China and Canada) have agreed to refer disputes to WIPO for ADR.
While many newly available Alternative Dispute Resolution (ADR) programs continue to improve, at this time they provide a well-developed alternative for resolving Standards Essential Patent (“SEP”) disputes. The World Intellectual Property Organization (“WIPO”), to which the US and Europe are members, operates a thriving ADR practice[17], including one specifically developed for resolving patent and SEP disputes[18]. WIPO also has specific arrangements for cooperative relations with some member states, including the US, Canada, and China[19]. Other alternatives are available, such as the International Chamber of Commerce[20], The European Patent Court (“UPC”) [21](created as per Article 35[22] of the UPC Agreement, and the European Patent Office has guidelines on ADR also[23]. However, these other resources have as well-developed an ADR practice as the one provided by the WIPO organization with a focus on SEP dispute ADR. WIPO even includes a discount for SME (Small to Medium Sized Entities or legal organizations) participation[24].
The parties who must pay material sums of money for a license to infringe patents covering their products that implement a standard have a strong incentive of capable of lobbying governments to eliminate this particular cost of doing business. In fact, they have done so through their proxies[25]&[26] and directly. Their narratives have influenced government action in in the areas of Unfair Competition Law, Injunction Law, and government agency policy that affects Standards bodies’ patent licensing rules (SDO IPR policies) and the corresponding obligations that Standards bodies require of their members with respect to their SEP licensing obligations[27]&[28].
However, a newly conceived and built for purpose agency project and related law that will limit conciliation to a narrow set of preset issues runs the risk of resulting in more litigation and added burden and delay to conclude SEP licenses, when the exact opposite was intended[29].
Thus, the proposed regulation’s hastily concocted registration system duplicating Standards bodies’ databases that have already identified SEPs cannot be the most practical way to solve for the complained of lack of transparency. Such regulation and law, as set out by the EU SEP Regulation will forced the establishment of two broad classes of “worthy” participants in opposing positions to establish through a complex and time-consuming procedure during which no enforcement or demands for licensing of SEPs can take place)[30] It is only after completing this procedure that SEP holders can enforce their SEPs (i.e., the same rights they were previously granted by patent offices in Europe. This procedure inserts third parties chosen at least partly by an agency (EUIPO as a “competency center”) rather than by the parties to create a non-binding set of findings on royalty rates, aggregate royalty caps, and essentiality determinations. If not registered and subject to this procedure, SEP patents become temporarily or permanently unenforceable SEPs[31].
This imposition seems more likely to impede rather than achieve the stated objective of the European Commission in proposing this regulation[32] of SEP licensing for enactment by Parliament. Their objective was to generally increase licensing success for SEPs and improve Small and Medium Enterprise (“SME”) access to SEP licensing (text in footnote 9). To do this, the process was to add “transparency” to the licensing process. In the current process before these regulations get implemented, in the ordinary course, parties on both sides use confidentiality provisions to enable more openness in their SEP licensing negotiations and prevent release of commercially sensitive data about the legal arguments related to SEP value and enforceability as well as product coverage and features relevant to the negotiations.
In Sum, the DG’s Proposed Regulation is untested, diverges significantly from existing and developed ADR programs to resolve SEP licensing disputes and as proposed, extremely complex.
Unforeseen Consequences
There is a very foreseeable risk and likelihood of unintended consequences. For example, rather than providing transparency to limit uncertainty and disputes, the DG’s Proposed Regulation has mandatory registration of SEPs that likely will create more disputes by duplicating and compounding the existing problem of over-declaration of SEPs in the SDOs themselves.
DG’s Proposed Regulation is limited to European patents they determine to be SEPs even if the parties’ licensing dispute involves patents issued in countries outside Europe and patents that are not SEPs. But often licensing disputes involve patents issued in Europe, the U.S. and other countries and patents that may not be SEPs. The DG Proposed Regulation will thus leave unresolved significant global disputes on patent licensing between the parties. In contrast, WIPO ADR may consider an entire global portfolio of SEPs and non-SEPs to resolve the parties entire, worldwide dispute.
The DG’s Proposed Regulations require mandatory registration of SEPs, where an SEP cannot go through the ADR process or even be enforced in a court or licensed anywhere if it is not registered. This includes SEPs that are owned by inventors that had no association with the standard, undermining the voluntary nature of SDO participation.
Under the DG’s Proposed Regulations, the process for selecting neutrals is more constrained than that provided by WIPO’s ADR.
Under the DG’s Proposed Regulations, the ultimate determination in the ADR process is not binding or final—e.g., it is more like an advisory mediation. In contrast, WIPO ADR includes the option for binding arbitration whose decision may be enforced worldwide.
Under the DG’s Proposed Regulations, parties may be forced to disclose certain information that they may prefer to remain confidential between the parties. In contrast, a hallmark of WIPO ADR is the flexibility for the parties to voluntarily decide what information may be maintained as confidential between them.
Traditional ADR affects only the parties in that particular ADR process. The DG’s Proposed Regulations force SEP owners to register their SEPs before they can be enforced against anyone and involve determining an aggregate rate for all SEPs owned by anyone regardless of whether they are involved in a particular ADR dispute. In contrast, WIPO ADR follows the traditional ADR limitation to the particular parties involved in the dispute and can be tailored to the specific parties, circumstances and actual issues necessary to resolve the particular dispute at hand.
Any transparency that might arise under the three options for voluntary determinations (royalty rate, aggregate rate cap, essentiality) enabled by the regulation does not foreseeably promote less litigation, because each can be challenged and even together they do not resolve fundamental business issues that typically drive bilateral negotiations.
The regulation is intended to address only those SEPs issued by Member States or the UPC that are also registered with the EUIPO to become part of the “Conciliation” process this regulation defines and establishes, subject to European Legislative adoption[33]. It produces, at most, non-binding determinations of RAND pricing, Aggregate Royalty Caps, and whether claims are Standards Essential. The parties still need to negotiate to conclusion or litigate after this process is completed to reach agreement on license terms and conditions.
The WIPO process allows for a selection by the participants of arbitration, mediation, or expert determination, and the worldwide family of SEPs can be part of any solution – there is no limitation of coverage to the jurisdiction of a single region or nation, unless the parties so desire it. Rules for selecting and using any of these neutrals are set out in detail, including how to determine costs, fees, and payments due, confidentiality, etc. for experts[34]. Similarly complete rules are spelled out for mediation[35] and arbitration[36].
Consortium or private SEPs are not covered by the proposed EC regulation, so some sources of conflict over SEPs cannot be overseen by the EU SEP Regulation. The definition of Standards is limited to those produced by “SDOs” (Standards Development Organizations)[37], and those exclude specifications (the technical document that defines a Standard) that may be important to implementers beyond those that fall within the definition.
WIPO’s ADR regime does not have provisions to exclude any specifications, whether private or public from being used as part of the basis for resolution of FRAND rates or any other topic of interest to resolving the impasse between the parties. Scope determination is made and decided by the parties[38].
The Proposed Regulation May Be Illegal
Even more troubling that the various flaws with the proposed regulation is the fact several aspects appear to violate the obligations of the European Union (“EU”) and EU Member States under the World Trade Organization (“WTO”) Agreement on Trade-Related Aspects of Intellectual Property Rights (the “TRIPS Agreement”) as well as Fundamental Rights under the EU Charter.
The Proposed EU SEP Regs would limit the ability of certain patent right holders in the European Union to enforce their patent rights, to collect royalties, or to seek an injunction in the Unified Patent Court or a national court of an EU Member State with jurisdiction[39]. It is worth noting that there is nothing in the WIPO ADR rules that limits patent holder rights.
The EU regulation prohibits litigation or other enforcement action during the period in which SEPs are being registered and non-binding determinations are being made[40]. (In effect, this interferes with the period in which patent rights may be exercised, the period of exclusivity being an essential feature of patent rights). Failure to register a SEP can lead to inability to enforce the patent rights covered in claims of the unregistered SEP before they are registered, an abrogation of the fundamental right of Access to Justice under the European Charter of Fundamental Rights. Compare to (summarized) Articles 28.1, .2, and 27.1 of Part II, Section 5 of TRIPS[41]. However, a SEP holder may be able to get a “provisional injunction of a financial nature” during the period of FRAND determination[42], so there may be argument yet to be had.
Conclusion
DG’s proposed regulation is unnecessary and counterproductive and may well be illegal. The European Parliament would be well advised to jettison the entire project. There is nothing wrong with SEP licensing as it stands today, and the proposed regulation only serves to handicap major European technology companies to the benefit of a handful of American and Chinese technology giants.
[1] The proposal was authored by the Directorate-General for the EC Department of Internal Market, Industry, Entrepreneurship and SMEs [Small and Medium Enterprises].
[2] Information about the proposed regulation and English translation thereof are available from the EC website at this url: https://single-market-economy.ec.europa.eu/publications/com2023232-proposal-regulation-standard-essential-patents_en.
[3] See for example, David L. Cohen, With SEP Politics Eagle Eyes are Needed, or Senator Tillis’ Watchfulness Pays Off and Comments on the Draft Policy Statement Now Due February 4 (Kidon IP Blog Dec 13, 2021) and Regulatory Capture Crosses the Atlantic (Kidon IP Blog May 10, 2023).
[4] See https://www.kidonip.com.
[5] For a discussion of this issue see David L. Cohen, Disclosures and Enforceability of Standard-Essential Patents: An Overview, The Licensing Update 2021 (Feb 2021) (updated April 2022).
[6] See Alexander Galetovic, Stephen Haber, Lew Zaretzki, An estimate of the average cumulative royalty yield in the world mobile phone industry: Theory, measurement and results, Telecommunications Policy, Volume 42, Issue 3, April 2018, Pages 263-276; Keith Mallinson, Modest SEP Royalties On Smartphones Have Declined And Licensing Is Stabilizing (Analyst Angle) As originally published by http://RCRWireless.com , September 3, 2021
[7] See, e.g., FOSS Patents posts dated July 29, 2023 (available at http://www.fosspatents.com/2023/07/instead-of-messing-up-standard.html); July 3, 2023 (available at http://www.fosspatents.com/2023/07/dubious-anecdotal-evidence-from-smes.html); April 3, 2023 (available at http://www.fosspatents.com/2023/04/in-draft-eu-sep-regulation-appeals-are.html).
[8] See FOSS Patent post dated September 21, 2022 (available at http://www.fosspatents.com/2022/09/mission-accomplished-for-avanci.html.
[9] See, e.g., David L Cohen, Tech’s Frightful Five and Their Allies Come to Brussels (Kidon IP Blog February 25, 2019); On Deceptive Apps and Practices: Unmasking the ACT App(le) Association (Kidon IP Blog July 7, 2021); Apple’s Well-Funded Efficient Infringement Tilts the Competitive Landscape (Kidon IP Blog February 1, 2022); Regulatory Capture Crosses the Atlantic [UPDATED] (Kidon IP Blog August 1, 2023).
[10] The 4IP Council have a very handy summary of the many cases extrapolating the implications of Huawei v. ZTE on their website https://caselaw.4ipcouncil.com/.
[11] See, https://www.avanci.com/2020/07/29/avanci-launches-5g-licensing-platform-for-the-internet-of-things/
[12] See, e.g., David L. Cohen, Apple’s Well-Funded Efficient Infringement Tilts the Competitive Landscape (Kidon IP Blog Feb 1, 2022); Apple Throws an Ally under the Bus Again – The Case of the IEEE (Kidon IP Blog September 30, 2021).
[13] Vringo changed its name to FORM Holdings in 2016 (see https://investors.xpresspa.com/news-releases/news-release-details/vringo-announces-2016-q1-earnings-and-name-change-form-holdings) and later that year, FORM Holdings acquired XpressSpa and changed its name to XpressSpa Group. https://xpresspagroup.com/portfolio/xpresspa/. By 2018 Vringo had divested most of its non-wellness-related assets.
[14] I query whether SEP injunctions were, in fact, a concern a decade ago, given how few were actually enforced, see, e.g., Microsoft Corp. v. Motorola Inc., 696 F.3d 872 (9th Cir. 2012) (affirming anti-suit injunction prohibiting Motorola from enforcing an injunction against Microsoft pending resolution of parallel FRAND litigation). On the other hand, I have witnessed how the real possibility of an injunction from a parallel litigation over non-SEPs can force parties to settlement. See e.g., Nokia wins German patent injunction against all HTC Android devices including the One series, Foss Patents (December 30, 2013) available at http://www.fosspatents.com/2013/12/nokia-wins-german-patent-injunction.html; HTC wins delay of two Nokia antenna patent suits in Germany: one case stayed, one trial adjourned, Foss Patents (Feb 22, 2013) (final paragraph discusses how likely injunction against the Apple App store with a Nokia non-SEP was a “key” contribution to the 2011 Apple/Nokia settlement) available at http://www.fosspatents.com/2013/02/htc-wins-delay-of-two-nokia-antenna.html.
[15] Many of these injunctions, including in Brazil, Germany, Holland, India, and Romania are discussed in David L Cohen, A Short History of Vringo’s Battle with ZTE, Kidon IP Blog (Aug 2, 2018) available at https://www.kidonip.com/news/a-short-history-of-vringos-battle-with-zte/. One these SEP injunctions was a preliminary injunction upheld by Brazil’s Superior Court of Justice in ZTE do Comércio, Serviços e Participações Ltda v. Vringo Infrastructure Inc., available here https://drive.google.com/file/d/0B8xYsG-VkgXNNVRXR0RJZzFTdkU/view?resourcekey=0-V0Mb7oiWiaEhvO9Tdx2diA and translation available at https://drive.google.com/file/d/0B8xYsG-VkgXNZGJ3c0R5a2JSbW8/view?resourcekey=0-0fQ_uwjGQO4Ukwzal4Oe4Q.
[16] For a discussion of some of the challenges in SEP licensing, and how implementers are trying to make it even harder, see David L. Cohen, A Compulsory “License to All” World: A Counterfactual Exercise, The Licensing Journal 13, Vol.41 no.1 (Jan 2021).
[17] See https://www.wipo.int/amc/en/
[18] FRAND resolution ADR at WIPO: https://www.wipo.int/export/sites/www/amc/en/docs/wipofrandadrguidance.pdf
[19] https://www.wipo.int/amc/en/center/specific-sectors/ipoffices/
[20] Website: https://iccwbo.org
[21] https://www.unified-patent-court.org/en/court/patent-mediation-and-arbitration-centre
[22] https://commentedupc.com/agreement/article-35/
[23] https://e-courses.epo.org/wbts_int/litigation/ADR.pdf
[24] “A 25% reduction on the <WIPO ADR> Center’s administration fees applies if a party (or both parties) to the dispute is (are) named as applicant or inventor in a published PCT application, … or an SME (an entity with less than 250 employees).” https://www.wipo.int/amc/en/mediation/fees/
[26] Examples ACT and FSA representation explained with differences highlighted at bottom of article: http://www.fosspatents.com/2022/09/in-apple-ericsson-itc-discovery-dispute.html
[27] Joint agency policy statement on SEP FRAND commitments withdrawing previous statements and committing decisions to courts: https://www.uspto.gov/sites/default/files/documents/SEP2019-Withdrawal.pdf . Historical perspective article on same and application to eBay to injunctions (prior to joint agency statement): https://www.mondaq.com/unitedstates/patent/1148644/biden-administration-releases-draft-of-sep-policy-revamp
[28] SDO policy change history/IEEE: https://www.omm.com/resources/alerts-and-publications/alerts/doj-issues-letter-encouraging-ieee-to-change-policy-on-standard-essential-patents/ referencing the 2015 DOJ letter to IEEE, https://www.justice.gov/atr/page/file/1315291/download and which could point to the original DOJ BRL that suggested to IEEE that their change in policy in 201515 would be acceptable http://www.justice.gov/atr/public/guidelines/290994.pdf and see report of how this original BRL was received https://www.omm.com/resources/alerts-and-publications/alerts/doj-issues-letter-encouraging-ieee-to-change-policy-on-standard-essential-patents/#:~:text=The%20DOJ%20urged%20the%20IEEE,as%20a%20remedy%20for%20infringement. IEEE changed its patent policy significantly in 2015 and again in 2022 (effective January 2023).
[29] The document embodying the EU SEP Licensing Framework Regulation is titled: COM_2023_232_1_EN_ACT_part1_v13. As stated in the document, “The overall objectives of this proposed initiative are to: (i) ensure that end users, including small businesses and EU consumers benefit from products based on the latest standardised (sic) technologies; (ii) make the EU attractive for standards innovation; and (iii) encourage both SEP holders and implementers to innovate in the EU, make and sell products in the EU and be competitive in non-EU markets. The initiative aims to incentivise (sic) participation by European firms in the standard development process and the broad implementation of such standardised technologies, particularly in IoT industries. In this context, the initiative seeks to: (i) make available detailed information on SEPs and existing FRAND terms and conditions to facilitate licensing negotiations; (ii) raise awareness of SEP licensing in the value chain and (iii) provide for an alternative dispute resolution mechanism for setting FRAND terms and conditions.
The Commission’s 2017 Communication ‘Setting out the EU approach to Standard Essential Patents’4, called for a comprehensive and balanced approach to SEP licensing to incentivise the contribution of best technology to global standardisation efforts and foster efficient access to standardised technologies. The Commission acknowledged the need for increased transparency and addressed certain aspects of FRAND licensing and SEP enforcement. The Commission’s views were supported by Council conclusions 6681/185, with the Council stressing the importance of increased transparency.”
[30] Id, Article 24, page 41.
A SEP that is not registered within the time-limit set out in Article 20(3) may not be enforced in relation to the implementation of the standard for which a registration is required in a competent court of a Member State, from the time-limit set out in Article 20(3) until its registration in the register.
A SEP holder that has not registered its SEPs within the time-limit set out in Article 20(3) shall not be entitled to receive royalties or seek damages for infringement of such SEPs in relation to the implementation of the standard for which registration is required, from the time-limit set out in Article 20(3) until its registration in the register.
[31] Id.
[32] https://single-market-economy.ec.europa.eu/publications/com2023232-proposal-regulation-standard-essential-patents_en And see public press conference video of publication announcement: https://audiovisual.ec.europa.eu/en/video/I-240304
[33] EU SEP Regs, Explanatory section Legal, sect. 5 – “only holders of SEP in a member state” (p11), Gen Prvsns Art 2 (sect. 6 – SEP holder of EU member state SEP (p27), Article 11, section 1, Information ON FRAND determinations outside of the Competence Center to be disclosed, and definitions (5) of SEP holder, but see Whereas clauses 8, global aggregate possible? (p17)
[34] https://www.wipo.int/amc/en/expert-determination/rules/#16a
[35] https://www.wipo.int/amc/en/mediation/rules/
[36] https://www.wipo.int/amc/en/arbitration/rules/index.html
[37] See definition #5 as it applies to definitions #s 1, 2, 3 and 4, (pp 26, 27 of EU SEP Regs). ” ‘standard development organisation’ means any standardising body that is not a private industrial association developing proprietary technical specifications, that develop stechnical or quality requirements or recommendations for products, production processes, services or methods; “
[38] Example clauses show flexibility: https://www.wipo.int/amc/en/clauses/expedited_arbitration/ , https://www.wipo.int/amc/en/clauses/
[39] In Art. 24 of the EU SEP Regs, sections 1, 2 and 5 (page 41) sets limits to these rights:
A SEP that is not registered within the time-limit set out in Article 20(3) may not be enforced in relation to the implementation of the standard for which a registration is required in a competent court of a Member State, from the time-limit set out in Article 20(3) until its registration in the register.
A SEP holder that has not registered its SEPs within the time-limit set out in Article 20(3) shall not be entitled to receive royalties or seek damages for infringement of such SEPs in relation to the implementation of the standard for which registration is required, from the time-limit set out in Article 20(3) until its registration in the register. >>>
A competent court of a Member State requested to decide on any issue related to a SEP in force in one or more Member States, shall verify whether the SEP is registered as part of the decision on admissibility of the action.
[40] See p 36, EU SEP Reg,s Whereas clauses 32 and 33.
[41] Provisions of Part II, Section 5 of the TRIPS Agreement:
o Article 28.1, by removing (at least temporarily from statutorily time-limited right) the exclusive rights that must be accorded to patent owners (including SEP owners) on products and processes.
o Article 28.2, by limiting the right of patent owners (here, owners of SEPs) to “conclude licensing contracts,” including license agreements that require the payment of royalties.
o Article 27.1, which provides that patent rights shall be “enjoyable without discrimination as to . . . the field of technology.” As a de facto matter, the proposed EU SEP Regulation impacts only patents covering those fields of technology in which SEPs essential claims that are infringed to implement specific standards in such fields (e.g., electronics, mobile telecom). There is no other EU or EU Member State measure that impacts patents covering other technologies by restricting only those in particular fields, such as pharmaceutical-related patents, in this way.
[42] Art 34 pp46, 47, and Art 37 p47 relates to provisional injunctions, Art 14 describes initiation timeframe from notice to the Competence Center, after the standard is finalized and during time of Competence Center activity licensing cannot be negotiated.
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