Recent Edits to the IEEE IPR Policy are Steps in the Right Direction
After lots of coverage of the IEEE and a long pause, the humble blog author begs your apology for not providing the latest update – as he has been busy dealing with other pressing matters. That said, it is important to update my readers – especially after all the controversy – on the latest edits to the IEEE IPR policy which took effect on January 1, 2023. There were two groups of edits to IEEE SA’s by-laws. The first was to the definition of “Reasonable Rate” (in Section 6.1) and the second concerned the policy related to prohibitive orders, e.g., injunctions (in Section 6.2). I will briefly illustrate those edits in turn. (The actual edits are provided at the end of this post).
The edits to “reasonable rates” remove the 2015 requirement that the smallest saleable patent practicing unit (SSPPU) and apportionment be used in determining a RAND rate. Thus, removing a major argument favored by implementers (see, e.g.) and leaves royalty base analysis open. Additionally, the definition allows RAND analysis to include examining comparable licenses obtained under the “explicit or implicit threat of a prohibitive order” (i.e., nearly all SEP licenses in the patent 10 years). These changes bring the IEEE back in light with industry practice and, importantly, with the approach taken in the 2020 Department of Justice Business Review Letter to Avanci.
The policy edits now clarify that, also under the IEEE policy, that is now aligned with the rest of the world, SEP holders are free to seek a prohibitive order against a party that is not negotiating in good faith. Additionally, an implementer “seeking further information” and either an implementer or SEP owner that seeks to litigate or arbitrate over the negotiations is not to be seen, in and of itself, as a basis for one party or the other as negotiating bad faith. Similarly, this brings the policy more in line with other approaches (e.g., ETSI) and away from the “compulsory license to all” approach favored by major implementers that would prohibit injunctions, among other SEP-devaluing ideas. Such a move was likely prompted by the many recent defeats of the license to all position (see,.e.g.).
The edits to the letters of assurance also allows for flexibility. Thus, a declarant can offer a license to any patents it owns terms as defined by the revised policy, or the declarant can refuse to license its SEPs or license its SEPs as defined by the new policy (i.e., a negative LOA). If the declarant choses the latter approach, then it must list all known patents and claims to which the approach will apply. This requirement seemingly addresses recent attempts by the IEEE to conceal its Negative LOA problem and avoid de-accreditation (something I discussed previously here). Note the prior LOA form will no longer be accepted. The FAQ changes are primarily deletions that refer to the 2015 policy. As revised the FAQ track the revised policy, merely noting that the reasonable royalty methods are optional.
In sum, the IEEE appears to be heading in the right direction – or perhaps read the writing on the figurative political wall. There is no doubt that the loss of ANSI accreditation and its IPR policy being out of steps with it major competitor impacted their thinking (see, e.g., p35, p40, and this). Hopefully, the IEEE is back on track to being an import part of the future of both standardization and connectivity.
APPENDIX – EDITS TO THE IEEE SA IPR POLICY
“Reasonable Rate” shall mean appropriate compensation to the patent holder for the practice of an Essential Patent Claim excluding the value, if any, resulting from the inclusion of that Essential Patent Claim’s technology in the IEEE Standard. In addition, determination of such Reasonable Rates should include, but need not be limited to, the consideration of:
Some optional considerations for determination of Reasonable Rates are:
- The value that the functionality of the claimed invention or inventive feature within the Essential Patent Claim contributes to the value of the relevant functionality of the smallest saleable Compliant Implementation that practices the Essential Patent Claim or to another appropriate value level of the Compliant Implementation.
- The value that the Essential Patent Claim contributes to the smallest saleable Compliant Implementation or to another appropriate value level of the Compliant Implementation that practices that Essential Patent Cclaim, in light of the value contributed by all Essential Patent Claims for the same IEEE Standard practiced in that Compliant
- Existing licenses covering use of the Essential Patent Claim, where such licenses were not obtained under the explicit or implicit threat of a Prohibitive Order, and where the circumstances and resulting licenses are otherwise sufficiently comparable to the circumstances of the contemplated license.
Edits to Section 6.2 (policy)
The Submitter and the Applicant should engage in good faith negotiations (if sought by either party) without unreasonable delay or may litigate or, with the parties’ mutual agreement, arbitrate: over patent validity, enforceability, essentiality, or infringement; Reasonable Rates or other reasonable licensing terms and conditions; compensation for unpaid past royalties or a future royalty rate; any defenses or counterclaims; or any other related issues. The Submitter of an Accepted LOA who has committed to make available a license for one or more Essential Patent Claims agrees that it shall neither seek nor seek to enforce a Prohibitive Order based on such Essential Patent Claim(s) in a jurisdiction unless the against an implementer who is willing to negotiate in good faith for a license. Seeking further information upon initial notice of infringement or choosing to litigate or arbitrate over any of the foregoing issues, however, does not by itself mean that a party so choosing is unwilling to negotiate in good faith. fails to participate in, or to comply with the outcome of, an adjudication, including an affirming first-level appellate review, if sought by any party within applicable deadlines, in that jurisdiction by one or more courts that have the authority to: determine Reasonable Rates and other reasonable terms and conditions; adjudicate patent validity, enforceability, essentiality, and infringement; award monetary damages; and resolve any defenses and counterclaims. In jurisdictions where the failure to request a Prohibitive Order in a pleading waives the right to seek a Prohibitive Order at a later time, a Submitter may conditionally plead the right to seek a Prohibitive Order to preserve its right to do so later, if and when this policy’s conditions for seeking, or seeking to enforce, a Prohibitive Order are met.