Coping with the standards wars: the practice of the Chinese courts

Abstract

The incorporation of patented technology in standards gives rise to significant challenges for licensing activities. Standard-essential patents (SEPs) create a risk of patent hold-up since being essential to a standard means that it would be impossible for a downstream implementer to manufacture standard-compliant products without the implementation of the essential patents. The phenomenon of royalty staking and the threat of injunctive relief exacerbate the risk of patent hold-up,1 thus standard setting organizations (SSOs) generally require members to make an irrevocable undertaking to licensing their SEPs on fair, reasonable and non-discriminatory (FRAND) terms before incorporating their patented technology into a standard.2 However, the inherent ambiguity of the FRAND undertaking leaves large room for interpretation, and therefore, the national courts have developed distinct approaches based on contract law, patent law and competition law to deter the abusive enforcement of patent rights.3 Differing judicial practices, in particular, with the emergence of jurisdictions favorable to the granting of injunctive relief against patent infringement and therefore attractive to SEP owners, have created the terrain for standards wars. The global characteristics of SEPs have aggravated such wars, since disparities in the way national courts consider the same issue have generated the phenomenon of forum shopping.4