Essential Patents Research Articles

European Commission’s Draft Regulation on SEPs: An IP Finance Assessment

Abstract The European Commission’s proposed Draft Regulation on Standard Essential Patents (SEPs) aims to overhaul the landscape of SEP licensing, addressing transparency deficits and fair, reasonable, and non-discriminatory (FRAND) terms amidst the burgeoning Internet of Things (IoT) market. Emphasizing concerns over hold-up risks, the Draft Regulation introduces mandatory essentiality checks and structured FRAND determinations to mitigate opportunistic behaviours among SEP holders. However, the practical implementation of these measures poses challenges, including the accuracy of essentiality assessments and the potential for increased transaction costs. Moreover, the Draft Regulation fails to consider the financial dimension of technological innovation, namely the potential of SEPs to function as valuable financial assets. By undermining the economic value of SEPs in terms of enforcement and monetisation, there is a risk of watering down their potential to serve as valuable financial collateral and therefore to help innovators access debt financing.

Reflection on the Anti-monopoly Regulation in Addressing the Abuse of Standard Essential Patents

Reflection on the Anti-monopoly Regulation in Addressing the Abuse of Standard Essential Patents

Royalty rate determination in standard essential patent litigation in China - from regional rate to global rate

Standard essential patent (SEP)-related disputes frequently involve parallel litigation cases in various jurisdictions in the world. With the rapid advancement of the telecommunication industry, Chinese companies are more and more embroiled in such global dispute, particularly with the issue of fair, reasonable, and non-discriminatory (FRAND) rate determination by the courts. Chinese courts are actively asserting jurisdiction over global FRAND disputes. It is important to note that within the framework of Chinese court practice, the court should further improve its trial procedures to ensure that parties have reasonable expectations regarding rate determination result on the merits and the procedural due process. This article reviews the judicial practice in China regarding the cases of FRAND rate dispute, summarizing the characteristics and recent development in the court practice. The article outlines how Chinese courts apply comparable license and top-down approach to calculate the FRAND rate. Notably, Chinese courts have taken a more flexible and pragmatic approach when addressing this issue, tailoring their decisions based on the circumstances in individual case. Additionally, it discusses the possibility of Article 24 in the Judicial Interpretation II as the legal basis for determining the global FRAND rate, as well as how the requirement for good-faith negotiation is interpreted by the court and whether the regional discount is reasonable in the context of the global FRAND rate. Consequently, the article argues that the courts should consider harmonizing its practice with prevailing norms in international jurisdictions. Several recommendations for optimizing the trial procedure also proposed, thereby ensuring scientific rigor and transparency of the rate calculation.

Navigating the new approach and evolving theory: a study of injunctive relief for SEPs in China

ABSTRACT Civil law indicates that an injunction shall be granted once property rights and personal rights are found to have been violated. In China, intellectual property judicial practice has adhered to this rule, resulting in an initial approach to patent injunctions known as ‘injunctive relief as a matter of course’. However, with a deeper understanding of corrective justice in law and economics theory, the automatic application of injunction for patents has been restricted. Conversely, in disputes over standard essential patents (SEPs), China has shifted its approach to injunctive relief from de facto exclusion to conditional application. Although the approaches to ordinary patents and SEPs have diverged, the underlying theoretical support, i.e. the balance of interest principle and the proportionality principle, remains consistent. An analysis reveals that the balance of interest principle provides guidance in the settlement of SEP disputes, while the proportionality principle serves as an effective tool for implementation.

A New Approach to FRAND Royalty Determination in IoT Value Chains: Insights from Connected Cars

The complexities surrounding connected cars, especially the integration of Telematics Control Units (TCUs), intensify uncertainties within their value chains. Disputes arise regarding rightful licensees and applicable rates. Standard Essential Patent (SEP) holders push for royalties from end-product manufacturers, pegged to final product prices. Conversely, manufacturers and suppliers argue for licensing directed at suppliers, restricting royalties to the TCU’s price. This discord unfolded in the legal tussle involving Nokia (SEP holder), Daimler (car manufacturer), and its supplier, litigated in German courts. This context underscores the significance behind the EU Commission’s proposal on SEP licensing issued in April 2023. Addressing escalating disputes and uncertainties surrounding Fair, Reasonable, and Non-Discriminatory (FRAND) royalty rates, the proposal aims to establish transparency and predictability in SEP licensing. In our study, we have devised a proposal aimed at reshaping this landscape. We challenge the conventional linkage of SEP royalties solely to end-product prices within intricate value chains. Instead, we advocate tying SEP royalties to the economic value attributed to the SEP, specifically focusing on connectivity within Internet of Things (IoT) applications. Our proposal suggests granting licences to the party responsible for designing the IoT component, irrespective of its role in the value chain. This functionalistic approach also proposes establishing the royalty base through technical, measurable factors like data consumption. This model offers objectivity in determining FRAND rates, potentially fostering constructive negotiations and offering environmental benefits.

Are non-practising entities opportunistic? Evidence from litigation of standard essential patents

Are non-practising entities opportunistic? Evidence from litigation of standard essential patents

Position Statement of the Max Planck Institute for Innovation and Competition of 6 February 2024 on the Commission’s Proposal for a Regulation of the European Parliament and of the Council on Standard Essential Patents

Position Statement of the Max Planck Institute for Innovation and Competition of 6 February 2024 on the Commission’s Proposal for a Regulation of the European Parliament and of the Council on Standard Essential Patents

The anti-suit injunctions in patent litigation in China: what role for judicial self-restraint?

Abstract Starting from 2020, the Chinese courts have actively participated in the jurisdictional battles for the standard essential patent (SEP) disputes, a pivotal development marked by the Supreme People’s Court’s inaugural SEP-related anti-suit injunction (ASI) in Huawei v Conversant. Subsequently, lower courts in China have emulated this approach by issuing ASIs targeting SEPs in the domain of information and communication technology. The present study highlights the features of the Chinese ‘act preservation measures’ by comparing them with the typical ASIs originally developed in the common law jurisdictions. This comparison reveals significant divergence in the factors considered by Chinese courts issuing ASIs, particularly in the context of cross-border patent litigation. The study aims at elucidating potential defenses that the respondents in SEP litigation may employ to contest the issuance of ASIs in Chinese judicial proceedings, with particular attention accorded to the principles of comity and public interest. The article concludes that the invocation of international comity and public interest in SEP litigation will encounter a formalistic assessment by the Chinese judiciary due to potential conflicts with statutory provisions and the lack of a more context-specific analysis. As a result, in the absence of supra-national mechanisms that would address the problem of parallel litigation, there appears to be little room for judicial self-restraint.

Standard Essential Patents Data Study of the Impact of Artificial Intelligence on Intelligent Connected Vehicle Technological Advancement

Standard Essential Patents Data Study of the Impact of Artificial Intelligence on Intelligent Connected Vehicle Technological Advancement

Study on the Injunction System of China's Standard Essential Patent Litigation

In the context of the digital age, disputes arising from standard-essential patent (SEP) licensing are becoming more frequent. At the same time, parallel litigations due to the SEP litigations are also increasing, and courts in various countries are now more inclined to adopt the injunction system to deal with this problem. In this paper, this article will review the origin, development, classification and role of injunction, analyse the implementation of the injunction of standard-essential patents in China, and point out the deficiencies of the current injunction system of standard-essential patents in China. At the same time, this article will put forward suggestions including improving the issuance requirements and procedural propriety of the injunction, as well as countermeasures in the face of foreign restrictions on China's jurisdiction, hoping that the injunction system will play a more effective and fair role in China's standard-essential patent litigation dispute resolution.

SEPs infringement and competition law defence in German case law

Within the debate on the role of competition law in standard essential patents (SEPs) litigation, German case law has taken centre stage because of the number of decisions handed down and its traditional patent-owner-friendly approach. As the framework handed down by the European Court of Justice (CJEU) in Huawei is usually interpreted as being opposed to the approach adopted by the German Federal Court in the Orange Book Standard decision, it is worth investigating how German courts have tackled the competition law defence in the post-Huawei scenario. The article maintains that the Federal Court’s rulings in Einwand have aligned German case law with the Huawei framework and that the attention devoted in German case law to the implementer’s obligations is consistent with the principles set out by the CJEU. Nonetheless, recent lower courts’ decisions confirm that the case-by-case detection of the licensee’s willingness is still a challenging issue.

35th Sharing Session – On SEPs – Standing Committee on the Law of Patents, WIPO, Geneva

Abstract WIPO’s Standing Committee on the Law of Patents (SCP) is in the early stages of placing standard essential patents (SEPs) on its agenda. Taken up at the initiative of the delegation of Canada, initial deliberations on the topic show cautious efforts to assess the current situation on very basic terms with the goal of achieving an understanding of the matter. On this basis, the SCP will evaluate whether WIPO should envisage taking action in the future and what form such action should take.

Flipping the paradigm of weak patent rights: from theories to evidence

Abstract In recent years, we have been confronted with complex challenges requiring coordinated global responses, such as the Covid-19 pandemic and climate change. At the same time, a negative sentiment towards IP rights (IPRs)—and patents in particular—has gained momentum. Sceptics claim that patents hinder the technology adoption needed to tackle these global crises, and proposals to weaken patent rights have intensified. A closer examination of these efforts reveals that they are generally expressed in two ways: on one side, anti-patent advocacy is backed up by popular, although empirically shaky, theories aimed at questioning patents’ effectiveness; on the other, the paradigm of weak patents is put forward through more incremental and—only at first glance—subtle policy changes that can potentially undermine the foundations of a balanced patent system. We address and review both efforts. Firstly, we examine the ‘first-mover advantage’ theory and we find it inadequate as a substitute for patent protection. Secondly, we focus on the cellular connectivity sector where efforts to weaken the patent system are intense. We discuss three common policy proposals: (i) royalty-free licensing for standard essential patents (SEPs), (ii) limiting injunctive relief under the proportionality principle and (iii) narrowing patent transfers and technology markets. We demonstrate that these seemingly minor changes can destabilize the patent system, and we explore the importance of a balanced licensing framework for the emergent Internet of Things (IoT). Ultimately, we highlight how a strong, efficient and balanced patent system remains crucial for fostering research and development (R&D), incentivizing innovators and effectively addressing the global challenges of our current times.

Research on the Application of Implied License of Standard Essential Patents in China

Research on the Application of Implied License of Standard Essential Patents in China

Position Statement of the Max Planck Institute for Innovation and Competition of 6 February 2024 on the Commission's Proposal for a Regulation on Standard Essential Patents

Position Statement of the Max Planck Institute for Innovation and Competition of 6 February 2024 on the Commission's Proposal for a Regulation on Standard Essential Patents

The EU Regulation on Standard Essential Patents: A Way to Fix What is Not Broken?

The EU Regulation on Standard Essential Patents: A Way to Fix What is Not Broken?

The Protection Dilemma and Solution of Standard Essential Patents in China

The Protection Dilemma and Solution of Standard Essential Patents in China

Essentiality Checks for Standard Essential Patents

Essentiality Checks for Standard Essential Patents

Deterring Over-Declaration of Essential Patents Through Random Assessments, Declaration Fees, and Royalty Sharing

Deterring Over-Declaration of Essential Patents Through Random Assessments, Declaration Fees, and Royalty Sharing

The dilemma and improvement of anti-suit injunctions in standard-essential patent litigation in China

Allocating jurisdiction and harmonizing anti-suit injunctions (ASIs) in concurrent litigation is a challenging task due to the complex and transnational nature of standard essential patent (SEP) licensing concerns. Notably, in the case of Huawei v. Conversant, the supreme people's court (SPC) of China demonstrated ingenuity by applying the act preservation system to issue the country's first ASI. This was done using a “five-factor framework” that considered the fairness and necessity of preservation measures, the parties’ interests, the public interest, and international comity. Chinese courts have subsequently utilized this framework in several cases to issue ASIs with more extensive and varied scopes. This shift indicates China's transition from a passive recipient to an active participant in ASI matters. Nevertheless, it is important to note that China lacks a legal foundation that explicitly permits the use of ASIs, necessitating further clarification regarding their circumstances of application.This article argues that directly applying the act preservation system to the ASI system lacks sufficient justification or may be constrained by the law, thereby granting judges greater discretion. By comparing Chinese ASI with traditional Western ASI, it becomes apparent that the impact of act preservation does not extend to international litigation and is more akin to an “injunction,” restricting the parties’ tort. Consequently, China should adopt a construction model of the act preservation system, incorporating the guiding principles of the ASI system, as well as the supporting appeal and retrial system, into its Civil Procedure Law. Additionally, providing judicial interpretation to elucidate the specific conditions for ASI application would be beneficial. These efforts have the potential to foster the development of a more predictable and stable international patent system. This, in turn, would benefit both patent owners and implementers, promote innovation, and facilitate global economic development.