Fair, Reasonable And Non-discriminatory Research Articles

Determination of FRAND royalty rates: an examination of prominent SEP cases

Abstract Technology standards are critical in creating a common interface, allowing interoperability between individual components, devices and networks. Technology standards often incorporate many essential patented inventions, which are referred to as standard-essential patents (SEPs). Owners of declared SEPs provide commitments to standard setting organizations (SSOs) that they will license their SEPs on fair, reasonable and non-discriminatory (FRAND) terms to companies that practice the standards. However, it is sometimes disputed whether or not these royalty rates are FRAND; in these cases, the burden of determining a FRAND royalty falls to courts. It is important for parties involved in SEP litigation to be knowledgeable of the appropriate economic tools and models to address the various issues arising in these unique and challenging patent disputes. This article discusses how various approaches to patent valuation have been applied in prominent SEP cases over the last decade.

PELUANG DAN TANTANGAN PELAKSANAAN PATEN ESENSIAL STANDARD (STANDARD ESSENTIAL PATENT/SEP) DI INDONESIA

Standards are technical requirements or something that is standardized, including procedures and methods that are formulated based on the consensus of all parties, the government, and international decisions related to safety, security, health, environmental conditions, advancements in science and technology, experience, as well as current and future developments to achieve maximum benefits. In the current development of technology and global economic competition, patented technologies often serve as standards (Standard Essential Patent, or SEP). The implementation of SEP itself is possible as long as the patent holder agrees and adheres to the principles of fair, reasonable, and non-discriminatory terms, also known as FRAND (Fair, Reasonable, and Non-Discriminatory) principles. When the FRAND principles are not followed, for example, when the patent holder is unwilling to provide a license or sets the licensing fee too high, issues may arise. This paper discusses examples of SEP implementation in Indonesia through two case studies, aiming to provide insights for policymakers, particularly the Directorate General of Intellectual Property and the National Standardization Agency, to take appropriate steps in maintaining a balance between the rights and obligations of patent holders and the public

Standard Essential Patents: A Comparative Study of India, UK, and USA

Standard essential patents (SEPs) are patents that are essential to a particular industry standard and are necessary for competitors to create compatible products. SEPs are particularly important in industries such as telecommunications and electronics, where interoperability is critical. This research project aims to provide a comparative analysis of SEPs in India, the UK, and the USA. The dissertation will examine the legal, economic, and policy frameworks that shape the functioning of the SEP ecosystem in each jurisdiction and will identify similarities and differences between the three countries. The research will involve a combination of data collection methods, including legal and policy analysis, economic analysis, and qualitative interviews with industry experts and policymakers. The dissertation aims to contribute to a better understanding of the challenges and opportunities posed by SEPs and to inform policy decisions that can support innovation and competition in these industries. The study will examine the legal, economic, and policy frameworks that shape the functioning of the SEP ecosystem in each jurisdiction. The research questions will focus on identifying the similarities and differences in the use and regulation of SEPs, as well as the challenges and opportunities posed by these patents in each jurisdiction. The data collection methods will include legal analysis, economic analysis, and policy analysis. The data analysis will employ a combination of qualitative and quantitative methods. The findings of this study will contribute to a better understanding of the role of SEPs in promoting innovation and competition in different industries and jurisdictions. Standard Essential Patents (SEPs) have become an essential component of modern communication technologies. SEPs owners have to license their patents on Fair, Reasonable and Non-Discriminatory (FRAND) terms to implementers of the standard. However, disputes often arise between SEP owners and implementers over the licensing terms. This paper provides an overview of the legal and policy frameworks for SEPs in India, the UK and the USA, along with a comparative analysis of these frameworks. The paper also discusses emerging issues in SEPs and their international aspects. Additionally, the paper examines case laws related to SEPs in each of the jurisdictions. The key findings of this paper highlight that while the legal and policy frameworks for SEPs vary across jurisdictions, they all aim to strike a balance between the interests of SEP owners and implementers. Dispute resolution mechanisms such as mediation, arbitration, and litigation are available in each jurisdiction to resolve disputes related to SEPs. However, the effectiveness of these mechanisms depends on the specific circumstances of each dispute. The paper also suggests that there is a need for further research on emerging issues related to SEPs, such as the impact of SEPs on competition and innovation. Finally, the paper provides recommendations for policymakers and practitioners on how to improve the legal and policy frameworks for SEPs. Overall, this paper provides a comprehensive overview of SEPs and their legal and policy frameworks in three important jurisdictions. It also highlights the importance of effective dispute resolution mechanisms and the need for further research on emerging issues related to SEPs.

A conceptual model for FRAND royalty setting

Setting an industry-wide standard is crucial for the interoperability, compatibility, and efficiency of information and communication technologies. To minimize holdup problems, patent holders are often required to ex-ante commit to licensing their technologies under Fair, Reasonable, and Non-Discriminatory (FRAND) terms. Yet, there is little consensus, in both courtrooms and industries, on the exact meaning of FRAND. We propose a new framework that enables a precise distinction: fairness in the distribution of royalty payments among patent users, and reasonableness in setting the size of the compensation to the patent holder, where both the size and the distribution of payments are determined in a non-discriminatory way that ensures similar firms are treated similarly.

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

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

FRAND Access to Data: Perspectives from the FRAND Licensing of Standard-Essential Patents for the Data Act Proposal and the Digital Markets Act

This article evaluates how the principles developed for the fair, reasonable and non-discriminatory (FRAND) licensing of standard-essential patents could be applied to FRAND data access as envisaged under the Digital Markets Act and the Data Act and proposes a negotiation scheme to specify the FRAND obligations. Firstly, this article describes the access rights under the Data Act and identifies its four layers to accelerate data sharing (Section 2). Secondly, the role of FRAND data sharing in the EU Data Package is described, and the specifics of FRAND in the context of the Data Act and the Digital Markets Act are developed (Section 3). Based thereon, the differences and commonalities of data sharing as envisaged in the Acts with respect to the FRAND licensing of standard-essential patents are described, and a negotiation scheme for FRAND terms under the current Data Act Proposal is developed under adaptation of the principles from Huawei/ZTE (Section 4).

Challenges to the disclosure and licensing of standard essential patents in the context of evolving trends in ICT technologies

Describing the importance of Standard Essential Patents in fostering innovation and development in Information and Communication Technologies, the article traces the implications and interpretations of the Fair, Reasonable and Non-discriminatory (FRAND) Agreement and emerging issues in the context of Standard Essential Patents in the United States, Europe and China through a brief analysis of recent judicial pronouncements—Microsoft v. Motorola, Apple v. Motorola and others—and systems.

A valuation perspective on the FRAND injunction issued in Unwired Planet vs Huawei

On August 26, 2020 the UK Supreme issued a landmark decision in the matter of Unwired Planet vs Huawei. The decision revolutionised the debate on standard essential patents as the Court held that a Global FRAND (fair, reasonable and non-discriminatory) rate can be sanctioned with an injunction in/the U.K. Against this background the article assesses whether the issuance of an injunction in that case was commensurate with the FRAND licensing rate set by the Court itself. In doing so, the article builds upon the valuation approaches contained in the judgment itself. It does so, by comparing the value of the injunction to the implied FRAND value of the SEPs that caused the British injunction. Comparing a slightly adjusted FRAND valuation approach accepted by the Court to the direct value of the injunction, shows that the direct value of the injunction outweighs the estimated value of the SEPs in question. Whether this is commensurate with the FRAND commitment should be further examined.

Disclosure rules and declared essential patents

Many standard setting organizations (SSOs) require participants to disclose patents that might be infringed by implementing a proposed standard, and commit to license their “essential” patents on terms that are fair, reasonable and non-discriminatory (FRAND). Data from SSO intellectual property disclosures have been used in academic studies to provide a window into the standard setting process, and in legal proceedings to assess the relative contribution of different parties to a standard. We describe the disclosure process, discuss the link between SSO rules and patent-holder incentives, and analyze disclosure practices using a novel dataset constructed from the disclosure archives of thirteen major SSOs. Our empirical results suggest that subtle differences in SSO policies influence which patents are disclosed, the terms of licensing commitments, and ultimately long-run citation and litigation rates for the underlying patents. Thus, while policy debates sometimes characterize SSOs as a relatively homogeneous set of institutions, our results point in the opposite direction – towards the importance of recognizing heterogeneity in SSO policies and practices.

ARE FAIR, REASONABLE AND NONDISCRIMINATORY (FRAND) COMMITMENTS APPLICABLE OUTSIDE THE STANDARD ESSENTIAL PATENTS (SEPS) DOMAIN? — AN ECONOMIC PERSPECTIVE

To date, the Competition and Consumer Commission of Singapore (CCCS) has dealt with two cases that involved fair, reasonable and nondiscriminatory (FRAND) commitments in order to resolve the competition concerns identified. While the application of FRAND commitments outside the standard essential patents (SEPs) domain remains limited globally, we show that the circumstances that give rise to the economic justification for the use of FRAND commitments in SEP cases are not unique. Instead, such circumstances are also present in some non-SEP cases such as those involving vertical effects in mergers and acquisitions, or abuse of dominance conduct such as refusal to supply. Therefore, FRAND commitments remain a viable behavioral remedy in addressing competition concerns.

FRAND for Dominant Digital Platforms: Enhancing the Way Essential Inputs are Accessed, Transferred and Shared

Abstract Dominant digital platforms (DDPs) are dynamic and can control the market with the aid of features such as network externalities, economies of scale and scope and the accumulation of inputs including data and algorithms. In this competitive imbalance, new companies face a greater challenge to enter the market, which in turn reinforces concentration. Different policy proposals have been discussed to address these issues and to enhance access to as well as transfer and sharing of essential inputs between DDPs and other market players. One proposal has been to apply the fair, reasonable and non-discriminatory (FRAND) model, traditionally used in the information and communication technology (ICT) sector in the context of DDPs. Considering the evolving nature of digital markets and the peculiarities of DDPs, the paper analyses the role of FRAND in providing access to crucial data and other essential inputs among digital market players.

Development of 5G – Identifying organizations active in publishing, patenting, and standardization

Publications, patents, standard-essential patents (SEPs), and standard contributions are important indicators for the drivers in the technology development of 5G. However, current 5G technology reports predominately draw on patent data to identify technology developing organizations, ignoring the importance of publications and standard contributions. Therefore, we identify 5G technology developing organizations in publishing, patenting, and standardization and compile a unique dataset to identify leading organizations per category and to identify possible correlations and interdependencies. We find that for companies offering fair, reasonable, and non-discriminatory (FRAND) licensing conditions related to standard-essential patents, their publication, patent, and standard contribution counts highly correlate. Our findings suggest that 5G technology developing companies holding a high number of patents declared to 5G manage the three contributing factors of publishing, patenting, and standardization to optimize their impact on 5G technology development. Furthermore, we show that patenting and standardization are dominated by a few large companies from the United States, China, Korea, Japan, Finland, and Sweden, while publishing is much more globally distributed and not as concentrated. Our research suggests that scientific findings can be more easily published via scientific journals and that barriers might hinder filing patents and participating in standardization committees focusing on 5G, which only large companies overcome.

SEPs licensing across the supply chain: an antitrust perspective

The rise of the Internet of Things (IoT) and the development of 5G are set to add a new layer of complexity to the current practice of standard essential patents (SEPs) licensing. While, until recently, the debate has centred on the nature of fair, reasonable and non-discriminatory (FRAND) commitments and the mechanisms to avoid hold-up and reverse hold-up problems between licensors and licensees, a new hotly-debated issue has now emerged. At its core is the question of whether SEP holders should be required to grant a FRAND licence to any implementer seeking a licence, including component makers (the so-called ‘licence-to-all’ approach), or if they should be allowed freely to target the supply-chain level at which the licence is to be granted (the so-called ‘access-for-all’ approach). After providing an up-to-date overview of the current legal and economic debate, this article focuses on the most recent antitrust case law dealing with the matter on both sides of the Atlantic and argues that no sound economic and legal bases which favour licence-to-all solutions can be identified. * The authors would like to thank the anonymous referees, Luigi Federico Signorini and the participants in the 2021 Annual Conference of European Policy for Intellectual Property (EPIP), in the 38th Annual Conference of the European Law and Economics Association (EALE), in the TILTing Perspectives 2021 (Tilburg University), and in the 16th Annual Conference of the Academic Society for Competition Law (ASCOLA). The study was conducted as part of the research activities promoted by the DEEP-IN (Digital Ecosystem, Economic Policy and Innovation) Research Network. The author is grateful for the financial support received. Any opinions expressed in this paper are personal and are not to be attributed to the Bank of Italy. The first is Half-Causation Branching, which allows the logical mapping of the inventing space, within which the imaginary invention is located. Implementing this tool reveals two alternative nearby inventions, which if left out of the sought patent protection would render any eventually granted patent practically worthless. Following that, Half-Causation Encapsulation comes to the rescue by allowing the encapsulation of the original imaginary invention, plus the two alternative nearby ones, all in a manner that provides the all-important unity of invention On the one hand, patent agents are not supposed to contribute to their client’s inventive concept to the extent that they become co-inventors. On the other hand, scientists and engineers are not supposed to dedicate so much time and effort to learning about complex patent laws as to become patent agents. Arguably, each should aim to excel in their discipline. However, a structured dialogue should be considerably helpful to each and to the patent process as a whole. It is proposed that Half-Causation, with its logical structure, can provide a basis for such a dialogue. Besides targeting a readership in patent practices and theory, this paper should be of interest to multiple readerships, for example in engineering design, medical discovery and philosophy of technology.

The Ping-Pong Olympics of Antisuit Injunction in FRAND Litigation

In the past two years, antisuit injunctions (ASIs) and subsequent legal proceedings associated with standard-essential patents (SEPs) subject to fair, reasonable, and nondiscriminatory (FRAND) commitments have proliferated in multiple jurisdictions. This phenomenon reveals not only the transnational nature of technical standards and FRAND-encumbered SEPs but also the jurisdictional tension between different national courts. This Article explains the emergence of ASIs in FRAND scenarios and recent developments in six jurisdictions with major interests in standard development and adoption. Countries have developed different approaches to ASIs based on their own domestic rules and interests. We believe that to promote technical compatibility and international comity, it is necessary to facilitate legal compatibility between jurisdictions at the policy level. Currently, courts in multiple jurisdictions are competing to grant ASIs and anti-anti-suit injunctions (AASIs), leading to fragmented decisions and significant costs for global standardization. We propose to include an exclusive forum selection clause in the policy documents of standard-setting organizations (SSOs) to reduce undesirable transaction costs stemming from ASIs and subsequent legal actions. Our proposal is more realistic and cost-effective than others concerning FRAND dispute resolution.

A Study on Methodology for Calculating the FRAND Royalty (Rate) to Begin with a Starting-Point-Royalty-Rate* ** - by Critical Analysis of the U.S. Methodology for Calculating the Reasonable Royalty (Rate) -

Standard-Essential Patent (SEP) holders make certain commitment, which requires that the holders license their SEP on Fair, Reasonable and Non-Discriminatory (FRAND) terms. In case of SEP patent infringement, thus, the issue is marked by determination of royalties for the SEP. In this regard, this article has thoroughly examined the meaning of the FRAND commitment, and has figured out that a core issue would be to calculate a reasonable royalty (rate) in taking a view of the FRAND commitment in terms of royalty. Furthermore, the FRAND royalty, especially the FRAND royalty rate calculation methodology has been derived by using the reasonable royalty calculation methodology in cases of non-SEP infringements as a link based on understanding of the meaning of the FRAND commitment. Recently, the importance of assessing a royalty base has been particularly emphasized due to application of apportionment ratio when a reasonable royalty is calculated for patent infringement damages, but it is because the main issue is generally to calculate a reasonable royalty rate. Specifically, this article asserts that it is necessary to have a specific formula or algorithm in determining the FRAND royalty rate, and emphasizes an importance on seeking a proper starting-point-royalty-rate. In this regard, this article has examined methodologies that the U.S. courts has considered when setting the starting-point-royalty-rate for calculating a reasonable royalty rate in patent infringement litigations. As a result, the U.S. courts tend to narrowly interpret the scope of a comparable license agreement, and therefore it is practically more difficult to find a sufficiently comparable royalty rate. Given that practical difficulty, this article suggests that Korea courts may find the starting-point-royalty-rate by considering either an average industry royalty rate in the comparable businesses technically relevant to the patents-in-suit or (if necessary) 25% rule of thumb, depending on the specific circumstances of the given cases. Similarly, this article asserts that Korea courts can apply the methodology to find the starting-point-royalty-rate for calculating a reasonable royalty rate for non-SEP infringement damages when calculating the FRAND royalty rate. Specifically, Korea courts may derive a comparable royalty rate by putting different weights on evidence for the comparable license agreements in the following order. 1) existence of an established FRAND royalty rate, 2) a rate received by the patentee for license to the SEPs-in-suit, 3) a rate paid by the licensee for the use of other patents comparable to the SEPs-in-suit. Where there is no any comparable license agreement, however, this article suggests that Korea courts may consider a rate in a patent pool related to the SEPs-in-suit, or top-down approach that is added by 25% rule of thumb, depending on the circumstances of the given cases. On the other hand, the importance of measuring an apportionment ratio cannot be disregarded, which is a different issue apart from the matter of royalty stacking. In the U.S., court’s practice has emphasized the requirement that a royalty base be smallest salable patent-practicing unit (SSPPU), but such practice has been subject to strong criticism by legal scholars. Thus, it is needed to conduct an additional study regarding the measurement of the apportionment ratio, and a follow-up research would be prepared for the future.

GAR’s guide to IP arbitration (2021): a critical appraisal

The establishment of international dispute resolution chambers by various States, the mediation and arbitration centres envisaged under the Unified Patent Court project in European Union, the adoption of Alternative Dispute Resolution (ADR) processes at trade fairs and the reference of disputes pertaining to licensing of standard-essential patents (SEP) on fair, reasonable and non-discriminatory (FRAND) terms to ADR by judicial authorities underpin the global appeal of IP arbitration. The Guide to IP Arbitration1 (‘Guide’) endeavours to demystify the novel field of IP arbitration from a global perspective and must be commended for its timely fruition. The publication includes contributions by 15 prestigious law firms from varied civil and common law countries. The Guide is divided into five parts spreading across 243 pages, logically and systematically arranged to appraise various substantive and procedural considerations which arise at different stages of resolving IP disputes through ADR. The Guide posits that a choice...

Delhi High Court unbalances the seesaw of ‘fair play’ and ‘trade secret protection’: an analysis of Interdigital ‘v’. Xiaomi

The year 2020 witnessed a tussle between an Indian and a Chinese court owing to the fair, reasonable and non-discriminatory (FRAND) licensing litigation between InterDigital (a company headquartered in the USA) and Xiaomi (a company headquartered in China). On 3 June 2020, Xiaomi initiated a suit at the Wuhan Intermediate People’s Court (Wuhan Court) seeking to determine royalty rates for numerous 3G and 4G standard essential patents (SEPs) owned by InterDigital in accordance with FRAND.1 Subsequently, InterDigital filed an infringement suit at the Delhi High Court (DHC) in respect of five of its Indian SEPs2 and three HEVC (High Efficiency Video Coding) video compression standards3 against Xiaomi.4 The Wuhan Court, by its order dated 23 September 2020, issued an anti-suit injunction (ASI) against InterDigital and proscribed them to seek an injunction against Xiaomi in the DHC. The Wuhan Court denied reconsidering its order. ASIs have been common in SEP proceedings as they reduce the expenses and avoid conflicting decisions in parallel jurisdictions.5

Conference Report on ‘Patents and Standards – Online FRAND-Forum’

Abstract There have recently been a large number of court decisions concerning questions of FRAND (fair, reasonable and non-discriminatory) licensing of standard essential patents (SEPs). Despite this high level of judicial activity, however, many of the questions surrounding this topic continue to remain unanswered. On 4 November 2020 the annual Mannheim (Germany) FRAND Forum organised by the FORUM Institute was held online to discuss these highly challenging issues. The forum spanned five presentations from both judicial and legal perspectives, as well as two group discussions in which around 30 people took part.

A cross-language study of speech recognition systems for English, German, and Hebrew

Despite the growing importance of Automatic Speech Recognition (ASR), its application is still challenging, limited, language-dependent, and requires considerable resources. The resources required for ASR are not only technical, they also need to reflect technological trends and cultural diversity. The purpose of this research is to explore ASR performance gaps by a comparative study of American English, German, and Hebrew. Apart from different languages, we also investigate different speaking styles – utterances from spontaneous dialogues and utterances from frontal lectures (TED-like genre). The analysis includes a comparison of the performance of four ASR engines (Google Cloud, Google Search, IBM Watson, and WIT.ai) using four commonly used metrics: Word Error Rate (WER); Character Error Rate (CER); Word Information Lost (WIL); and Match Error Rate (MER). As expected, findings suggest that English ASR systems provide the best results. Contrary to our hypothesis regarding ASR’s low performance for under-resourced languages, we found that the Hebrew and German ASR systems have similar performance. Overall, our findings suggest that ASR performance is language-dependent and system-dependent. Furthermore, ASR may be genre-sensitive, as our results showed for German. This research contributes a valuable insight for improving ubiquitous global consumption and management of knowledge and calls for corporate social responsibility of commercial companies, to develop ASR under Fair, Reasonable, and Non-Discriminatory (FRAND) terms

Global FRAND licensing: the UK Supreme Court Judgment in Unwired Planet v Huawei and Conversant v Huawei and ZTE

In markets for global telecommunications products, including mobile phones, standards enable the necessary infrastructure equipment and devices produced by different manufacturers to work with one another and for those products to be available for use internationally by consumers who travel with their phones. The European Telecommunications Standards Institute (ETSI) is responsible for developing and publishing telecommunications standards in Europe.1 such as 2G (GSM), 3G (UMTS) and 4G (LTE). The underlying technology which is incorporated into these standards is generally protected by SEPs; it is not possible to make, sell, use or operate devices which comply with the standard without infringing those patents. The ETSI IPR Policy (the ‘Policy’) requires SEP holders to grant licences to use their technology on fair, reasonable and non-discriminatory (FRAND) terms so as to ensure that access to the use of the standard is not blocked. Against that background, the Judgment identifies two attributes of patent law that are relevant to the development of a global telecommunications market: first, that the prima facie entitlement of a SEP holder to obtain an injunction within a national jurisdiction has the potential to disrupt a global market for equipment using that technology; and, secondly, that the national nature of patent rights, which means that the SEP holder must commence proceedings in individual national courts to enforce its patent rights, makes it very difficult, if not wholly impracticable, for a SEP holder to protect an invention which is used in equipment manufactured in another country, sold in many countries and used by consumers globally. The Supreme Court explains that the first attribute may give SEP holders excessive power to disrupt an otherwise global market potentially resulting in excessive royalties while the second attribute may enable those implementing the standard (implementers) to avoid paying SEP holders a proper price for the use of their inventions internationally. The need to balance these ‘alternative evils’ lies at the core of the Judgment.