Owners Of Standard-essential Patents Research Articles

The Smallest Salable Patent-Practicing Unit (SSPPU): Theory and Evidence

In the recent past, U.S. courts have begun to require that litigating parties base patent infringement damages on sales of the “smallest salable patent-practicing unit,” or SSPPU, in an effort to constrain the patentee’s damages claim to the true “economic footprint” of the invention. We ask whether this legal requirement can be grounded in economic theory, industry licensing practices, or the scope of actual patent claims. We find significant theoretical reasons to reject the mandatory imposition of the SSPPU rule, because the economic impact of an invention is not, in general, limited to the sales price of an input that allegedly embodies it. In the telecommunications industry, where the SSPPU rule has assumed additional policy significance in the context of FRAND commitments by owners of standard-essential patents (SEPs), we find overwhelming evidence that: (1) major licensors and licensees reject the ostensible SSPPU — the baseband processor — as a royalty metering device, regardless of their place in the supply chain; and (2) for one representative patent portfolio, the scope of the claims cannot be limited to the baseband processor itself. In short, we find that the pricing of telecommunications inventions is not limited to the “smallest” component, nor are such components necessarily “salable,” or “patent-practicing.”

Abuse of a dominant position by legal actions of owners of standard-essential patents: Huawei Technologies Co. Ltd v. ZTE Corp.

Abuse of a dominant position by legal actions of owners of standard-essential patents: <i>Huawei Technologies Co. Ltd v. ZTE Corp.</i>

Standard-Essential Patents (SEPs) and Fair, Reasonable and Non-Discriminatoryy (FRAND) Licensing

FRAND-encumbered SEP owners find themselves in a complex situation because fetters are put on their limited period freedom to exclude others from making, using, selling or offering to sell, and importing the claimed invention in the country of grant. In this paper we discuss some of the issues involved in FRAND-encumbered SEP licensing and their possible solutions. In particular we suggest that SEPs be treated as a separate class of patents of national importance in patent acts for which specific rules are framed for dealing with injunctions; the creation of a SEP tribunal that would decide how best contemporary public interest would be served with minimal FRAND commitments; and government intervention in the form of “march-in” rights on behalf of all those in need of the SEP in question to prevent a potential or real economic crisis from arising due to a lack of sufficient number of licensees or acts of discriminate licensing by SEP owners, to keep the market competitive.

Are You Still in? The Impact of Licensing Requirements on the Composition of Standards Setting Organizations

Opportunistic behavior such as hold-up by owners of standard-essential patents increasingly affects standardization processes as well as the implementation of standards. The vague fair, reasonable and non-discriminatory (FRAND) licensing requirement applied in the majority of standards setting organizations (SSOs) only mitigates hold-up in the rare case of categorical refusal to license. In recent years, public authorities and some SSOs have therefore intensified their efforts to promote royalty-free (RF) standards. While this approach definitely contributes to a faster standards development process and eventually faster implementation, certain important contributors might decide to leave an SSO or not to join in the first place if they have to forego any licensing revenues from standard-essential patents.To analyze the substitutability of the two licensing regimes, this paper assesses the impact of the IP policy change at the SSO OASIS in April 2005. Based on a unique dataset, a survival analysis finds that the change from a FRAND to a RF licensing regime is correlated with a significant decrease in the overall number of new SSO members. Second, among the new members the share of non-profit research organizations and systems integrators significantly increases in the aftermath of the change. Third, the change has a positive impact on the duration for which the producers of physical goods remain at OASIS.The analysis suggests that SSOs and public authorities have to consider important trade-offs regarding static versus dynamic efficiency when considering to introduce or promote RF licensing requirements.

Solutions to Patent Hold-up beyond FRAND: An SOS to SSOs

While standard setting has well-recognized benefits to industry and consumers alike, the process is also subject to possible abuse by owners of standard essential patents (SEPS), who may through patent hold-up frustrate the efficient implementation of the standard. Even when a standard-setting organization (SSO) requires covenants to license on fair, reasonable and nondiscriminatory (FRAND) terms, threats of injunctions and other tactics by SEP owners have potential anticompetitive effects. SSOS may play a useful role, beyond securing FRAND commitments, in further reducing the prospect of patent hold-up. While some policymakers and SSOS have embraced ex ante licensing negotiations as a means to prevent hold-up, there are also other, nonmonetary solutions to consider. This article suggests a number of nonmonetary solutions, including limits on injunctive relief, increased disclosure of prior licensing rates, and mandatory ADR, that SSOS may adopt to streamline the licensing of FRAND-encumbered patents and thus reduce hold-up.

Injunctions for Frand-Pledged Standard Essential Patents: The Quest for an Appropriate Test of Abuse Under Article 102 TFEU

This paper discusses the legal test under which owners of Standard Essential Patents (SEPs) who have pledged to grant licences to those SEPs on Fair Reasonable and Non-Discriminatory (FRAND) terms can be held guilty of an abuse of a dominant position under Article 102 of the Treaty on the Functioning of the European Union (TFEU) by seeking, or threatening to seek, injunctions against unlicensed implementers of their technology. To that end, we use the theoretical framework described in a previous paper on rule-making in EU competition law (Petit, 2012). First, we sift through the various tests of abuse potentially applicable in positive EU competition law (I). Second, we show that an objective criterion should command the selection of a test of abuse, and suggests using the notion of ‘consistency’ (II). Third, we rank the applicable tests of abuse on grounds of consistency (III). Fourth, our paper generalizes those results to propose a framework for the assessment of new forms of conduct under Article 102 TFEU (IV).

Standard-Essential Patents and the Problem of Hold-Up

Standard-setting organizations typically require FRAND commitments from owners of standard-essential patents in order to ensure the availability of technologies needed to practice the standard. Failure to observe these FRAND commitments can lead to “patent hold-up” when implementers of a standard are confronted with supracompetitive royalty demands from SEP owners exploiting the market power associated with the standard. This article reviews empirical evidence from several recent cases suggesting that the problem of patent hold-up is real. We then analyze a number of arguments that have been advanced to downplay the risks of patent hold-up and demonstrate that they are flawed.

The Use of Standard Essential Patents: Competition Policy Issues

The threat, seeking and enforcement of injunctions, i.e. court decisions whereby a party is ordered to desist from an infringement of an intellectual property right, have recently come under the spotlights of courts and regulatory authorities on both sides of the Atlantic. The main purpose of this brief paper is to highlight some of the crucial issues competition authorities and courts are likely to consider when applying Article 102 TFEU to the threat, seeking and enforcement of injunctive reliefs by owners of standard essential patents.