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Tandon, Victor Vaibhav
- SEP Litigations & Issues in Determining the FRAND License
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1 Saikrishna & Associates, New Delhi- 110003, Delhi, IN
2 Faculty of Law, University of Delhi, Delhi — 110 007, Delhi, IN
1 Saikrishna & Associates, New Delhi- 110003, Delhi, IN
2 Faculty of Law, University of Delhi, Delhi — 110 007, Delhi, IN
Source
Journal of Intellectual Property Rights, Vol 28, No 5 (2023), Pagination: 438-444Abstract
Lately, there have been several multi-jurisdiction litigations involving SEPs. In large part this is because of the complexity of executing FRAND licenses for SEP portfolios. This work focuses on, and explains, some of the issues that arise in the context of FRAND licensing- including, the problem of over-declaration by SEP holders, the possibility of patent hold-out, difficulties associated in court determination of terms of a global FRAND license for SEP portfolios, lack of awareness regarding the nuances of SEP/FRAND space, and the intrinsic informational imbalances that exist in any FRAND negotiation. The issues discussed here are by no means exhaustive and many of them do not have easy answers.Keywords
SEP, SSO, FRAND, Licenses, InjunctionFull Text
References
- In Huawei Technologies Co. Ltd. v ZTE Crop., (Court of Justice for European Union, 16 July 2015) it is noted, in context of European Telecommunications Standards Institute (ETSI)- a prominent SSO, that, “ETSI does not check whether intellectual-property right, the use of which an ETSI member has brought to its attention as necessary, is valid or essential. Nor does Annex. 6 define the concept of a ‘license on FRAND terms’” (paragraph 20).The same is also noted in Unwired Planet International Ltd and another v Huawei Technologies (UK) Co Ltd and another, [2020] UKSC 37 (paragraph 6).
- Simcoe T S & Shampine A L, Economics of Patents and Standardization: Network Effects, Hold-up, Hold-out, Stacking, (100-124), in The Cambridge Handbook of Technical Standardization Law, Competition, Antitrust and Patents, edited by Jorge L. Contreras, (Cambridge University Press, Cambridge, UK, 2018), page 118, noting that “SSOs generally do not make any determinations about the reasonableness of a license, but leave such determination to courts or arbitrators”. A similar view is expressed in Huawei Technologies Co. Ltd. v ZTE Crop.
- Inter-digital Technology Corporation v Lenovo Group Limited, [2023] EWHC 539 (Pat), paragraph 927.
- Unwired Planet International Ltd and another v Huawei Technologies (UK) Co Ltd and another, [2020] UKSC 37 (paragraph 40) noting that, “As we have said, many of the foreign judgments have been appealed, but they nonetheless show what is in fact common ground between the parties, that declared SEPs within a portfolio are often invalid or not essential”.
- Lemley, Mark A & Simcoe, Timothy, How essential are Standard Essential Patents? Cornell Law Rev, 104 (3) (2019) 607-642 at 608.
- Unwired Planet International Ltd and another v Huawei Technologies (UK) Co Ltd and another, [2020] UKSC 37 at paragraph 44, noting that “There is a problem that more patents are declared to be essential than in fact are essential. This problem of over-declaration is in part the result of the IPR Policy process which requires patent owners to declare SEPs in a timely manner when a standard is being prepared, as it encourages patent owners to err on the safe side by making a declaration. In part, there are difficulties in interpreting both the patents and the standards. In part also, patent claims are amended over time; different national patents within a patent family will vary in scope around the world; and standards themselves will vary over time”.
- Inter-digital Technology Corporation v Lenovo Group Limited, [2023] EWHC 539 (Pat), paragraph 928.
- Inter-digital Technology Corporation v Lenovo Group Limited, [2023] EWHC 539 (Pat), paragraph 927.
- Unwired Planet International Ltd. v Huawei Technologies Co. Ltd, [2017] EWHC 711 (Pat), paragraph 562, noting that, “I remain of the view however that UK court’s power to grant an injunction against an implementer will only arise once at least two conditions are satisfied - there must be a FRAND license available for the licensee to accept (or subject to case management some proper means of settling one) and there must be a SEP held by the court to be valid and essential. Only an implementer who refuses to take a FRAND license will be at risk of an injunction”. Further, in Optis Cellular Technology LLC v Apple Retail UK Limited, [2019] EWHC 3538 (Pat), paragraph 29, it is noted that, “The practice in the cases which have so far taken place is that the English court will, first of all, require the proprietor to establish that there has been infringement of a UK patent, and only at that stage will consider the question of whether the terms that have been put forward on either side are FRAND or not. Until it has resolved the question of whether they are FRAND or not, the English court's practice is not to grant an injunction, with the result that the implementer can continue to sell its technology in the UK, despite the finding of infringement which, by then, will have taken place. It is only at the stage at which the court has settled the FRAND terms, or they have been agreed, that the question arises whether the implementer will take a license on those terms or not, it being recognized that there is no legal obligation on the implementer, however much there may be in practice a commercial one, to take a license on the terms settled by the court”. In Intex Technologies (India) Ltd. v Telefonaktiebolaget LM Ericsson (PUBL), 2023: DHC: 2243-DB, the High Court of Delhi has held that “Standard Essential Patent owners who file lawsuits can pray for interim and final injunctive relief if an infringer is deemed by a Court to be an “unwilling licensee,” often as indicated by the use of “stalling” and other opportunistic bargaining and litigation tactics” (paragraph 91).
- Intex Technologies (India) Ltd. v Telefonaktiebolaget LM Ericsson (PUBL), 2023: DHC: 2243-DB, paragraph 62.
- European Commission, Commission Staff Working Document, Executive Summary of the Impact Assessment Report accompanying the document Proposal for Regulation of the European Parliament and of the Council on standard essential patents and amending Regulation (EU) 2017/1001, dated 27 April 2023, page 1.
- Huawei Technologies Co. Ltd. v ZTE Crop., (Court of Justice for European Union, 16 July 2015) notes that “Should the alleged infringer not accept the offer made to it, it may rely on the abusive nature of an action for a prohibitory injunction or for the recall of products only if it has submitted to the proprietor of the SEP in question, promptly and in writing, a specific counter-offer that corresponds to FRAND terms” (paragraph 66).
- Optis Cellular Technology LLC v Apple Retail UK Limited, [2019] EWHC 3538 (Pat), paragraph 29.
- For example, Nokia, which has been litigating in India for several of its SEPs, had stated way back in 2013 in its SEP dispute against Inter-digital that “Allowing Inter-digital to obtain an exclusion order against a willing licensee… would upset this delicate balance and would threaten to undermine the very purpose of standardisation”. Nokia Corporation and Nokia Inc.’s Public Interest Statement pursuant to 19 C.F.R. § 210.14(f) (21 February 2013), https://www.essential patentblog.com/wp-content/uploads/sites/64/2013/02/337- TA-868-Nokia-Public-Interest-Statement-2-21- 2013.pdf(accessed on 17 July 2023).
- eBay Inc. et al. v Merc Exchange, L.L.C., 547 U.S. 388 (2006), concurring opinion of Justice Kennedy.
- Unwired Planet International Ltd. v Huawei Technologies Co. Ltd, [2017] EWHC 711 (Pat), paragraph 562.
- https://www.news18.com/tech/oppo-oneplus-and-realmeforced-to-exit-the-german-mobile-market-heres-why-8134669.html (accessed on 21 June 2023).
- Unwired Planet International Ltd. v Huawei Technologies Co. Ltd, [2017] EWHC 711 (Pat), paragraph 562and Unwired Planet (2020), Unwired Planet International Ltd and another v Huawei Technologies (UK) Co Ltd and another, [2020] UKSC 37 (paragraph 40).
- This comes from the famous US Supreme Court ruling in Diamond v Chakrabarty, 447 U.S. 303 (1980, S.Ct.) where the Court dealt with eligible subject matter under U.S. law and paved the way for biotechnology patents while noting that, “the Congress intended statutory subject matter to include anything under the Sun that is made by man”.
- Unwired Planet International Ltd and another v Huawei Technologies (UK) Co Ltd and another, [2020] UKSC 37, paragraph 58.
- Unwired Planet International Ltd and another v Huawei Technologies (UK) Co Ltd and another, [2020] UKSC 37 paragraphs 37 and 92 for submissions by Huawei and ZTE, and paragraphs 97 and 98 for views of the Court in relation to the forum non conveniens argument.
- In, Inter-digital Technology Corporation & Ors. v Xiaomi Corporation & Ors., 3 May 2021, a Single Judge of High Court of Delhi dealt with an application by Inter-digital, essentially seeking an anti-anti suit injunction (AASI)- in respect of an anti-suit injunction order issued by Wuhan Intermediate People’s Court. The Wuhan court was tasked with the determination of global FRAND rate to be paid by Xiaomi for Inter-digital’s patents. The Indian Court was dealing with infringement actions brought by Inter-digital against Xiaomi. The Indian court noted that “the mere fact that one or other aspect of the controversy may overlap cannot be a ground to grant” an anti-suit injunction by a foreign court. Even “the consideration of the two courts arriving at differing decisions on that part of the issue which may overlap” is not sufficient reason for granting anti-suit injunction by Wuhan Court. This would imply that the Wuhan Court and the Indian court could have independently dealt with FRAND aspect of the dispute, even if they reached different conclusions.
- For a chronology of how negotiations should proceed and what information is required to be shared, Huawei Technologies Co. Ltd. v ZTE Crop., (Court of Justice for European Union, 16 July 2015).
- European Commission, Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee Setting out the EU approach to Standard Essential Patents (29 November 2017), page 9.
- European Commission, Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee Setting out the EU approach to Standard Essential Patents (29 November 2017), page 10.
- “Non-discrimination is most often interpreted as requiring that similarly situated firms be offered the same terms and conditions”. What is, or who are, “similarly situated is not defined by SSOs”- Simcoe, Timothy S. and Shampine, Allan L., Economics of Patents and Standardization: Network Effects, Hold-up, Hold-out, Stacking, in The Cambridge Handbook of Technical Standardization Law, Competition, Antitrust and Patents, edited by Jorge L. Contreras, Cambridge University Press, Cambridge, UK, 2018), 100-124, page 122.
- Huawei Technologies Co. Ltd. v ZTE Crop., (Court of Justice for European Union, 16 July 2015) paragraph 64.
- Huawei Technologies Co. Ltd. v ZTE Crop., (Court of Justice for European Union, 16 July 2015) at paragraph 63: “Secondly, after the alleged infringer has expressed its willingness to conclude a licensing agreement on FRAND terms, it is for the proprietor of the SEP to present to that alleged infringer a specific, written offer for a license on FRAND terms… specifying in particular, the amount of the royalty and the way in which that royalty is to be calculated”.
- Unwired Planet International Ltd. v Huawei Technologies Co. Ltd, [2017] EWHC 711 (Pat), paragraph 806.
- Unwired Planet International Ltd. v Huawei Technologies Co. Ltd, [2017] EWHC 711 (Pat), paragraph 468.
- The Guangdong High People’s Court handed the decision in 2013.
- https://www.competitionpolicyinternational.com/assets/Uplo ads/AsiaNovember3.pdf (accessed on 17 July 2023).
- Indeed, in Huawei v ZTE, the CJEU requires that prior to bringing an action for infringement, “it is thus for the proprietor of the SEP in question, first, to alert the alleged infringer of the infringement complained about by designating that SEP and specifying the way in which it has been infringed”(paragraph 61).
- The first sale exhausts the rights of the IP/patent holder. For details on exhaustion, and for the link between parallel imports and exhaustion, Matsushita, Mitsuo, Schoenbaum, Thomas J. et. al., The World Trade Organization Law, Practice, and Policy (2nd Ed., OUP, New York, 2006), 720- 721 and 734.
- European Commission, Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee Setting out the EU approach to Standard Essential Patents (29 November 2017), page 12.
- European Commission, Commission Staff Working Document, Executive Summary of the Impact Assessment Report accompanying the document Proposal for Regulation of the European Parliament and of the Council on standard essential patents and amending Regulation (EU) 2017/1001, dated 27 April 2023.
- Telefonaktiebolaget LM Ericsson (PUBL) v Competition Commission of India & Anr., LPA 247/2016, High Court of Delhi, 13th July 2023, 2023:DHC:4783-DB.