Posts in Licensing

Much like a biological ecosystem, the development, commercialization, and licensing of standardized technologies involves a delicate balance among many diverse and competing participants. The 2021 Draft Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments (hereinafter “the 2021 Draft Policy Statement”), however, appears to be primarily concerned with an issue faced exclusively by implementers when dealing with owners of larger patent portfolios, but without explicitly saying so. This observation is based on the 2021 Draft Policy Statement’s reference to the vague and ill-defined notion of patent “hold-up”.

The Justice Department’s December 6, 2021 Draft Policy Statement on Licensing Negotiations and Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments (“2021 DPS”) badly misses the mark and merits a failing grade. By contrast, the 2019 PS (issued by the Justice Department, NIST, and the U.S. PTO) is eminently sound, and merits being reaffirmed. The DPS should be viewed in the context of the benefits conferred on society by patents that read on standards, commonly referred to as standard essential patents (SEPs). Given the economic importance of SEPs, public policy should encourage investment in them and ensure that they receive adequate legal protection. Such sound policies inform the New Madison Approach (NMA), publicly described by Assistant Attorney General for Antitrust Makan Delrahim in 2018.

Even as Europe and the rest of the world continued to face the unprecedented challenges of the COVID-19 pandemic in 2021, the development of 5G and other Standard Essential Patent (SEP)-enabled technology standards has continued at an unabated pace. While the year has not yet ended, more than 100,000 technical contributions have already been submitted at 3GPP meetings for 2G, 3G, 4G and 5G in 2021 – a near-record yearly contribution count. The invention and standardization of massive, complex communication technologies continues to generate significant numbers of SEPs. According to IPlytics data, the cumulative number of self-declared SEP families has surpassed 72,000 in 2021, indicating a five-fold increase in just 10 years.

This is Part II of a two-part article discussing FRAND (fair, reasonable, and non-discriminatory) licensing developments taking place in the United States in 2021. Read Part I here. After a slow summer on the FRAND licensing front, the Court of Appeals for the Fifth Circuit’s ruling in the matter of HTC v. Ericsson came in the dog days of August. As we wrote about here, the August 31 ruling dealt with, amongst other things, an appeal challenging the district court’s instructions to the jury regarding whether or not the license terms offered by Ericsson were FRAND and, more specifically, with respect to the issue of apportionment. Beyond finding that the failure to give instructions on an undisputed issue did not impair HTC’s ability to present its claims, the majority found that HTC’s proposed instructions “were not ‘substantially correct’ statements of law”.

From the perspective of the Intangible Investor, 2022 will be a year of new opportunities and transitional growth. IP business models will evolve, and risk and return calculations will become more reliable. In the decade since the America Invents Act (AIA) was enacted, patent licensing challenges have increased for many technology companies and independent inventors. The neutering of software, e-commerce and algorithm patents are at least partly responsible but, amazingly, software-related patents represent almost two-thirds of U.S. grants for the first half of 2021.

In April of this year, we provided a three-part series relating to the IP and Competitive Landscape for the mRNA market. In this post (Part I), we provide a 2021 year in review update on mRNA pioneers Moderna, BioNTech and CureVac, and in Part II, we profile Sanofi and other companies in the mRNA space and offer additional conclusions and outlook for 2022 and beyond.

Collaboration has invariably helped people to maneuver the most significant challenges and hurdles. Like all other human accomplishments, technology players have collaborated and enforced methodologies to avert any obstacles faced while creating innovation-driven sustainable businesses, to enable technology-driven societies. While innovation can be both an individual and collective endeavor, shaping the final consumer product/service demands collaborative innovation and coordinated policies and frameworks. 

On December 6, the Department of Justice – Antitrust Division (DOJ), U.S. Patent and Trademark Office (USPTO), and National Institutes of Standards and Technology (NIST) issued for public comment a “draft revised statement on remedies for the infringement of standards-essential patents (or SEPs) that are subject to a RAND or F/RAND licensing commitment, which also provides guidance on what demonstrates good-faith negotiation in this context.” The 2021 SEP Licensing Draft Statement responds to President Biden’s Executive Order on Competition, which called on the agencies to review the 2019 Trump Administration Statement dealing with SEP infringement remedies. The 2019 Statement in turn excised the anti-IP language from a 2013 Obama Administration Statement on this topic.

Your company and its business have been built around the strength of a trademark license from a third-party licensor. You have invested heavily in the brand. Now, however, your trademark licensor is in financial distress. Bankruptcy is not beyond the realm of possibility. Perhaps the licensor has asked to renegotiate the terms of the trademark license or threatened to terminate the license once a chapter 11 bankruptcy case is filed. What are the respective rights of the distressed trademark licensor and your company, as trademark licensee, in this situation? Is your company at risk of losing everything invested in reliance on the license?

The U.S. Department of Justice – Antitrust Division (DOJ) is requesting public comment on a new iteration of the Joint DOJ-USPTO-NIST Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary FRAND Commitments. The announcement comes in response to President Joe Biden’s July 2021 Executive Order on Promoting Competition in the American Economy, which asked the three agencies to review the 2019 statement.

Standard Essential Patents (SEPs) are on the rise; the number of newly declared patents per year has almost tripled over the past five years. There were 17,623 new declared patent families in 2020, compared to 6,457 in 2015 (see Figure 1). The 5G standard alone counts over 150,000 declared patents since 2015. Similarly, litigation around SEPs has increased. One of the driving factors of recent patent litigation is the shift in connectivity standards (eg, 4G/5G, Wi-Fi) that in the past were mostly used in computers, smartphones and tablets, but are now increasingly implemented in connected vehicles, smart homes, smart factories, smart energy and healthcare applications. Another reason why litigation may rise further is the belief that large SEP owners such as Huawei, ZTE or LG Electronics may soon sell parts of their SEP portfolios, which may likely end up in the hands of patent assertion entities (PAEs). One way or another, it is anticipated that the majority of patent holders will actively monetize their SEPs covering standards such as 5G, Wi-Fi 6 or VVC in this fast-moving, high-investment environment. Any company adopting these standards must decrease operational risk and expense exposure by taking a proactive strategy towards SEPs rather than a reactive one.

Question: how do you make money from a secret formula for a product that smells and tastes horrible and that no one wants? Answer: you make everyone believe they have a medical problem that only this stuff can solve. Back in 1879, Joseph Lawrence, a St. Louis doctor, was experimenting with surgical disinfectants. This was a new thing. In the 1860s, a British surgeon named Joseph Lister was the first to perform surgery antiseptically, using carbolic acid as a disinfectant. Inspired by Lister, Lawrence came up with a compound of alcohol and essential oils that seemed to kill whatever bugs it touched. To honor Lister (and presumably to take advantage of his fame), Lawrence named the concoction “Listerine.”

Last week, IPWatchdog hosted its annual SEP conference, which once again took place in virtual format. I either moderated or directed/produced all the panels, so I stayed busy throughout the week, but still managed to pay attention to what was being said by the panelists. For some panels I participated more, making it a bit more challenging to take notes, so when I say what follows are statements that particularly piqued my interest, I am by no means suggesting there weren’t many more golden nuggets of wisdom imparted to the over 900 registrants over our four-day program.

On November 12, the United States Court of Appeals for the Federal Circuit (CAFC) affirmed the decision of the U.S. District Court for the Northern District of California that compelled arbitration and dismissed Rohm Semiconductor USA’s declaratory judgment action without prejudice, holding that an arbitrator must determine arbitrability. In 2007, Rohm Japan and MaxPower Semiconductor entered into a technology licensing agreement (TLA). According to the TLA, Rohm Japan and its subsidiaries were permitted to use certain power-related technologies of MaxPower developed under a Development and Stock Purchase Agreement in exchange for royalties paid to MaxPower. In 2011, the TLA was amended to include an agreement to arbitrate “any dispute, controversy, or claims arising out of or in relation to this Agreement or at law, or the breach, termination, or validity thereof.” Further, the amendments provide that arbitration must be conducted “in accordance with the provisions of the California Code of Civil Procedure (CCCP).”

One recurring thorn in the side of copyright owners is Cloudflare, the San Francisco-based web performance, optimization, and security company. Cloudflare offers many services to its customers, including a content delivery network that utilizes hundreds of servers around the world to cache its customers’ content. When an end user requests content from one of Cloudflare’s customers, it is delivered to that user from the cached copy on the nearest Cloudflare server—not the customer’s own web host server. This saves on bandwidth costs, improves security, and decreases page load times. It also raises important questions about Cloudflare’s liability for contributory copyright infringement when it knowingly allows infringing content to remain on its cache servers. Under Ninth Circuit precedent, web hosting services like Cloudflare can be held contributorily liable for assisting in the infringement under the material contribution theory. However, a recent district court decision misconstrued the case law to conclude otherwise in Mon Cheri v. Cloudflare.