{"id":69671,"date":"2016-06-09T05:15:15","date_gmt":"2016-06-09T09:15:15","guid":{"rendered":"https:\/\/ipwatchdog.com\/?p=69671"},"modified":"2016-06-24T17:11:11","modified_gmt":"2016-06-24T21:11:11","slug":"sep-licensing-beyond-essentiality","status":"publish","type":"post","link":"https:\/\/ipwatchdog.com\/2016\/06\/09\/sep-licensing-beyond-essentiality\/id=69671\/","title":{"rendered":"SEP Licensing: Looking Beyond Essentiality"},"content":{"rendered":"
Cellular standard essential patents (SEPs) have been at the center stage of many litigations, arbitrations and licensing disputes in the last couple of years. European Telecommunications Standards Institute (ETSI) defines essential IPR as follows:<\/p>\n
\u201cESSENTIAL” as applied to IPR means that it is not possible on technical (but not commercial) grounds, taking into account normal technical practice and the state of the art generally available at the time of standardization, to make, sell, lease, otherwise dispose of, repair, use or operate EQUIPMENT or METHODS which comply with a STANDARD without infringing that IPR.<\/em><\/p><\/blockquote>\n
Unlike other technologies (e.g. User interface) where the manufacturers have a choice to design around the technology of the patent, in case of SEPs, there is no possible way to avoid infringement and still comply with the standard. On the other hand, non-compliance with standard is a commercially non-viable option.\u00a0 This situation gives the SEPs holders a great leverage to assert their licensing terms. While there have been several cases and rulings in favor of SEP licensees that put some restrictions on the SEP holders regarding their FRAND licensing commitments as well as their abilities to exercise an injunction for infringement of SEPs, lack of clarity on FRAND terms still make the negotiations tough for a potential SEP licensee.<\/p>\n
<\/a>The traditional lines of defense against SEPs (non-essentiality and invalidity) continue to remain effective. However, all the patents that survive these two tests are not equally important and do not merit the same royalty. There has been rising interest in exploring other aspects of SEPs that affect their true worth. These aspects rely on the fact that a SEP is implemented (and hence infringed) not only due to its unique advantages, but also due to the fact that the technology of the SEP was selected (among various other alternatives) to be incorporated in the standard even if the incremental advantage was non-substantial or even non-existent in some cases. Therefore, the true worth of a SEP should be determined based on the degree of superiority it had compared to other alternatives at the time of standard development. While the tasks of evaluating a technology\u2019s superiority compared to other alternatives may sound complex, it is very much doable in the context of cellular SEPs due to the transparency offered by 3GPP \/ ETSI in the process of standard development and the appropriate documentations. In some cases, the study of standard development process reveals that the owner of the patent was not the entity that introduced the corresponding feature in the standard, but was merely the first one to file for a patent on a jointly developed concept or even someone else\u2019s concept, which raises serious validity issues.<\/p>\n
Let me demonstrate a few examples of what can be uncovered through the study of standard development process and how it affects the perceived value of a SEP. I picked up a few patents from one of the most actively licensed portfolios in the cellular SEP space i.e. InterDigital and provide specific findings.<\/p>\n
Example 1: USP 6,973,579<\/strong><\/h2>\n