Standards, FRAND, NPEs & Injunctions Conference: Part 1

Another conference held in the
comfy Denys Lecture Theatre

This guest Kat is delighted to attend the two-day conference jointly organized by Taylor Wessing and IBIL and held in the Denys Holland lecture Theatre in Ensleigh Gardens, London -- exactly the same room in which he used to attend IP lectures two years ago. This event was held under the Chatham House Rule, which means that speakers can't be attributed in relation to what they say. 

 

After the Chairman’s Introduction given by KatFriend Sir Robin Jacob, Judge Crabb from the Western District of Wisconsin delivered the judicial Keynote Address.

The first speaker discussed three cases regarding royalty rate disputes under FRAND commitment for Standard Essential Patents. These three cases were held by Judge Crabb, Judge Posner and Judge Robart. 

The speaker mentioned Judge Robart's herculean work in  determining a Frand rate for two patent portfolios in a dispute involving Motorola ad Microsoft in April 2013. Judge Robart gave basic princples to determine a bilateral royalty rate. To her, the main benefit of this case was to get a set up a template for royalty determination in essential patents. Whether or not this template will be used remains a different question. However, the speaker questioned the fact that courts were best equipped to resolve disputes, considering the lack of resources of US courts. Perhaps private dispute resolution should be developed for Frand disputes and each standard-setting organization should take care of the dispute.

Then came the first topic of the day, quite a big starter on today’s menu: patent pools for essential patents. Panellists included Professor John Kallagher, UCL, John Sideris from Philips, Roger Ross from Via Licensing and Robert Vidal from Taylor Wessing as moderator.

As an alternative to Frand, patent pools are another way to gather patents under the ownership of various parties in order to license a technology to an acceptable rate and with a single desk to call at.

Discussion opened with the history of patent pools, it being recalled that the first patent pool was created in 1856 for sewing machines and that patent pools were developed in the earlier 20^th century for aircraft and automobile manufacturers. Mpeg compression and DVD tech pools of the late 1990s were the beginning of the current patent pool business.

The following points were then emphasised: 

• Patent pools can be set up for a specific technology or a product, the second option becoming increasingly interesting considering the various range of technologies in products.
• All licensees are offered the same rates under non-discriminatory terms. The fees are negotiated on cash-only terms, to avoid some competition law issues and abuses arising from bundling standard essential patents (SEP) with non-SEPs.  Furthermore, "cash only" licence terms eliminate the barriers for manufacturers without any patent to cross-license. 

The process for creating a patent pool and the current state for some important pools were then described, citing the mpeg as example (2500 patents from 26 holders at a cost 20 cents per product). The speaker then pointed out the issues in patent pool, notably the transmission of patents included in a patent pool. To conclude, he emphasized on the benefits of patent pools to avoid patent thicket problems, bring transparency, improve access by reducing time and efforts to access to licenses. He said, "It is difficult for a set up patent holder to obtain more than a bilateral licences than the benefit he would get from being in a pool."

 The next speaker then spoke about formation and execution of patent pools, the main activity of Via licensing. He described the patent pool development cycle and the role of a licensing administrator. Said he, the patent pool can prevent essential patents from falling into the hands of "non-market oriented" companies i.e NPEs. He finally compared the advantage of patent pool versus Joint Licensing programs.

To end this discussion, a competition analysis was nade of patent pools, pointing out their benefit and detriment. In short, patent pools can harm competition, leading to higher prices while eliminating substitute technologies. A second problem, in the standards context, is that pooling of essential and non-essential patents may foreclose opportunities for alternatives to the non-essential patents. Further, large pools may deter challenges to weaker patents, possibly leading to higher prices. Finally, The marginalisation of rivals can be also caused by pools with refusal to license or discriminatory licensing terms. The general approach to pool issues developed in the US and EU was also detailed. One thing  to remember: to be legal, your pool better contain only essential technologies. The draft of the revised EU tech transfer guidelines has proposed a "safe harbour" to deal with these issues. 

Coming next, all being well: The Market for Patent Portfolios- the latest position and predictions.