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Good news for licensors under FRAND commitment

3. January 2020

Just before Christmas, the US authorities published a joint policy statement on Standard Essential Patents (SEPs). The declaration strengthens the patent holders and licensors under FRAND obligation in the application of legal remedies in case of infringement of SEPs.

FRAND-Verpflichtung

Just before Christmas, the US Patent and Trademark Office (USPTO), the US Department of Justice (Antitrust Division, (DOJ)) and the National Institute of Standards and Technology (NIST) published a joint policy statement on standard-essential patents (SEPs). This new declaration distances itself from the previous declaration of 2013, which provided for injunctions and other means of exclusion for actions for infringement of standard-essential patents only under special circumstances.

The current policy statement, published just before Christmas on December 19, 2019, refers to various judgments in the area of infringement of standard-essential patents. Due to the special legal provisions for SEPs and the difficulty of filing injunctions in case of patent infringement, two basic difficulties arise in practice:

  1. If a patent under FRAND obligation distorts competition, there is an antitrust damage – but can antitrust law also be applied?
  2. For SEPs, fair licensing agreements should be made to serve the general public and the patent owner – but what to do if a license agreement is refused and also if a discussion on it is refused?

The current policy statement explicitly addresses these two points.

A brief side view of the FRAND commitment to Germany

Recently, a very interesting ruling has also been made in German courts on patents and licensing disputes under FRAND obligation. For example, in its ruling between Unwired Planet and Huawei, the Düsseldorf Court of Appeals has set a new framework for FRAND compliance and the licensing of transferred SEP. In its ruling, the court ruled that the obligation under the original SEP holder’s FRAND declaration is binding in the event of a transfer of the SEP even without an explicit or tacit FRAND declaration by the assignee.

Antitrust law applicable to FRAND disputes?

The 2013 policy statement may have been misinterpreted to mean that antitrust law is applicable to FRAND disputes, the current policy statement of the US authorities now states – but interestingly only in footnote 9.

Although the U.S. International Trade Commission considers “competitive conditions in the United States economy” to be part of the public interest (see 19 U.S.C. § 1337(d)(1)), this does not mean that FRAND licensing disputes raise antitrust concerns, the policy statement states.

However, this is in direct conflict with footnote 3, which states that antitrust law is fully applicable to FRAND disputes involving anti-competitive behavior.

So is antitrust law applicable or not? The statement of 19 December leaves this decision to the discretion of the courts. Courts, the U.S. International Trade Commission and other decision-makers should consider all relevant facts at their discretion, including the parties’ conduct in assessing the general principles of law applicable to their appeal, provisions relating to standard-essential patents, such as 19 U.S.C. §.

By clearly distancing itself from its own policy statement of 2013, it is also clear that the US authorities take the position that antitrust law should not apply to FRAND disputes. This differs from the 2013 Declaration, which had prescribed an aggressive attitude towards patent holders of SEPs and a limitation of their enforcement possibilities. The reason for this was that a large number of patent holders of SEPs were seen as so-called patent trolls.

The current policy statement shifts this view, but is ultimately an assessment by the US authorities. However, the courts will decide with the upcoming judgements.

Refusal of a licence agreement and discussion

Essentially, the current policy statement states that SEPs are basically no different from other patents and that they should be judged according to the same rules as other patents. This is basically a formal withdrawal from the previous 2013 Declaration, which provided for injunctions and other means of exclusion in special circumstances, such as a refusal to participate in a negotiation to determine the FRAND conditions, for actions for infringement of standard-essential patents.

Similarly, the damage analysis for standard-essential patents applies in the same way as for any other patent, and this was already provided for in the 2013 Declaration.

Conclusion

In sum, the new current policy statement makes it clear that patent holders and licensors should have the right to reprimand innovators and product manufacturers with the threat of an injunction, in particular in the event of refusal to grant a licence agreement or to discuss it. Good faith in negotiations with FRAND commitments could promote the efficiency of licensing, says the current policy statement, supported by the availability of data and the application of best practices, as well as in negotiations with commitments on patents that are not essential to standards.

The new Statement of Principles on the use of remedies for infringement of SEPs is a powerful message of good news for licensors under FRAND commitments – and the courts will decide.

Do you also need support to protect your patent rights? Or would you like a license agreement?

Our attorneys will be pleased to advise you. Please contact us if you are interested – we look forward to your call!


 

Sources:

Grundsatzerklärung der US-Behörden vom 19. Dezember 2019

Image:

geralt / pixabay.com / CCO License

 

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Category iconPatent Law,  Licenses Tag iconUSPTO,  FRAND,  SEP,  SEPs,  DOJ,  NIST,  assigned SEP,  denial of license agreement,  FRAND obligation,  US authorities,  FRAND disputes,  antitrust law,  antitrust law applicable,  violation of standard-essential patents,  standard-essential patents,  policy statement

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