Patents are a type of property. As with any kind of property, owners must be able to enforce their rights against competitors who are trespassing, or infringing, upon their patents or portfolio of intangible assets. Without the ability to enforce, there would be no way to recoup the investments in resources and R&D required to create a new patentable invention in the first place. Patents cover new inventions, including important technology standards. Patents on standards are commonly known as Standard-Essential Patents (SEPs) and are frequently litigated as recent news shows.
The existence of SEPs – and associated litigation - has potentially disruptive consequences for the manufacture, marketing and distribution of complex products that include many patented standards, e.g. ICT products such as smart-phones incorporating a camera, a video, a web browser, wireless, text messages, etc, as well as an increasing array of IoT ‘networked’ products such as wearable devices and appliances for ‘smart homes’.
By enforcing their patents – their time-limited monopoly right - owners of SEPs could, if they wished, use the patent enforcement system to ‘hold up’ or prevent competitors from launching rival products that use the same standards. This raises serious concerns over competition in the marketplace and the need to maintain interoperability to ensure the industry can develop. Therefore, acute tension exists between SEPs (which offer their owners R&D incentives/rewards in the form of monopolistic rights) and standards (which allow for widespread and collective use). This is particularly the case in the ICT and IoT fields, which have recently witnessed an increase in the number of granted patents.
- How can an appropriate balance be reached ?
- How can the optimum scenario of incentivising the development of new inventive technologies, including standards, while also allowing fair competition be achieved?
- How to calculate a fair royalty or royalty stack ?
- What are the drivers and "marqueurs" for a systemic approach ?
The answer is clear: fair licensing practices. In order to balance the need for standardisation, required for public use, with the private rights of SEP-holders, standard-setting organisations (SSOs) typically require SEP-owners to give an irrevocable undertaking that they are prepared to grant competitors licences on FRAND terms (fair, reasonable, and non-discriminatory).
Join the debate during this unique session at Solvay Business School during the first European appearance of Andrei Iancu, newly elected Director of USPTO (United States Patents and Trademarks Office). It will be a cracker!