In the aftermath of the publication of the Commission’s Communication on standard essential patents (SEPs), two rival workshops were established within the framework of the European Standards Organizations CEN and CENELEC with the purpose of establishing a code on best practices for SEP licensing.
After the first workshop (WS-SEP), backed by IP Europe, produced a first draft of its Guidance for licensing SEPs in 5G and the IoT, it is now the turn of the second workshop (WS-SEP2), acting with the support of the Deutsches Institut für Normung (DIN), and jointly chaired by the Fair Standards Alliance and ACT | The App Association. On January 29, 2019, a draft document setting out principles and approaches to the licensing of standard essential patents (SEPs) for 5G technologies and IoT devices was published by the working group and is now open for consultation.
The document is an interesting read for the entire FRAND community and proposes a number of fundamental principles, the main ones being the following:
- Injunctions: SEP holders should not threaten or seek exclusionary remedies, including injunctions, except in exceptional circumstances and only where FRAND compensation cannot be addressed via adjudication (e.g. due to the risk of insolvency of the alleged infringer).
- License availability: A FRAND license should be made available to anybody wishing to implement the relevant standard, including upstream component suppliers. In addition, requests by OEMs to have the supplier engage in the process and negotiate a license with the SEP holder should not be viewed as an indication of unwillingness by the OEM.
- Transparency: SEP holders should provide prospective licensees with sufficient information to assess the FRAND nature of the offer, including regarding the terms of comparable licenses. Patent holders should not exploit their information advantage regarding the value of the SEP portfolio or prior licenses and should not rely on secrecy claims and NDAs to impair the possibility for licensees to valuate the portfolio on a FRAND basis (on this last point, the draft guidance also provides a template list of materials SEP holders should allegedly provide to meet their FRAND obligation).
- FRAND methodologies: in line with the position taken by the Commission in its Communication on SEPs, FRAND methodologies should not “include any element resulting from the decision to include the technology in the standard” and should take account of royalty stacking, to set “a reasonable aggregate rate for the standard.”
All interested parties can send comments on the draft document until March 28, 2019 (see here for additional details on the consultation process).