JPO’s initiatives
Commissioner Akira Matsunaga
November 7th 2019
1. Background
2. JPO’s Initiatives(1) Guide to Licensing Negotiations Involving
Standard Essential Patents (SEPs)(2) “Hantei” Advisory-Opinion System to Judge
the Standard Essentiality of Patents
3. Open Questions
Table of Contents
1
1. Background
2. JPO’s Initiatives(1) Guide to Licensing Negotiations Involving
Standard Essential Patents (SEPs)(2) “Hantei” Advisory-Opinion System to Judge
the Standard Essentiality of Patents
3. Open Questions
2
3
Imminent Issue on SEPs: Changes in Licensing Negotiations
Telecom companyvs
Telecom company
In the Past
Telecomm companyvs
Company in other business
In IoT EraDisputes/Negotiations among ICT companies
Disputes/Negotiations among parties from different business
Cross-licensing
Perspectives on licensing rates
Almost consistent Significantly different
Perspectives on Essentiality
Can be easily evaluated by parties
Difficult for licensees to evaluate
Possible DifficultSuppliers
Source: Made by the JPO based on “the SEP Guide”, “Research Report on Actual State of How Disputes over SEPs Were Being Resolved”, and various news reports. 4
Disputes over SEPs Arising in Numerous Countries
ChinaNational Development and Reform Commission (NDRC) v. Qualcomm
Iwncomm v. SonyHuawei v. Samsung
JapanJapan Fair Trade Commission (JFTC) v. Qualcomm
Apple v. Samsung
U.K.Unwired Planet v. Huawei
Conversant Wireless Licensing v. Huawei
EUEuropean Commission v. Qualcomm
Huawei v. ZTE
GermanyNokia v. Daimler
Sisvel v. Haier
U.S.Federal Trade Commission v. QualcommContinental Automotive v. Avanci et al.
Core Wireless Licensing v. AppleCSIRO v. Cisco
Apple v. QualcommHTC v. Ericsson
Continental Automotive v. Avanci et al case (U.S. District Court in California in 2019)
Nokia v. Daimler case (Germany, Regional Court in 2019)
Major Lawsuits and Administrative Actions Concerning SEPs
Disputes Arising among Different business
JPO’s Initiatives to Deal with SEP Issues
The environment surrounding SEPs is undergoing a great change as the wider use of theIoT.
The range of parties involved in licensing negotiations has been expanding to companiesin various business.
“Guide to Licensing Negotiations involving Standard Essential” “Hantei on SEPs”
Background
5
JPO’s Initiatives
Perspectives on reasonable licensing rates are different in licensing negotiationsbetween telecommunications business and other business.
It is difficult to resolve disputes through cross-licensing. When disputes are arising among parties from different business in decisions on
whether or not patents at issue are based on the essential standards, the parties mayfail to reach an agreement.
Issues to Be Solved
1. Background
2. JPO’s Initiatives(1) Guide to Licensing Negotiations Involving
Standard Essential Patents (SEPs)(2) “Hantei” Advisory-Opinion System to Judge
the Standard Essentiality of Patents
3. Open Questions
6
I. Purposes of the Guide
Aiming to ・ Enhance transparency and predictability
・ Facilitate negotiations between rights holders and implementers
・ Help prevent or quickly resolve disputes concerning SEPs
Not Recipes (Not legally binding, Not intended to be prescriptive)
II. Licensing Negotiation MethodsA. Good Faith Desirable acts Specific examples of actions in bad faith
B. Efficiency Factors in terms of enhancing the
efficiency of licensing negotiations Who in the supply chain should be the
main entity?
III. Royalty Calculation MethodsA. Reasonable Royalties How to determine the royalty basis How to determine royalty rates
B. Non-discriminatory Royalties Is a use-based license discriminatory?
C. Other Factors Methods for paying royalties
7
Overview of the Guide
I. Purposes of the Guide
Aiming to ・ Enhance transparency and predictability
・ Facilitate negotiations between rights holders and implementers
・ Help prevent or quickly resolve disputes concerning SEPs
Not Recipes (Not legally binding, Not intended to be prescriptive)
II. Licensing Negotiation MethodsA. Good Faith Desirable acts Specific examples of actions in bad faith
B. Efficiency Factors in terms of enhancing the
efficiency of licensing negotiations Who in the supply chain should be the
main entity?
III. Royalty Calculation MethodsA. Reasonable Royalties How to determine the royalty basis How to determine royalty rates
B. Non-discriminatory Royalties Is a use-based license discriminatory?
C. Other Factors Methods for paying royalties
8
Overview of the Guide
Based on the framework suggested by the ECJ
Based on the framework suggested by the European Court of Justice (Huawei v. ZTE case, 2015), the Guide summarizes factors that parties should consider at each stage in the negotiation process.
• Rights holders do not provide any claim charts.
• Rights holders do not provide any claim charts to the implementers.
• Implementers unreasonably have delayed negotiations
• Implementers refuse to conclude any confidentiality agreement.
9
Stages in Licensing Negotiations and Good Faith Negotiations
1. Offer licensing
negotiations
2. Express willingness to
obtain a license
3. Offer FRAND terms 4. Present
Counteroffers on FRAND
terms
Right Holder Implementer
Lawsuits or ADRs
Stages in Licensing Negotiations SEP Right Holder’s Argument
End-Product Manufacturer’s Argument
I. Purposes of the Guide
Aiming to ・ Enhance transparency and predictability
・ Facilitate negotiations between rights holders and implementers
・ Help prevent or quickly resolve disputes concerning SEPs
Not Recipes (Not legally binding, Not intended to be prescriptive)
II. Licensing Negotiation MethodsA. Good Faith Desirable acts Specific examples of actions in bad faith
B. Efficiency Factors in terms of enhancing the
efficiency of licensing negotiations Who in the supply chain should be the
main entity?
III. Royalty Calculation MethodsA. Reasonable Royalties How to determine the royalty basis How to determine royalty rates
B. Non-discriminatory Royalties Is a use-based license discriminatory?
C. Other Factors Methods for paying royalties
10
Overview of the Guide
Further discussions are needed
11
Parties to Negotiate in Supply Chain
Supplier 1
Supplier 2
Offer licensing negotiation
Components
(e.g. TCU)
Offer licensing negotiation
Components
(e.g. module)
Patent Indemnification Agreement
PatentIndemnification Agreement
Supply Chain
Implementer to become a party in negotiation
Right HolderEnd-Product Manufacturer
• The Guide organizes factors to be considered, such as who in the supply chain, for example, either end-product manufacturers or parts manufacturers, should be the main entity in concluding any licensing agreements.
•License to all
•Access for all
SEP Right Holder’s Argument
End-Product Manufacturer’s Argument
Smallest Salable Patent Practicing Unit (SSPPU) Approach
Entire Market Value (EMV) Approach
SEP Right Holder’s Argument
End-Product Manufacturer’s Argument
The Guide organizes factors to be considered in determining the basis for calculating royalties, i.e., the prices of individual parts or prices of completed end-products.
Royalty Base: EMV and SSPPU
12
Chips
Communi-cation Modules
Telematics Control Unit (TCU)
End products
Essential part of SEP technology
Relation between Contribution of SEP and Royalty Base
1. Background
2. JPO’s Initiatives(1) Guide to Licensing Negotiations Involving
Standard Essential Patents (SEPs)(2) “Hantei” Advisory-Opinion System to Judge
the Standard Essentiality of Patents
3. Open Questions
13
Standard
Advisory Opinion “Hantei” for Essentiality Check
14
Request for Advisory Opinion(Specify subject product/process (allegedly infringing
product/process), etc.,Compare/explain claims of the patented invention and
the subject product/process)
Reply
Proceedings by Administrative Judge Panel(Compare/determine claims of the patented invention
and the subject product/process, etc.)
JPO began providing advisory opinion “Hantei” for essentiality check on April 1st, 2018 for the purpose of early dispute resolution of Standard Essential Patents (SEPs)
Demandant
Demandee
Advisory Opinion “Hantei”
Advisory Opinion(The Virtual Subject Article, etc. falls or does not fall within the technical scope of the patented invention)
Essentiality Check Utilizing the “Hantei” System
Request for Advisory Opinion(Specify Virtual Subject Article (Virtual Object), etc. that is compliant with the standard, Compare/explain claims of the
patented invention and the Virtual Subject Article)
Reply
Proceedings by Administrative Judge Panel(Compare/determine claims of the patented
invention and the Virtual Subject Article, etc.)
Advisory Opinion(The subject product/process, etc. falls or does not fall within the technical scope of the patented invention)
If Hantei is concluded that the Virtual Subject Article, etc. “falls” within the technical scope of the patented invention
=> It is possible to determine that the patented invention is “essential” to the standards
a. ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
b. ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
c. ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
the technical scope of the patented invention
a. ・・・・・・・・・・・・・・・・
・・・・・・・・・・・・
b. ・・・・・・・・・・・・・・・・
・・・・・・・・・・・・
c. ・・・・・・・・・・・・・・・・
・・・・・・・・・・・・
a. ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
b. ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
c. ・・・・・・・・・・・・・・・・・・・・・・・・・・・・
configuration of
Virtual ObjectVirtual
Objectthe technical scope of the patented invention
a. ・・・・・・・・・・・・・・・・・・・・
・・・・・・・・
b. ・・・・・・・・・・・・・・・・・・・・
・・・・・・・・
c. ・・・・・・・・・・・・・・・・・・・・
・・・・・・・・
configuration of
allegedly infringing
product/process
allegedly infringing
product/process
Demandee
Demandant
1. Background
2. JPO’s Initiatives(1) Guide to Licensing Negotiations Involving
Standard Essential Patents (SEPs)(2) “Hantei” Advisory-Opinion System to Judge
the Standard Essentiality of Patents
3.Open Questions
15
I. Purposes of the Guide
Aiming to ・ Enhance transparency and predictability
・ Facilitate negotiations between rights holders and implementers
・ Help prevent or quickly resolve disputes concerning SEPs
Not Recipes (Not legally binding, Not intended to be prescriptive)
II. Licensing Negotiation MethodsA. Good Faith Desirable acts Specific examples of actions in bad faith
B. Efficiency Factors in terms of enhancing the
efficiency of licensing negotiations
Who in the supply chain should be the main entity?
III. Royalty Calculation MethodsA. Reasonable RoyaltiesHow to determine the
royalty basis How to determine royalty rates
B. Non-discriminatory Royalties Is a use-based license discriminatory?
C. Other Factors Methods for paying royalties
16
Overview of the Guide
Q1: Which kind of considerations would affect whether SSPPU or EMV?
HTC v. Ericsson (US, 2019)
The IPR policy of the ETSI neither requests nor excludes any FRAND license using royalty based on the SSPPU approach.
FTC v. Qualcomm (US, 2019)
Qualcomm must make SEP license available to modem-chip suppliers on FRNAD terms.
Q:What kind of considerations would affect whether the SSPPU approach or EMV approach should be used?
Which do SEPs technology contribute to, End-products or Chips?
Basis for calculating royalties is to be identified based on the part to which the essential part of the SEP technology contributes to the end-product.
Chips
Commu-nicationmodule
Telematics Control Unit(TCU)
End-products
Essential part of SEP technology
17
Relation between Contribution of SEP and Royalty Base
Q2: Who in the supply chain should be the main entity?
Q:For the supply chain side, who should be the main entity in licensing negotiations with the SEP owner to facilitate licensing negotiations efficiently?
18
A supply chain consisting of end-product manufacture and two suppliers of Tier1 and Tier2.
Communication module is being manufactured by Tier2
Patent indemnification obligation agreements are concluded between the end-product manufacture, supplier Tier1, and supplies Tier2, under each of which suppliers bear the payments of licensing fees.
Case
Supplier 1
Supplier 2
Components
(e.g. TCU)
Offer licensing negotiationComponents
(e.g. module)
Patent Indemnification Agreement
PatentIndemnification Agreement
Supply Chain
Right HolderEnd-Product Manufacturer
?
Implementer to become a party in negotiation
Q3: Who should determine the allocation of the licensing fees among the supply chain?
Q:Who should determine the allocation of the licensing fees among the supply chain? 19
A supply chain consisting of end-product manufacture and two suppliers of Tier1 and Tier2.
Communication module is being manufactured by Tier2
Patent indemnification obligation agreements are concluded between the end-product manufacture, supplier Tier1, and supplies Tier2, under each of which suppliers bear the payments of licensing fees.
Case
Supplier 1
Supplier 2
Components
(e.g. TCU)
Components
(e.g. module)
Patent Indemnification Agreement
PatentIndemnification Agreement
Supply Chain
Implementer to become a party in negotiation
Right HolderEnd-Product Manufacturer
? + Negotiations between end-product
manufacturer and Right holder.Offer licensing negotiation
Questions Being Raised
• The 4G and 5G telecommunications technologies are becoming widely used.
• Licensing negotiations have become more complicated.
• Different types of business without any common background are conducting licensing negotiations.
• Difficult to reach a consensus on the essential issue of to what extent each player contributes to creating added value by using the 4G and 5G telecommunications technologies.
20
21
Questions Being Raised
Consumers
Telecom EnergyCommon parts
and appliers
・・・
Industrial infra-structure
to what extent each player contributes to creating added value
End-product manufactures
Service businessIT companies ×
Smart agriculture Automobile Factory Smart house
End-product manufactures/ service business
Createadded value
In the age of the IoT,
Expectations for Further Discussions
• Various parties with conflicting interests are negotiating licensing agreements involving SEPs.> not easy to resolve disputes over licensing negotiations.
• Evaluate the value of 4G and 5G technologies.
• Evaluate how much 4G and 5G technologies have contributed to creating the entire added value of new technologies and innovative products.
• Discuss these evaluations from the broad perspectives.
• Promote a multi-stakeholder process in which various stakeholders discuss together such as business, academia and government.
22
Top Related