JPOs initiatives Commissioner Akira Matsunaga November 7th 2019 - - PowerPoint PPT Presentation
JPOs initiatives Commissioner Akira Matsunaga November 7th 2019 Table of Contents 1. Background 2. JPOs Initiatives (1) Guide to Licensing Negotiations Involving Standard Essential Patents (SEPs) (2) Hantei Advisory -Opinion
Commissioner Akira Matsunaga
November 7th 2019
(1) Guide to Licensing Negotiations Involving Standard Essential Patents (SEPs) (2) “Hantei” Advisory-Opinion System to Judge the Standard Essentiality of Patents
Table of Contents
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(1) Guide to Licensing Negotiations Involving Standard Essential Patents (SEPs) (2) “Hantei” Advisory-Opinion System to Judge the Standard Essentiality of Patents
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Imminent Issue on SEPs: Changes in Licensing Negotiations
Telecom company vs Telecom company
In the Past
Telecomm company vs Company in other business
In IoT Era
Disputes/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 Difficult
Suppliers
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
China
National Development and Reform Commission (NDRC) v. Qualcomm Iwncomm v. Sony Huawei v. Samsung
Japan
Japan Fair Trade Commission (JFTC) v. Qualcomm Apple v. Samsung
U.K.
Unwired Planet v. Huawei Conversant Wireless Licensing v. Huawei
EU
European Commission v. Qualcomm Huawei v. ZTE
Germany
Nokia v. Daimler Sisvel v. Haier
U.S.
Federal Trade Commission v. Qualcomm Continental Automotive v. Avanci et al. Core Wireless Licensing v. Apple CSIRO v. Cisco Apple v. Qualcomm HTC 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 the IoT. The range of parties involved in licensing negotiations has been expanding to companies in various business.
“Guide to Licensing Negotiations involving Standard Essential” “Hantei on SEPs”
Background
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JPO’s Initiatives
Perspectives on reasonable licensing rates are different in licensing negotiations between 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 may fail to reach an agreement.
Issues to Be Solved
(1) Guide to Licensing Negotiations Involving Standard Essential Patents (SEPs) (2) “Hantei” Advisory-Opinion System to Judge the Standard Essentiality of Patents
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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)
Desirable acts Specific examples of actions in bad faith
Factors in terms of enhancing the efficiency of licensing negotiations Who in the supply chain should be the main entity?
How to determine the royalty basis How to determine royalty rates
Is a use-based license discriminatory?
Methods for paying royalties
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Overview 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)
Desirable acts Specific examples of actions in bad faith
Factors in terms of enhancing the efficiency of licensing negotiations Who in the supply chain should be the main entity?
How to determine the royalty basis How to determine royalty rates
Is a use-based license discriminatory?
Methods for paying royalties
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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.
charts.
charts to the implementers.
delayed negotiations
confidentiality agreement.
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Stages in Licensing Negotiations and Good Faith Negotiations
licensing negotiations
willingness to
license
FRAND terms
Counteroffers
terms Right Holder Implementer Lawsuits or ADRs
Stages in Licensing Negotiations SEP Right Holder’s Argument
End-Product Manufacturer’s Argument
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)
Desirable acts Specific examples of actions in bad faith
Factors in terms of enhancing the efficiency of licensing negotiations Who in the supply chain should be the main entity?
How to determine the royalty basis How to determine royalty rates
Is a use-based license discriminatory?
Methods for paying royalties
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Overview of the Guide
Further discussions are needed
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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 Patent Indemnification Agreement
Supply Chain
Implementer to become a party in negotiation
Right Holder
End-Product Manufacturer
example, either end-product manufacturers or parts manufacturers, should be the main entity in concluding any licensing agreements.
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
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Chips Communi- cation Modules Telematics Control Unit (TCU) End products
Essential part of SEP technology Relation between Contribution
(1) Guide to Licensing Negotiations Involving Standard Essential Patents (SEPs) (2) “Hantei” Advisory-Opinion System to Judge the Standard Essentiality of Patents
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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
the technical scope of the patented invention
configuration of Virtual Object Virtual Object
the technical scope of the patented invention
configuration of allegedly infringing product/process allegedly infringing product/process
Demandee Demandant
(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
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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)
Desirable acts Specific examples of actions in bad faith
Factors in terms of enhancing the efficiency of licensing negotiations
Who in the supply chain should be the main entity?
How to determine the royalty basis
How to determine royalty rates
Is a use-based license discriminatory?
Methods for paying royalties
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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
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
product.
Chips Commu- nication module
Telematics Control Unit （TCU)
End- products Essential part of SEP technology 17
Relation between Contribution
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?
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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 negotiation
Components (e.g. module)
Patent Indemnification Agreement Patent Indemnification Agreement
Supply Chain
Right Holder
End-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?
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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 Patent Indemnification Agreement
Supply Chain
Implementer to become a party in negotiation
Right Holder
End-Product Manufacturer
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Negotiations between end-product manufacturer and Right holder. Offer licensing negotiation
Questions Being Raised
becoming widely used.
background are conducting licensing negotiations.
what extent each player contributes to creating added value by using the 4G and 5G telecommunications technologies.
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Questions Being Raised
Consumers
Telecom Energy
Common parts and appliers
・・・
Industrial infra-structure
to what extent each player contributes to creating added value
End-product manufactures Service business
IT companies ×
Smart agriculture Automobile Factory Smart house
End-product manufactures/ service business
Create added value
In the age of the IoT,
Expectations for Further Discussions
agreements involving SEPs. ＞ not easy to resolve disputes over licensing negotiations.
creating the entire added value of new technologies and innovative products.
discuss together such as business, academia and government.
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