Recent Issues Concerning Licensing of Standard Essential Patents

In recent years, clashes over the licensing of SEPs have emerged in numerous countries around the world due to the proliferation of standards and the increased intricacy of the technologies necessary for such standards. Behind such litigations lies a system where SEP holders gather patent licensing fees from end-product manufacturers, as SEP holders can anticipate higher licensing fees by targeting end-product manufacturers to excercise their rights instead of negotiating with upstream suppliers of the end-product manufacturers. Nevertheless, industry has raised concerns that end-product manufacturers and component manufacturers will not obtain suitable compensation while licensing fees become more expensive, making it infeasible for them to do business. In response to this, the necessity of forming rules such as the exchanging of information between the parties has been emphasized from the viewpoint of resolving and preventing disputes between the parties. In light of such discussions, this chapter examines (1) the issue of how the burden of SEP licensing fess should be borne within the supply chain, (2) the evaluation of patent pool, and (3) the necessity of rules concerning the provision of information, etc. between the parties during the negotiation process, given the vast gap in claims between the parties regarding the license conditions and whom to negotiate with. The chapter first reviews recent major contentious cases in Europe, and examines some of the issues involved in each case.When the inter-industry licensing in the supply chain becomes an issue, from the perspective of competition law, the “non-discrimination” requirement should be applied regardless of the level of the supply chain, as long as FRAND commitment has been made. The SEP holder with market dominance should not be allowed to unreasonably refuse the Tier 1 or Tier 2 suppliers’s request to obtain the SEP’s license. Second, in the assessment of patent pools, a monitoring system from the perspective of competition law is vital to ensure that license conditions are not unreasonable. Last, with regard to the need for information provision rules in the license negotiation process, a specific guidance may contribute to the reduction of SEP disputes, based on the existence of the obligation of both parties to negotiate in good faith. It is essential to visualize the rules with respect to the licensing of SEPs, which frequently results in disputes, based on the duty of good faith negotiation. Such rules, though based on the premise of private autonomy, may lead to the resolution of disputes between the parties.