Submitted By: Access Advance LLC
Recipient: UK IPO

Read a summary of the Comments below or click on the buttons at the bottom of the page to download the full submission.

Part 1 – Potential measures to improve efficiency and transparency in SEP licensing

Potential measure 1: Rate Determination Track (RDT) General

Procompetitive Patent Pools are an effective market-based mechanism by which SMEs receive licenses at FRAND rates. SMEs have become licensees and licensors in our HEVC Advance patent pool throughout the life of the pool. An RDT is unnecessary and likely inapposite in the context of licensing by Procompetitive Patent Pools, and likely would undermine the efficiency of Procompetitive Patent Pools potentially limiting their availability, to the detriment of SMEs.

Potential measure 2: Searchable standard related patent information

Mandating disclosure of standard related patent information

Possibility of an IPO essentiality service

As we noted at the Consultation meeting on September 4, and explain further in our Comments filed with this Response, the radical transparency on both pricing and essentiality practiced by Procompetitive Patent Pools fully addresses the IPO’s concerns on these issues.

Essentiality determination done right – as in the Advance polls – is inherently complex and time consuming and requires significant expertise. It requires one or more independent patent experts, especially given differences in language and patent law of the various jurisdictions in which potential SEPs are issued. As a result, these evaluations are expensive and efforts to reduce the expense through “approximation” methods such as sampling are likely to lead to both false positives and false negatives, undermining the point of the evaluation.

Access Advance addresses the concern about affordability of essentiality evaluations for SMEs and new entrants by providing interest-free financing of evaluations by such entities. Should the IPO establish a government-led essentiality review mechanism, we respectfully suggest that it would be redundant, expensive, inefficient, and potentially counterproductive, to apply that mechanism to Procompetitive Patent Pools.

Potential measure 5a: Remedies and dispute resolution

Remedies

In the Consultation, the IPO recognized the importance and appropriateness of an injunction to remedy a patent infringement, even of SEPs: “The patent framework offers various remedies for patent infringement. The remedies used for SEPs disputes generally include damages to compensate for infringement; injunctions to stop infringement; and FRAND determinations.”

But those statements often are not true as to infringement of SEPs:

• The FRAND rate in SEP litigation is applied to past practice as well as to future use, unlike the punitive damages granted for willful infringement of non-SEPs.

• Injunctions for SEP infringement are not so easily obtained given the significant limitations that have developed around when injunctions can be granted for infringement of SEPs.

In fact, the potential of a court-ordered injunction is the only remedy to the intentional infringement by implementers who engage in “efficient infringement.”

“An implementer engaged in holdout when the patents are not SEPs runs the risk of being found liable for willful infringement, and therefore subject to enhanced penalties. By contrast, an implementer engaged in holdout when the patents are SEPs runs no such risk: the only “penalty” the holdout implementer will face is being required to pay FRAND royalties, the same royalties it would have paid had it not engaged in holdout and—even more to the point—the same royalties that its competing good faith implementers have been paying all along. The term ‘efficient infringement’ is an apt description and explains the strong incentive to engage in such conduct.”[1]

Contrary to the phrasing of paragraph 94 and of other Questions , a patent holder cannot “threaten” an injunction. The only “threat” a patent holder can make as to an injunction is a statement that the patent holder intends to seek an injunction from a court. And since a court will only grant an injunction if and when the court determines both that the FRAND defense does not apply and that an injunction is appropriate, that alleged “threat” is nothing more than a statement by the patent holder that it “intends to seek an injunction which a court may grant as a remedy.”

As to how “bad behaviours” in licensing negotiations can be addressed or prevented, the question appears to be limited to “’bad faith’ behaviours” of patent holders. We noted at the in-person session on 4 September that we believe it is important for a tribunal to examine the entire course of the negotiation conduct by both sides in reaching a determination as to which if either party was exhibiting “bad behaviours” or acting in bad faith.

Potential measure 5b: Alternative dispute resolution

Existing ADR services

The great majority of pool licenses are obtained by a Procompetitive Patent Pool through the consultative, sales-based, licensing process. Given this track record, it is unlikely that ADR would have any beneficial effect for licensing in the context of Procompetitive Patent Pools.

Current non-regulatory measures

As Access Advance noted at the 4 September Consultation meeting, and as described in more detail in our narrative Comments filed with these Responses, enhanced engagement by the IPO with SDOs must be approached thoughtfully and cautiously, as that involvement may be counterproductive. For example, in 2015 the IEEE revised its IPR Policy in 2015 to add detailed provisions fleshing out the meaning of a FRAND commitment in ways that were widely perceived to favor implementers over patent holder. Over the following years many fewer participants filed affirmative commitments on FRAND licensing, as a result of which the IEEE withdrew most of the revisions in 2022.

The most important thing government can do in its non-regulatory work is to proceed mindfully to ensure that its non-regulatory work is perceived as transparently intended to “create a more balanced system that works for everyone involved”. We respectfully suggest that the IPO seek to ensure that whatever interventions it creates do not reduce the efficiencies or undermine the effectiveness of Procompetitive Patent Pools in offering transparent market-based solutions to SEP licensing, including the opportunity to become both licensors and licensees for entities of all sizes including SME’s and startups. For example, the HEVC Advance patent pool has included SMEs and startups as licensees since its inception. We invite the IPO to see our response to Q31and Q43, as well as the discussion of this point in our narrative response.

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[1] Jeffrey Blumenfeld, Should FRAND Excuse “Efficient Infringement”?, 5 Criterion J. on Innovation 143 (2020), found at https://www.criterioninnova:on.com/ar:cles/should-frand-excuse-efficient-infringement/

You may click on the buttons below to download the full Response and additional narrative comments.