Brussels, October 26, 2020 – Forcing companies to license a global portfolio of standard essential patents (SEP) contradicts potential licensee’s right to pay royalties only for those intellectual property rights that are infringed or otherwise applicable and only in relevant countries.
In a position paper “Coerced Global SEP Portfolio Licences Are Not FRAND” published on 26 October 2020, the Fair Standards Alliance cautions about undesired consequences such practices might have.
If parties voluntarily and mutually agree to negotiate a global portfolio licence, they certainly may do so. However, companies should not be forced to take a licence to SEPs they do not need or do not infringe. A company that operates only in a particular country or geographic region should not be required to pay for worldwide intellectual property rights that it does not need.
Just because it chooses to challenge applicability, validity or quality of declared SEPs in a given jurisdiction, a company should not be automatically deemed “unwilling” to license SEPs. This should also not be invoked as a reason for SEP holder to refuse to license patents in the portfolio that are not being challenged. Studies show that as many as 70-90% of declared SEPs, when tested in court are found to be invalid, or not essential, or not infringed.
The burden of proof of patent infringement lies with patents holders. But if licensees are forced to agree to a global patent portfolio, the burden of proof is unfairly lifted, or, indeed, reversed. Licensees may be forced to pay royalties for patents in a bundled portfolio that are possibly not essential to a given standard, not valid or not infringed by the prospective licensee.
The threat of injunctions and market exclusion should not be used to force licensees into global SEP portfolio licences or global portfolio adjudication where adequate monetary remedies are available and sufficient to address legitimate infringement claims.
Practices that mandate global portfolio adjudications in a single jurisdiction, particularly under the threat of injunction, can also undermine legitimate interest of courts and regulatory authorities to shape and enforce intellectual property laws and norms within their jurisdictions.
The FSA is concerned that if SEP holders may seek to impose a global patent portfolio on potential licensees even when there are good arguments that such a licence is not required. It is troubling that a SEP holder could use a single patent, in a single jurisdiction, to force a potential licensee to enter into a worldwide SEP licence, including for patents that might not be essential, infringed or valid.
To read the full position paper please follow this link.