Using Licensing Negotiation Groups (LNGs) When Licensing Standard Essential Patents on FRAND Terms

Brussels, 27 July 2022 – Although most negotiations for licenses for standard essential patents (SEPs) on fair, reasonable, and nondiscriminatory (FRAND) terms result in licensing agreements, there may be circumstances when licensing negotiations groups (LNGs) have the potential to facilitate negotiations between some SEP licensors (including patent pools) and licensees. They could be used as a complement to bilateral SEP licensing negotiations and licensing by patent pools, provided proper safeguards are established to maximize the procompetitive benefits of LNGs and minimize their risks:

  • The LNG negotiator must be independent, highly qualified, and have experience negotiating FRAND licenses in the technological field of the SEPs subject to negotiation.
  • The LNG should be open to similar adopters of the standard—including those at different levels of the supply chain— that are able to establish objective, comprehensible criteria to enable effective licensing negotiations.
  • The proceedings should be as transparent as legally possible and commercially reasonable.
  • Negotiating with, or participating in, an LNG should be voluntary.
  • Members of the LNG have a meaningful opportunity to engage bilaterally with the SEP holder to negotiate a license on FRAND terms.
  • A SEP holder that refuses to negotiate with an LNG should not be deemed an unwilling licensor or bad-faith licensor, provided the members of the LNG have a meaningful opportunity to engage bilaterally with the SEP holder to negotiate a license on FRAND terms.
  • A SEP licensee that refuses to participate in an LNG should not be deemed an unwilling licensee or bad-faith negotiator.
  • Each member of the LNG must decide independently whether to take an LNG negotiated license.
  • Negotiating with an LNG should not affect whether a member may raise a FRAND defense against an injunction under the European Court of Justice’s decision, Huawei Technologies Co. Ltd v. ZTE Corp.
  • The LNG and SEP holder or patent pool should agree to a reasonable timeframe for negotiations, recognizing that the precise time will depend on the facts and circumstances of the particular negotiation.

Such LNGs may help increase the number and variety of products incorporating standardized technologies that can be successfully brought to market.

Download the full position paper here.

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