Fresh Guidance for Owners of Standard-Essential Patents

Fresh Guidance for Owners of Standard-Essential Patents


Until recently, thousands of companies had agreed to license their standards-essential patents (SEPs) on fair, reasonable and non-discriminatory (FRAND) terms in the course of participating in standard-setting organizations (SSOs), even though they were uncertain as to how or whether those commitments could be enforced or interpreted. A recent flurry of activity has brought the meaning and enforceability of FRAND commitments into sharp focus.

The Cellphone Wars

The most exceptional event was the August 3, 2013 decision by the US Trade Representative to overturn an exclusion order issued by the US International Trade Commission (ITC), the first such reversal of the ITC in over 25 years. The ITC order would have prevented Apple from bringing certain of its products into the United States because they infringed a Samsung patent essential to the 3G wireless communications standard.

Samsung had participated in the development of that standard. In doing so, it had committed to make its SEPs available on FRAND terms. The Apple products in question adhered to the applicable standard and, according to the ITC, used the Samsung technology. Although Samsung had offered a license to Apple over the course of prolonged negotiations, Samsung was persistent in asking for a license back of certain Apple patents that were not SEPs and not subject to FRAND commitments.

Before the ITC rendered its decision, the Department of Justice and the US Patent and Trademark Office issued a joint statement supporting a theory that we have reported as gaining traction worldwide: that injunctive relief should not be available to remedy infringement of patents that are the subject of FRAND commitments. This theory is based on the doctrine that injunctive relief is available only where monetary damages is not an adequate remedy; by agreeing to license on FRAND terms, the patent holder has conceded that it would be adequately compensated for a license if a reasonable royalty were paid. [footnotes omitted]

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