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21 August 2015Copyright

IP Week @ SG 2015 preview: ZTE discusses SEPs

When Tong Xin, senior licensing director at ZTE, steps up to address delegates at IP Week at the end of August, his company will probably still be digesting one of the most important European patent rulings in recent times.

In July, the Court of Justice of the European Union (CJEU) issued its ruling in Huawei v ZTE. The case centred on standard-essential patents (SEPs) and when, if at all, it is appropriate to seek an injunction based on alleged infringement of a SEP.

The court issued a mixed ruling. It confirmed that a SEP owner that has given an irrevocable undertaking to grant a licence on FRAND terms does not abuse its dominant position by seeking an injunction due to alleged infringement. However, the SEP owner must have alerted the implementer to the alleged infringement and, after the infringer has expressed its willingness to conclude a licensing agreement, presented a written offer for a licence on FRAND terms that specifies the royalty and how it was calculated.

Xin, who leads ZTE’s patent licensing programmes, will be speaking at the 5th Global Forum on IP, which is part of the IP Week activities. He will address trends in IP protection and enforcement in China.

Although the CJEU’s decision does not directly affect China he believes it has provided some wider clarity.

“Such a ruling will bring more clarity to the industry and will help reduce unnecessary and costly patent litigation, which always comes at the expense of customers. Instead, companies will be able to direct their resources towards research and innovation,” he says.

He adds that although all companies “should have the right” to enforce their IP rights it needs to be acknowledged that SEPs provide their owners with “significant, or even dominant” market power.

“It needs to be acknowledged that SEPs provide their owners with ‘significant, or even dominant’ market power.”

He says that is why certain safeguards are in place “to allow fair licensing negotiations without the threat of injunctions, which could be extremely damaging to business”.

This is especially true, he adds, when they are sought by non-practising entities, which have “nothing to lose in the market and abuse the patent system for commercial purposes”.

“The ruling sets a balance and fair rule between SEP owners and technology implementers.”

In his daily role Xin is well aware of the relevance of SEPs. The company currently owns around 13% of all SEPs related to the LTE (4G) standard, to which the patents at issue in the Huawei case relate.

He adds: “In the single year of 2014, ZTE submitted 2,179 filings in the Patent Cooperation Treaty (PCT), the third-highest total globally, according to the World Intellectual Property Organization (WIPO).

“We have also been ranked in the top three of WIPO’s PCT application tables over the last four years.”

With a large number of patents at play, deciding exactly what and when to license IP is crucial.

“We believe that the very fundamental and important thing is to study your patent portfolio and monitor the market,” he says.

The IP Week @ SG 2015 initiative runs from August 24 to 28 at the Marina Bay Sands Expo and Convention Centre in Singapore.

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