Japan launches guidelines for SEP licensing negotiations
In a bid to provide clear rules on standard-essential patent (SEP) licensing, the Japanese government has issued guidelines for those engaging in negotiation to follow.
The four-step process for SEP owners—“ Good Faith Negotiation Guidelines for Standard Essential Patent Licenses”—was unveiled today March 31, by Japan’s Ministry of Economy, Trade and Industry (METI).
METI said: “In recent years, disputes have arisen worldwide on licensing SEPs due to the widespread use of standards and the complication of technologies required for such standards.
“In particular, as the Fourth Industrial Revolution progresses in which many products will be computerised and processing data will create new added-value, SEP licensing among different industries, especially those in which Japan has strengths (eg automobiles, construction machinery and factories), is expected to expand in the future. Therefore, it is crucial for Japan to consider measures to resolve such disputes efficiently.”
Four steps
The four main steps in SEP licensing negotiations, according to METI, are: a licensing offer from the SEP holder; an expression of willingness to conclude a contract under fair, reasonable and non-discriminatory (FRAND) terms by the implementer; the proposal of specific licence terms by the SEP holder; and a proposal of a counteroffer, if the implementer refuses the offer proposed.
As part of step one, the government recommends that the SEP holder provides a list of patent numbers, claim charts, information indicating the implementer’s products comply with the corresponding standard and information indicating the existence of FRAND commitments.
Meanwhile, at step two, the guidelines note that the implementer’s willingness to obtain a licence under FRAND terms will not be denied even where it reserves the right to challenge the essentiality, validity, or infringement of the subject patents in the negotiation process.
At stages three and four, in addition to explaining how the royalties are calculated, the relevant party should explain that the licence terms are FRAND by using information such as information concerning third-party licences, royalty rates of patent pools, and court cases so that the other party can “objectively understand” that the licence terms are FRAND.
Expert study group
The guidelines are not legally binding and don’t guarantee that negotiations can be judged to be in good faith in each individual case. However, METI expects that parties involved in SEP licensing negotiations will follow the guidelines because, when being developed, the ministry considered the opinions of domestic and foreign companies, and experts on IP and competition law in Japan.
To develop the guidelines, METI put together a study group, comprised of representatives from industry and experts, to discuss measures. The government also asked domestic and foreign companies about their thoughts on the actions taken at each of the main steps of SEP licensing negotiations.
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