Views on SEPs to inform UK IP strategy
Office releases results of call for views on SEPs | Responses indicate imbalance of power in price negotiations and problems with anti-suit injunctions.
The UK Intellectual Property Office (IPO) has published a summary of the responses received from its consultation on standard essential patents (SEPs).
The office published its summary of the views on Friday, August 5, following a call for views which ran for 12 weeks between December 2021 and March 2022, and received 56 written responses.
Responses covered six themes: the relationship between SEPs, innovation, and competition, and what actions or interventions would make the greatest improvements for consumers in the UK; competition and market functioning; transparency in the system; patent infringement and remedies; licensing of SEPs; and SEP litigation.
Tim Moss, the IPO’s chief executive, said: “The responses we received to our call for views gave us a vast amount of information to analyse on these incredibly important issues. This forms an excellent foundation for our work as we take this to the next stage.
“We recognise there are many different interests to consider, which is why we began by asking broad questions to establish what the issues are.
“We can now narrow these down as we move forward, and ensure the IP framework is striking the right balance for the maximum benefit to UK innovation.”
SEP price negotiations
Many respondents said there was an imbalance of power to influence prices in SEP negotiations.
SEP holders claimed that implementers derive power from the requirement to offer fair, reasonable and non-discriminatory (FRAND) terms, which “gave them the ability to ‘hold-out’ or delay entering into licences, while these terms were negotiated and litigated”.
On the other hand, implementers claimed that SEP holders exercise market power, with some arguing that SEP holders “used the threat of injunctions to coerce implementers to accept non-FRAND licences”.
Anti-suit injunctions
Additionally, a number of respondents commented on the use of anti-suit injunctions (ASIs), which prevent a party from commencing or continuing the same legal action in another jurisdiction or enforcing a judgment obtained in a foreign jurisdiction.
While some respondents noted that ASIs can be useful in avoiding conflicting decisions in different jurisdictions, several respondents claimed that ASIs were problematic, “adding to the cost, complexity and length of litigation or depriving SEP holders of their ability to enforce their patents”.
Others said that ASIs had been used in Chinese courts without due process.
The IPO received several proposals for discouraging the use of ASIs, including one suggestion that the use of an ASI should be treated by the courts as a sign of being an unwilling licensee.
National courts and FRAND
The consultation also asked about the benefits or otherwise of national courts determining the terms of global FRAND licences, as seen in the UK Supreme Court’s Unwired Planet case.
Some respondents said that the setting of global licensing rates can be more efficient than pursuing litigation in multiple jurisdictions.
However, others—including many implementers—stated that national courts should not be able to compel a party to accept a determination of global licensing terms.
According to a number of the respondents, this is an extra-territorial judicial overreach which encouraged forum shopping and the use of ASIs.
Ecosystem efficiency
“We found that both SEP holders and implementers reported problems related to the efficiency or effectiveness of the ecosystem around SEPs,” said the IPO.
“However, there was little consensus on the nature, extent, causes, and impact of problems in this area, with SEP holders and implementers often advancing opposing arguments in response to the questions posed.”
Findings will be reported to UK ministers in 2023, helping to inform the government’s decision on what actions it takes next, including whether any government intervention is required. Any significant policy interventions will be subject to public consultation.
According to “Fact finding study on patents declared to the 5G standard”—a 2020 report published by market intelligence company IPlytics and the Technical University of Berlin—the number of declared SEPs doubled on average every five years between the early 1990s to 2014.
As of 2020, around 95,000 patents were declared essential for the 5G standard.
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