InterDigital v Lenovo exposes flaws in SEP practices, says Fair Standards Alliance
Alliance calls for ‘guardrails’ around SEP licensing | IoT group to review “significant milestone” for holders of standard-essential patents.
Patent hold-up is still an issue for companies trying to license standard-essential patents (SEPs), the Fair Standards Alliance (FSA) has said as it called for “guardrails” around SEP licensing practices.
The alliance was referring to the recent judgment in InterDigital v Lenovo, in which the English High Court handed down its second-ever global fair, reasonable and non-discriminatory (FRAND) licensing decision. Lenovo was ordered to pay InterDigital $138.7 million in royalty fees—about 40% of the amount originally claimed by the wireless technology giant.
The FSA advocates for fairer licensing of standardised technology in the development and rollout of the Internet of Things (IoT), and comprises an alliance of 46 European and global companies.
The judgment underlines the importance of transparency in licensing negotiations, the FSA said, pointing to the judge’s finding that InterDigital had refused to share “important information that would have allowed the defendant to assess whether their offer was FRAND”.
In a statement released yesterday (March 20) the FSA said the decision “highlights that willingness should only be assessed once a FRAND rate is offered”. In the case between InterDigital and Lenovo, the court determined that there was insufficient evidence that Lenovo was unwilling to take a licence—but that none of the licensing deal offers made by either party were FRAND.
‘Guardrails’ around licensing practices
Giving further guidance on how these deals should operate, the judge said that SEP holders should not base their rates on the price or other features of end-devices because it would lead to discrimination.
“When a mobile phone, tablet or computer uses 3G, 4G or 5G technology covered by SEPs, the royalties payable should not depend on the price of the phone (or tablet or computer), which reflects many other features (eg screen size, processor power and other features) which are unrelated to the licensed technology even if dependent on it, as well as the status of the brand of phone or tablet,” the judge said.
“Accordingly, in terms of SEP licensing, each unit should be viewed as a functional unit, functioning using the relevant generation(s) of the technology.”
The FSA called for governments to place ‘guardrails’ around SEP licensing practices, as not all companies had the resources to go to court and would be required to accept offered terms particularly under the threat of an injunction.
Ief Daems, chair of the FSA, said: “We will continue to review the decision, but this is a significant milestone that signals again the importance for SEP holders to abide by their voluntary commitment and license their SEPs to all companies that want a license on FRAND terms whatever the size of the licensee.”
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