Partner Tim Syrett published a two-part article series in IPWatchDog.com responding to a series of articles addressing various aspects of licensing cellular standard essential patents (SEPs) on FRAND terms as addressed in statements from various entities involved with licensing.
“A recent series of five articles on IPWatchdog address various aspects of licensing cellular standard essential patents (SEPs) on fair, reasonable and non-discriminatory (FRAND) terms by examining statements from entities involved with licensing. The authors also provide their commentary on the statements and cite various authorities that they suggest are consistent or inconsistent with principles advocated in the statements. The articles lean heavily in favor of the positions of a few companies that derive significant revenue from SEP licensing. For this reason, they fail to present a balanced view. Indeed, to read the series, one might conclude that the major priority for SEP licensing should be to extract excessive revenues for SEP patent owners. Quite the contrary, a key priority should be applying FRAND safeguards against outsized, windfall profits resulting from abuse of SEPs to the detriment of innovative companies that engage in research and development and supply products to the marketplace. Those safeguards include applying well-established principles of patent law to SEPs, including when it comes to patent valuation and patent litigation, where a patent holder is rewarded with fair royalties that reflect the incremental value of any infringed and valid SEP.
This two-part series responds to certain issues addressed in those articles to fill the gaps on FRAND licensing and offer a perspective that seeks to vindicate the true meaning and role of FRAND. Part one starts by addressing the third article in the series. In that article, the authors address what licensing statements have said about the appropriate royalty base for licensing cellular SEPs on FRAND terms. The authors incorrectly paint a position that FRAND royalties based on the smallest saleable patent practicing unit (SSPPU) are out of step with judicial authority and industry practice. This could not be further from the truth. The authors overlook black letter patent authority, industry practice, and changes in technology that support using the SSPPU as the royalty base for cellular SEPs, just as when valuing any patent that reads on a component in a complex multi-component product.”