Web viewThis position should be adopted because ____________. Such a presumption is warranted because continual challenges to agreed-upon

DRAFTTo: AIPLA Board of Directors

From: Standards & Open Source Committee

Date: DRAFT

Subject: Paper on Standard Essential Patents (SEPs)

This paper presents a review of AIPLA’s past positions concerning standard essential patents and also considers new positions or a change in prior positions. The past prior position papers considered in the instant paper include: [LIST HERE OR PUT THE LIST IN AN APPENDIX]

Table of Contents

I. IPR Policies of Standard Setting Organizations.....................................................................................

Position 1. Options A and C...........................................................................................................Position 2. ......................................................................................................................................Position 3. Options A and C...........................................................................................................Position 4. Options A, B and C [Combine with Position above?].................................................Position 5. Option B.......................................................................................................................Position 6. Option B.......................................................................................................................Position 7. Options A and B...........................................................................................................Position 8. Options A and C...........................................................................................................Position 9. ......................................................................................................................................Position 10. ......................................................................................................................................Position 11. ......................................................................................................................................Position 12. Options B and C.........................................................................................................Position 13. Options B and C (Combine with Position above?)....................................................Position 14. ....................................................................................................................................Position 15. ....................................................................................................................................Position 16. Options A and B.........................................................................................................Position 17. ....................................................................................................................................Position 18. Options A and B.........................................................................................................Position 19. ....................................................................................................................................Position 20. Option C.....................................................................................................................Position 21. Options A, B and C....................................................................................................

II. The Specific Standard Setting Obligation At Issue...............................................................................

Position 22. ....................................................................................................................................Position 23. Options A and C.........................................................................................................Position 24. Options A and C.........................................................................................................Position 25. Options A and C.........................................................................................................

III. Determining Essentiality......................................................................................................................

Position 26. Options A, B and C....................................................................................................Position 27. ....................................................................................................................................

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Position 28. Options A, B and C....................................................................................................

IV. Disclosure Obligations for SSO Participants........................................................................................

Position 29. Options A and C.........................................................................................................Position 30. Options A and C.........................................................................................................Position 31. ....................................................................................................................................Position 32. Options A and B.........................................................................................................

V. Availability of Injunctive Relief............................................................................................................

Position 33. Options A and C.........................................................................................................Position 34. Options A and C.........................................................................................................Position 35. Option A.....................................................................................................................Position 36. Option A.....................................................................................................................Position 37. Options A and C.........................................................................................................Position 38. Options A and C.........................................................................................................Position 39. Options A, B and C....................................................................................................Position 40. Option C.....................................................................................................................Position 41. Option C.....................................................................................................................Position 42. Option C.....................................................................................................................Position 43. Options A and C.........................................................................................................Position 44. Option C.....................................................................................................................

VI. Bilaterally negotiated FRAND terms may be monetary or non-monetary............................................

Position 45. Options A and C.........................................................................................................Position 46. Option A.....................................................................................................................Position 47. Options A and C.........................................................................................................Position 48. Option B.....................................................................................................................

VII. Regulation of FRAND Royalty Rates...................................................................................................

Position 49. Options A and C.........................................................................................................Position 50. Option A, B and C......................................................................................................Position 51. Option B.....................................................................................................................Position 52. Options A and C.........................................................................................................Position 53. Option B.....................................................................................................................

VIII. SSO setting FRAND licensing terms....................................................................................................

Position 54. Options A, B and C....................................................................................................Position 55. 32Position 56. Options B and C.........................................................................................................Position 57. Option C.....................................................................................................................

IX. SEPs and Competition Law.................................................................................................................

Position 58. Options B and C.........................................................................................................Position 59. Options A and C.........................................................................................................Position 60. Options A, B and C....................................................................................................

X. Patent Holdup, Holdout, Reverse Holdup/Holdout, Willing Licensee, Willing Licensor........................

Position 61. Options A, B and C....................................................................................................Position 62. Options A, B and C....................................................................................................Position 63. Option A.....................................................................................................................Position 64. Option A and C...........................................................................................................

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Position 65. Option A and C...........................................................................................................Position 66. Options A, B and C....................................................................................................Position 67. ....................................................................................................................................

XI. Royalty Stacking.................................................................................................................................

Position 68. Options A, B and C....................................................................................................Position 69. ....................................................................................................................................Position 70. Options A and B.........................................................................................................Position 71. Option A.....................................................................................................................

XII. Patents are territorial rights enforceable only in issuing country or region...........................................

Position 72. Options A, B and C....................................................................................................

XIII. Royalty Base and Apportionment........................................................................................................

Position 73. Options A and C.........................................................................................................Position 74. Option B.....................................................................................................................Position 75. Option C.....................................................................................................................

XIV. Patent law guidance on “reasonable royalty”.......................................................................................

Position 76. ....................................................................................................................................

XV. Use of NDAs in negotiating SEP licenses..............................................................................................

Position 77. Option A.....................................................................................................................Position 78. Options A and C.........................................................................................................Position 79. Option C.....................................................................................................................Position 80. Options B and C.........................................................................................................Position 81. Option C.....................................................................................................................Position 82. Option C.....................................................................................................................Position 83. Options B and C.........................................................................................................

XVI. Non-discriminatory licensing of SEPs..................................................................................................

Position 84. ....................................................................................................................................Position 85. Options A and C.........................................................................................................Position 86. Option C.....................................................................................................................Position 87. ....................................................................................................................................Position 88. Options B and C.........................................................................................................

XVII. Methodology for resolving SEP licensing disputes................................................................................

Position 89. ....................................................................................................................................Position 90. Option C.....................................................................................................................Position 91. ....................................................................................................................................Position 92. Options A and C.........................................................................................................

XIII. Cross-Licensing and Patent Pools involving SEPs................................................................................

Position 93. Options A, B and C....................................................................................................Position 94. Options A, B and C....................................................................................................Position 95. Option C.....................................................................................................................Position 96. Options A and C.........................................................................................................Position 97. Options A, B and C....................................................................................................Position 98. ....................................................................................................................................Position 99. Options A, B and C....................................................................................................

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Position 100. Options A and B.........................................................................................................

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I. IPR Policies of Standard Setting Organizations

[This topic will discuss the purpose behind IPR policies and whether there is a need for clear and public IPR policies and SSO governance documents]

Position 1. Options A and C

Option 1A There should be sensible transparency, flexibility and incentives for broad participation in standards-setting activities by all stakeholders—i.e., users of standards and also owners of intellectual property whose technology may be included in standards based on the consensus of interested stakeholders. Consistent with this view, strong IPR protection in connection with standards-setting is important so that innovators will have the incentives to invest in the development of technologies and contribute such technologies to standards-setting efforts. To ensure that such incentives remain strong, SSO’s IPR polices should not be interpreted as imposing constraints on patent owners’ rights, except to the extent specifically set forth in a particular SSO policy.

This proposed position is based on past prior AIPLA positions __________. This existing AIPLA position remains proper because _________.

The primary difference between this proposed position and Option C is that ______. This proposed position should be adopted because ___________.

Option 1B Supports Option A.

Option 1C There should be sensible transparency, flexibility and incentives for broad participation in standards-setting activities by all stakeholders—i.e., users of standards and also owners of intellectual property whose technology may be included in standards based on the consensus of interested stakeholders. Consistent with this view, strong fair IPR protection in connection with standards-setting is important so that innovators will have the incentives to invest in the development of technologies and contribute such technologies to standards-setting efforts. To ensure that such incentives remain strong fair, SSO’s IPR polices should not be interpreted as imposing constraints on patent owners’ rights, except to the extent specifically set forth in a that do not accord with the particular SSO policy.

The primary difference between this proposed position and Option A is that _____. This proposed position should be adopted because ____________.

Position 2. .

(New Position?) Standard setting may save costs (and allow for investment in non-standardized fields) and promote competition and growth in the standards field itself as well as associated and networked fields as the standard becomes adopted and revised to promote new products and services over time.

This is based on past prior AIPLA positions __________. This existing AIPLA position remains proper because _________.

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David W. Long, 08/16/16,

Is this a new position or from an prior AIPLA position?

DRAFT


Option 3A (Prior AIPLA Position) Proper SSO IPR Policies generally should foster investment in R&D that creates technology used in standards and seeks a balance in sufficiently rewarding innovators who contribute their patented technology to standards while ensuring that implementers of the standard have reasonable access to such technology.




Option 3C Proper SSO IPR Policies generally should foster investment in R&D that creates technology used in standards and seeks a balance in sufficiently rewarding innovators who contribute their patented technology to standards while ensuring that providing implementers of the standard have with reasonable access to such technology.


Position 4. Options A, B and C [Combine with Position 3above?]

Option 4A (Prior AIPLA Position) At a minimum, SSO IPR policies, however, should balance the dual goals of (1) ensuring implementers who want to practice a standard have reasonable access to SEPs on FRAND terms, and (ii) providing SEP owners the opportunity to negotiate terms that provide them with reasonable compensation that supports their investment in innovation. Accordingly, SSO IPR policies should not include terms that limit royalties or devalue SEPs or deprive SEP owners of remedies available under patent or other applicable law (DIPP nn. 147, 191).


The primary difference between this proposed position and Option B is that _____. This proposed position should be adopted because ____________.


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Can we combine this with Position above given similarity re “balancing”?


What is the difference between Option A and C? Is there a difference between (A) ensuring implementers have reasonable access and (B) providing implementers with reasonable access?

DRAFT

Option 4B At a minimum, SSO IPR policies, however, should balance the dual goals of (1) ensuring implementers who want to practice a standard have reasonable access to SEPs on FRAND terms, and (ii) providing SEP owners the opportunity to negotiate terms that provide them with reasonable compensation for use of their technologies that supports their investment in innovation. Accordingly, SSO IPR policies should not include terms that limit royalties or devalue SEPs or deprive SEP owners of remedies available under patent or other applicable law.



Option 4C At a minimum, SSO IPR policies, however, should generally balance the dual goals of (1) ensuring implementers who want to practice a standard reasonable have access to SEPs on FRAND terms, and (ii) providing SEP owners the opportunity to negotiate terms that provide them with reasonable compensation that supports their investment in innovation. Accordingly, SSO IPR policies should not include terms that limit royalties or devalue SEPs or deprive SEP owners of remedies available under patent or other applicable law.

The primary difference between this proposed position and Option A is that _____. This proposed position should be adopted because ____________. This position, unless edited, conflicts with AIPLA’s position that SSOs should be free to adopt the policies their members choose, and that one-size does not fit all. It also seems to suggest that FRAND-Z SSOs such as Bluetooth – which have been widely used and successful – are inappropriate.


Position 5. Option B.

Option 5A No Direct Prior AIPLA Position.

Option 5B SSO IPR Policies, including those that seek commitments that SEPs will be licensed on FRAND terms and conditions, provide the necessary clarity to facilitate effective standards development and licensing. This is reflected by the significant number of standards that have been developed under typical SSO IPR policies and the enormous number of FRAND licenses that have been entered to implement such standards. The clarity of SSO IPR policies is further reflected by the de minimis number of disputes over the meaning of IPR policy terms relative to the number of FRAND licenses..

This proposed position is appropriate because ____________________.

Option 5C Oppose Option B.

Option B is improper because ______. This conflicts with existing AIPLA positions that SSOs should be free to adopt the policies they see fit for their group, and that “one size does not fit all”. We

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should not be making value judgments about different SSO policies, or implicitly wading into debates over particularly SSOs such as IEEE that have decided to provide additional clarity. This also could be taken as a positioning AIPLA as at-odds with the USDOJ and FTC, each of whom have recommended added clarity in SSO policies, and at odds with the US Federal Courts that have recognized that FRAND policies can be problematically ambiguous.



Option 6B Disputes over FRAND terms do not reflect a lack of clarity of SSO IPR policies. Such disputes are commercial disagreements over the amount of royalties or license fees and not ambiguity regarding the meaning of FRAND. FRAND is a meaningful legal standard and terms such as “reasonable” and “non-discriminatory” have meaningful definitions; many areas of law afford analogies.

This proposed position is appropriate because ____________________.

Option 6C Opposes Option B.

Option B is improper because ______ the same reasons given for Option 5C above.

Position 7. Options A and B.

Option 7A (Prior AIPLA Position) SSOs should make their IPR Policies clear and publicly available to clearly define the metes and bounds of IPR obligations for innovators contributing their patented technology and for implementers of such technology.



Option 7B SSOs should make their IPR Policies clear and publicly available so as to clarify the to clearly define the metes and bounds of IPR obligations for innovators contributing their patented technology and for implementers of such technology.


Option 7C Supports Option A.


Option 8A (Prior AIPLA Position) There is no one-size-fits all IPR policy for all SSOs. Diversity of SSO IPR Policies has benefited standards and each SSO should adopt IPR policies that fit its particular circumstances.


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Option 8C There is no one-size-fits all IPR policy for all SSOs. Diversity of SSO IPR Policies has benefited standards and each SSO should adopt IPR policies that fit its particular circumstances. Depending on the criticality of the standard and to the overall product and to implementers, and depending on the availability of viable alternatives that may replace the SEP technology in the standard specification, SEP holders may have varying levels of leverage over those implementing the standard. In some instances, implementers have little choice but to incorporate SEP technologies into their product.


Position 9. .

(Prior AIPLA Position) FRAND should be sufficiently flexible to permit patentees and implementers to negotiate specific license terms tailored to their unique interest, relationships and business models (n. 207). Such flexibility benefits both implementers and innovators.


Position 10. .

(Prior AIPLA Position) SSOs should make their governance documents available to review and easy to find.


Position 11. .

(Prior AIPLA Position) SSOs should make readily available declarations by patent owners of whether they have patents with potentially essential patent claims, when they are required to do so by the SSO IPR policy, and any licensing commitments that the patent owner does or does not provide with same.


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Position 12. Options B and C


Option 12B SSOs should make readily accessible all positive and negative licensing declarations submitted by patent holders.

The primary difference between this proposed position and Option C, shown in redline in Option C below, is that ______. This proposed position should be adopted because ___________.

Option 12C SSOs should make readily available accessible all positive and negative licensing declarations submitted by patent holders.

The primary difference between this proposed position C and Option B, shown in redline above, is that _____. This proposed position should be adopted because ____________.

Position 13. Options B and C (Combine with Position 12above?)


Option 13B SSOs should make readily accessible any terms upon which patent holders have committed to make licenses of SEPs available, regardless of whether such terms are consistent with the SSO’s policy.


Option 13C SSOs should make readily available accessible any terms upon which patent holders have committed to make licenses of SEPs will be made available, regardless of whether such terms are consistent with the SSO’s policy.

The primary difference between this proposed position C and Option B, shown in redline above, is that _____. This proposed position should be adopted because ____________.

Position 14. .

(Prior AIPLA Position) SSOs generally should avoid overly-burdensome IPR disclosure requirements, which can discourage participation in developing, disclosing, and assuring licenses under critical inventions and IP.


Position 15. .

(Prior AIPLA Position) SSO IPR disclosure requirements generally should not require disclosing a third party’s IPR that may be essential to the standard.


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Combine with prior position?

DRAFT


Option 16A (Prior AIPLA Position) SSOs should not examine patents or state an opinion of whether patents are essential to a standard.




Option 16B [Proposed alternative “softened” language?].

The primary difference between this proposed position and Option A is that _____. This proposed position should be adopted because ____________. Group B appreciates the proposed position, but notes that some SSOs may also be organized as ,or otherwise incorporate, patent pools or licensing platforms that may examine patents for their essentiality. Therefore some softened language may be appropriate there.


Option 16C Oppose A and B?



Position 17. .

(Prior AIPLA Position) SSO IPR policies generally should encourage licensing commitments to have language that the obligation shall survive transfer of the IPR to a new owner, and further subsequent transfers. Parties transferring SEPs should have latitude in how they achieve this.


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Does Drafting Team B have proposed alternative language to “soften” the statement based on its following comment: Group B appreciates the proposed position, but notes that some SSOs may also be organized as ,or otherwise incorporate, patent pools or licensing platforms that may examine patents for their essentiality. Therefore some softened language may be appropriate there.

DRAFT


Option 18A AIPLA recommends that, when drafting a standard, SSOs and participants consider whether a patent holder’s declared licensing commitment includes a provision that such commitment shall be binding on itself and future owners of the patent. Further, AIPLA recommends that SSOs’ IPR policies should encourage that such obligations survive transfer to new owners (including successors in interest through bankruptcy proceedings) and include such a provision in exemplar declarations. Parties transferring SEPs should have latitude in how they achieve these desired ends.



Option 18B AIPLA recommends that, when drafting a standard, SSOs and participants consider whether a patent holder’s declared licensing commitment includes a provision that such commitment shall be binding on itself and future owners of the patent. Further, AIPLA recommends that SSOs’ IPR policies should encourage require that such obligations survive transfer to new owners (including successors in interest through bankruptcy proceedings) and include such a provision in exemplar declarations. Parties transferring SEPs should have latitude in how they achieve these desired ends.



Position 19. .

(Prior AIPLA Position) AIPLA does not support legislative, regulatory, judicial, or administrative action that would require all SSOs to adopt a single prescribed intellectual property rights / licensing and disclosure policy, but favors SSOs having the flexibility to formulate their own policies and procedures.


Position 20. Option C.

Option 20A (No Direct AIPLA Position).

Option 20B Opposes Option C.

Option C is should not be adopted because ___________.

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Option 20C SSOs should seek to avoid developing a standard that cannot be implemented because a participant in the standards-development process holds a blocking IPR that it refuses to license or refuses to license on reasonable term. 1

This proposed position is appropriate because ____________. This direct quote from prior AIPLA text is accurate and fully consistent with applicable case law.

Position 21. Options A, B and C.

Option 21A (Prior AIPLA Position). SSOs should consider basic due process requirements set out in the American National Standards Institute (ANSI) Essential Requirements; Due Process Requirements for American National Standards.




Option 21B SSOs should consider basic due process requirements set out in the American National Standards Institute (ANSI) Essential Requirements; Due Process Requirements for American National Standards. AIPLA strongly endorses the adoption of SSO IPR policies through processes that comport with principles of balance, openness, consensus and due process such that the interests of all interested persons are respected.



Option 21C [Redline to Option B] AIPLA strongly endorses the adoption of SSO IPR policies through fair and representative processes that comport with principles of balance, openness, consensus and due process such that the interests of all interested persons are respected while recognizing that SSOs are private organizations and have the right to adopt their own IPR policies according to their own established rules.


The primary difference between this proposed position and Option B is that ______. This proposed position should be adopted because ___________.

1 Canada Submission, p.3-4.- 13 -


This was proposed as coming from a direct quote from prior AIPLA paper, citing to “Canada Submission, p.3-4”. Did not find this quote in the Aug. 20, 2015 AIPLA So need Drafting Team C to confirm where this comes from. If a direct quote, as Drafting Team C’s comments suggests, the wording suggests this was not an AIPLA position, but an assortment of factual background – i.e., does not indicate that AIPLA supports or opposes that statement. Reworded this into a proposed position as seemed the intent of Drafting Team C.

DRAFT

II. The Specific Standard Setting Obligation At Issue

[This topic will address whether and to what extent someone considering an SEP should consider the specific wording of the standard setting obligation at issue. May list different types of obligations and different types of FRAND. May consider ad hoc consortia. Consider benefit of diversity in different SSO’s setting own IPR policies and avoiding government regulation thereof. ]

Position 22. .

(Prior AIPLA Position) Diversity among SSOs in setting IPR policies is encouraged and beneficial to ensure that an SSO develops an IPR policy that fits its particular circumstances – one size does not fit all.


Position 23. Options A and C.

Option 23A (Prior AIPLA Position) AIPLA supports strong IPR protection in connection with standard setting, so innovators will have the incentives to invest in the development of technologies and contribute such technologies to standard-setting efforts ( n. 3).




Option 23C AIPLA supports strong fair IPR protection in connection with standard setting, so innovators will have the incentives to invest in the development of technologies and contribute such technologies to standard-setting efforts, and so that standards participants will know that they can obtain access to the standard on fair terms.



Option 24A (Prior AIPLA Position) License assurances made under an SSO IPR policy generally should be considered a binding, enforceable contract subject to the terms of the SSO’s IPR policy and the license assurance, which establish the intent of the parties to the contract - i.e., the SSO and SEP owner (n . 190).



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Option 24C License assurances made under an SSO IPR policy generally should be considered a binding, enforceable contract subject to the terms of the SSO’s IPR policy and the license assurance, which establish the intent of the parties to the contract - i.e., the SSO and SEP owner.

The primary difference between this proposed position and Option A is that _____. This proposed position should be adopted because ____________. The suggestion that the intent of the parties is determined with reference to the policy language only is an inaccurate statement of law.


Option 25A (Prior AIPLA Position) An SEP is fundamentally a patent, imbued with all rights provided by and under the laws of the issuing jurisdiction (just like any other patent), except that it is subject to the applicable FRAND commitment. In the context of either a licensing transaction or dispute resolution, a FRAND commitment or SSO IPR policy does not impose, nor should be interpreted as imposing, constraints on patent owners’ rights, except to the extent explicitly set forth in a particular FRAND commitment or applicable IPR policy ( nn. 4; 89, 180).




Option 25C An SEP is fundamentally a patent, imbued with all rights provided by and under the laws of the issuing jurisdiction (just like any other patent), except that it is subject to the applicable FRAND commitment. In the context of either a licensing transaction or dispute resolution, a FRAND commitment or SSO IPR policy does not impose, nor should be interpreted as imposing, constraints on patent owners’ rights, except to the extent explicitly set forth in a consistent with the particular FRAND commitment or applicable IPR policy or requirements of competition law.


III. Determining Essentiality


Option 26A (Prior AIPLA Position) The SSOs definition of what constitutes an essential patent to the standard controls that determination, which definition may vary among different SSOs.


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Option 26B The SSOs definition of what constitutes an essential patent to the standard controls that determination, which definition may vary among different SSOs, and should include patents which are necessarily infringed, on technically grounds, by a compliant implementation of the standard, but not patents which are only commercially desirable. Such definition may vary among different SSOs.


The primary difference between this proposed position and Option C is that _____. This proposed position should be adopted because ____________.

Option 26C The SSOs definition of what constitutes an essential patent to the standard controls that determination, which definition may vary among different SSOs, and typically includes patents to the extent they include patent claims which are necessarily infringed by compliant implementations of required portions of the standard.

The primary difference between this proposed position and Option A is that ______. This proposed position should be adopted because ___________.


By stating what an SSO policy “should” state in its policy, we are violating our own rule that SSOs should be left free to state their own rules. This is particularly true as many IPR policies do expressly include commercially required patents be included. If we are going to add to AIPLA’s prior text, this is a far more accurate and consistent with past AIPLA statements than the immediately preceding formulation.

Position 27. .

(Prior AIPLA Position) Essentiality determinations should be on a claim-by-claim basis of individual claims within a patent.


Position 28. Options A, B and C

Option 28A (Prior AIPLA Position) Essentiality should be based on a finding of a court or tribunal of competent jurisdiction.



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Option 28B Where there is a dispute, AIPLA believes that essentiality should be based on can finally be decided only by a finding of a court or tribunal of competent jurisdiction.



Option 28C Essentiality should be based on a finding of disputes between SEP holder and implementer are typically determined by a court or tribunal of competent jurisdiction, which may include government agencies and alternative dispute resolution forums.

The primary difference between this proposed position and Option A is that _____. This proposed position should be adopted because ____________. This [Option C] may be unnecessary if the original AIPLA text [Option A] above is retained.


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IV. Disclosure Obligations for SSO Participants

[This topic will include different types of disclosure obligations, vel non, -- e.g., disclosure-based IPR policies verses participation-based IPR policies – and best practices in designging such policies (e.g., avoid overburdensome disclosure obligations, protect confidentiality, disclosure of third-party SEPs, SSO not examine patents, transfer of ownership).


Option 29A (Prior AIPLA Position) SSOs generally should avoid overly-burdensome IPR disclosure requirements. In particular patent searches by patent holders should not be required, and only potentially essential patents and patent applications that the individual who is an active participant or contributor to the technical committee developing a standard is individually aware of should be required to be disclosed.




Option 29C SSOs generally should avoid overly-burdensome IPR disclosure requirements, which can discourage participation I developing, disclosing and assuring licenses under critical inventions and IP. In particular patent searches by patent holders should not be required, and only potentially essential patents and patent applications that the individual who is an active participant or contributor to the technical committee developing a standard is individually aware of should be required to be disclosed.

The primary difference between this proposed position and Option A is that _____. This proposed position should be adopted because ____________. Note that this is duplicative of text above. As noted above, some SSOs, under the particular circumstances, may wish to require patent searching; is AIPLA saying it is inappropriate for them to do so?


Option 30A (Prior AIPLA Position) SSOs should not require any participant to disclose a third party’s potentially essential patents.



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Option 30C SSOs generally should not require any participant to disclose a third party’s potentially essential patents.

The primary difference between this proposed position and Option A is that _____. This proposed position should be adopted because ____________. Again, we should not be criticizing SSO’s ability to tailor their own rules. Many SSOs - e.g., ETSI – have provisions for disclosure of any known IPR, regardless of the patent holder.

Position 31. .

(Prior AIPLA Position) SSOs should generally not examine patents to determine their essentiality. The essentiality of patent claims must be examined by legal professionals and ultimately by a court of law or proper tribunal.



Option 32A (Prior AIPLA Position) SSO IPR disclosure requirements generally should not require disclosure of confidential information, and usually should be limited to issued patents, published patent application titles and patent application numbers.



Option 32B SSO IPR disclosure requirements generally should not require disclosure of confidential information, and usually should be limited to issued patents, published patent applications and patent application numbers. Licensing assurances should permit limitations to specified patents, patent claims and applications. SSO’s should be free to allow for blanket license assurances.



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Drafting Team C opposed Option A because they would add the word “generally” before “should not require disclosure …” Made that change to Option A because it seemed like a nominal difference. So Drafting Team C should now support that language. Drafting Team C gave the following comment to support the change:Some SSOs, under the particular circumstances, may wish to require more extensive disclosures; is AIPLA saying it is inappropriate for them to do so? For instance, some SSOs – e.g., NGMN – may require disclosure of maximum licensing terms. Is this confidential information that is prohibited from disclosure, such that AIPLA is attacking NGMN?


Let’s discuss to see whether this nominal difference is worth having separate voting about – e.g., Could Drafting Team B accept “generally” or could Drafting Team C live without it?

DRAFT

V. Availability of Injunctive Relief

[This topic will address the availability of injunctive or exclusionary relief for an SEP.]


Option 33A (Prior AIPLA Position) A FRAND commitment is a representation of a SEP holder’s willingness to license its technology to willing licensees on FRAND terms and conditions, but it is not a blanket waiver of the right to seek injunctive relief. A FRAND commitment, unless expressly stated otherwise, does not limit SEP holders’ rights under the patent laws, including the ability to seek and obtain injunctive relief that is otherwise justified by law.




Option 33C A FRAND commitment is a representation of a SEP holder’s willingness to license its technology to willing licensees on FRAND terms and conditions, but it is not a blanket waiver of the right to seek injunctive relief. A FRAND commitment, unless expressly stated otherwise, does not limit SEP holders’ rights under the patent laws, including the ability to seek and obtain injunctive relief that is otherwise justified by law. As is the case with any patent, whether an injunction should be granted in favor of a SEP owner will depend on the facts and circumstances in each case and their assessment under applicable patent law principles. See, e.g., eBay An SEP owner will not necessarily be entitled to injunctive relief in all situation (n. 103)



Option 34A (Prior AIPLA Position) A SEP-holder may seek an injunction if a prospective licensee is unwilling to license on FRAND terms. The patentee will not necessarily be entitled to injunctive relief in all circumstances, and a court should consider questions of equity, such as whether the patentee has honored its representations to the SSO. Injunctive relief may be appropriate where an infringer effectively refuses to negotiate in good faith, takes unreasonable positions, or prolongs negotiations for an unreasonably long time while other licensees are paying FRAND royalties, or where the infringer is unable to pay royalties.



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Option 34C It may be permissible for a SEP-holder may to seek an injunction if a prospective licensee is unwilling to license on FRAND terms. The patentee will not necessarily be entitled to injunctive relief in all circumstances, and a court should consider questions of equity, such as whether the patentee has honored its representations to the SSO. Injunctive relief may be appropriate where an infringer effectively refuses to negotiate in good faith, takes unreasonable positions, or prolongs negotiations for an unreasonably long time while other licensees are paying FRAND royalties, or where the infringer is unable to pay royalties.


Position 35. Option A.

Option 35A (Prior AIPLA Position) A blanket prohibition on injunctive relief may not be appropriate in all circumstances, but it may be appropriate in certain circumstances, such as where the patentee has not yet offered a license on FRAND terms.


Option 35B Opposes Option A. [Is there a proposed Option B]

Option A should not be adopted because ____________.



Option 36A (Prior AIPLA Position) Whether a patent owner refused to make a FRAND offer, or refuses a FRAND offer by a licensee, might be relevant to the court’s consideration of whether to grant injunctive relief, but such refusals should not limit a patent owner’s right to seek such relief when it is otherwise available under governing law. A mere allegation by a potential licensee that the SEP owner has refused to make or accept a FRAND offer should not preclude the patent owner from seeking injunctive relief and proving that injunctive relief is appropriate because its offer of a FRAND license was rejected.



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Confirm whether entirety of this is prior AIPLA statement; anything substantively new should be deleted and used as an Option B given their support for entirety of this statement.


Does drafting Team B have an alternative to Option A?


I don’t think these are inconsistent. I reviewed the DIPP statement and the source documents in context which indicates that seeking an injunction is not problematic, because courts act as gatekeepers, but courts applying equity may not grant injunctive relief upon determining that the owner of an SEP has not made a FRAND offer.


Consistent with prior comment on the issue (put in comment “reply” below), clarified “prohibition on seeking injunctive relief” to “prohibition on injunctive relief.” AIPLA has expressly stated there is not a problem in seeking injunctive relief because the court acts as a gate keeper. This statement re blanket prohibition was made in the context of a court deciding whether to grant injunctive relief.


Drafting Team C also indicated another alternative (I think), so should pick which one. The other alternative is as follows:The patentee will not necessarily be entitled to injunctive relief in all circumstances, and a court should consider questions of equity in assessing whether injunctive relief will be permissible.

DRAFT


Option 36C Opposes Option A [Is there proposed Option C].



Option 37A (Prior AIPLA Position) There are legitimate circumstances under which SEP holders may be justified in not agreeing to license terms demanded by potential licensees, such as, for example, where the potential licensee expressly or constructively refuses to accept FRAND terms. It is against good public policy to deny the availability of injunctive relief in these circumstances.



Option 37B Support Option A.

Option 37C There are legitimate circumstances under which SEP holders may be justified in not agreeing to license terms demanded by potential licensees, such as, for example, where the potential licensee expressly or constructively refuses to accept FRAND terms. It is against good public policy to deny the availability of injunctive relief in these circumstances.



Option 38A (Prior AIPLA Position) Merely participating in SSO activities should not affect licensing freedom or limit the equitable remedies available to IPR holders that comply with applicable law and SSO IPR policies.




Option 38C Merely Participating in SSO activities should not affect licensing freedom of non-SEPs or limit the equitable remedies available to IPR holders that comply with applicable law and SSO IPR policies.


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Drafting Team B proposed a position (pasted below) based on prior AIPLA statemtns, but it appears to be more reason to support for this option – e.g., why it would be against good public policy to deny injunctive relief. If Drafting Team B disagrees and wants it as a position, then they should copy Option A and then append language to the end of that. Drafting Team C indicated it would oppose that languge. The language is as follows:AIPLA believes that precluding an SEP owner from seeking injunctive relief under its SEPs against unwilling licensees is contrary to a patent owner’s fundamental right to seek such relief under governing law (n. 98), and would discourage SEP holders from participating in an SSO if participation would cause them to lose or substantially limit their enforcement rights, which would be harmful to standardization and encourage infringement (nn. 113-114)


Does drafting Team C propose alternative language?

DRAFT


Option 39A (Prior AIPLA Position) If SSO participants wish to limit the rights of holders of FRAND-committed patents to seek injunctive relief, they could clearly provide for such limitations in their policies and in the language of their licensing commitments. To the extent no such limitations are included in the relevant SSO commitments and policies it must be assumed that no such limitations are intended.




Option 39B If SSO participants wish to limit the rights of holders of FRAND-committed patents to seek injunctive relief, they could clearly provide for such limitations in their policies and in the language of their licensing commitments, provided that they comply with principles of balance, transparency, due process and consensus in the adoption of such policies. To the extent no such limitations are included in the relevant SSO commitments and policies it must be assumed that no such limitations are intended.



Option 39C If SSO participants wish to limit the rights of holders of FRAND-committed patents to seek injunctive relief, they could clearly provide for such limitations in their policies and in the language of their licensing commitments. To the extent no such limitations are included in the relevant SSO commitments and policies it must be assumed that no such limitations are intended.



Position 40. Option C

Option 40A (No Direct Prior AIPLA Position).

Option 40B Oppose Option C.

Option C should not be adopted because ______.

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Confirm no direct AIPLA position. Recall that AIPLA cited Apple v. Motorola as example of approaches courts have taken, but that may have been informational and not a position.

DRAFT

Option 40C A FRAND licensing promise will generally make it difficult for a patentee to establish irreparable harm based on another’s use of the patented technology.

This proposed position should be adopted because ___________.2



Option 41B Opposes Option C [Any alternative proposal or simply oppose?].

Option C should not be adopted because ____________.

Option 41C Where monetary approaches are available to deter bad faith behaviors, there is little if any need for SEP injunctions.

This proposed position should be adopted because ____________.





Option 42C In lieu of SEP injunctions, courts can use monetary incentives – such as interest, attorneys’ fees and enhanced damages – to deter bad faith behaviors in connection with SEP licensing.

This proposed position is appropriate because ____________.


Option 43A (Prior AIPLA Position) Courts are well-equipped to weigh applicable factors in deciding whether injunctive relief should be awarded. If any harm is incurred by the infringing SEP implementer, it is not as a result of the SEP owner seeking an injunction, but rather the court’s determination that its conduct warranted granting of an injunction after the infringing implementer had the opportunity to be heard, which decision also is subject to appeal.



2 Apple Inc. v. Motorola, Inc., 757 F.3d 1286, 1331-32 (Fed. Cir. 2014).

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Confirm there is no direct prior AIPLA position on this issue. .


Confirm there is no direct prior AIPLA position on this issue. .

DRAFT


Option 43C Courts are well-equipped to weigh applicable factors in deciding whether injunctive relief should be awarded. If any harm is incurred by the infringing SEP implementer, it is not as a result of the SEP owner seeking an injunction, but rather the court’s determination that its conduct warranted granting of an injunction after the infringing implementer had the opportunity to be heard, which decision also is subject to appeal.






Option 44C The use of SEP injunctions can create competition law concerns, because the threat of exclusion from a market is a powerful weapon that can enable a patent owner to hold up implementers of a standard. The use of SEP injunctions can be a tactic for hold-up. Using standard-development leverage, the SEP holders are in a position to demand more for a license than the patented technology, had it not been adopted by the SSO, would be worth. The tactic of withholding a license unless and until a manufacturer agrees to pay an unduly high royalty rate for a SEP is referred to as “hold-up.”.

This proposed position is appropriate because ____________.3

3 Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 884 (9th Cir. 2012).

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Rephrased this from quoting DOJ or court decision into a proposed AIPLA statement of its position, where the DOJ or case quote can be used to propose the proposal in the body text. Below is the original text of this proposed new position:The use of SEP injunctions can create competition law concerns. As the U.S. Department of Justice (“DOJ”) has noted, the “threat of exclusion from a market is a powerful weapon that can enable a patent owner to hold up implementers of a standard.” The use of SEP injunctions can be a tactic for hold-up. As the US courts have instructed, “[u]sing that standard-development leverage, the SEP holders are in a position to demand more for a license than the patented technology, had it not been adopted by the SSO, would be worth. The tactic of withholding a license unless and until a manufacturer agrees to pay an unduly high royalty rate for a SEP is referred to as ‘hold-up.’”


Confirm there is no direct prior AIPLA position on this issue. AIPLA prior positions have suggested limited role of competition law, but do not recall whether there was a direct reference as it applies to injunctive relief.

DRAFT

VI. Bilaterally negotiated FRAND terms may be monetary or non-monetary

[This topic will address FRAND terms being in different forms as negotiated by the parties and whether terms are permissible, such as reciprocity.]


Option 45A (Prior AIPLA Position) FRAND agreements are not limited to only monetary rates, but may include substantial non-monetary terms, such as reciprocal licensing, defensive suspension provisions or any other consideration that the parties agree to exchange. Fundamentally, all licensing terms have value, whether monetary or non-monetary terms, so negotiating parties cannot consider monetary terms in isolation. In evaluating whether license terms are FRAND, all of the terms of the license agreement, including the total exchange of consideration by the parties to a specific license agreement, must be considered at the time of the transaction.




Option 45C FRAND agreements are not limited to only monetary rates, but may include substantial non-monetary terms, such as reciprocal licensing, defensive suspension provisions or any other consideration that the parties agree to exchange. Fundamentally, all licensing terms have value, whether monetary or non-monetary terms, so negotiating parties cannot generally should not consider monetary terms in isolation. In evaluating whether license terms are FRAND, all of the terms of the license agreement, including the total exchange of consideration by the parties to a specific license agreement, must be considered at the time of the transaction.


Position 46. Option A

Option 46A (Prior AIPLA Position) There is no formula or other detailed framework that can value an SEP outside of the specific transaction at issue.



Option 46C Opposes Option A.


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AIPLA phrased this as “not aware of”, which itself implied there is not one given AIPLA’s diligence into the issue. At the same time, AIPLA emphasized the need to consider the specific transaction at issue. So phrased this as a position that one should not use a formula to determine FRAND that does not consider the specific transaction at issue. Drafting Team B supported, but as worded (“unaware of a formula ..”) it seemed more a statement than a position. Drafting Team C opposed because it seemed like a statement and, substantively, because it suggests that US courts do not have a framework. Drafting Team C may want to reconsider given clarification – e.g., Fed. Cir. in Ericsson said there was no set modified Georgia-Pacific rule for all SEPs, but that courts should tailor the analysis to the specific facts presented (e.g., don’t go through all GA-Pacific factors if some simply don’t apply under the circumstances).


Drafting Team C supported a proposal with this language and another proposal without it. Drafting Team B opposes deleting this language. If Drafting Team C is fine with this language, then I suggest not having options by adding that language and accepting the change from “cannot” to “generally should not”j.

DRAFT


Option 47A (Prior AIPLA Position) SSOs should not establish specific licensing terms, including monetary terms, which should be left to negotiations between the parties.




Option 47C SSOs generally should not establish specific licensing terms, including monetary terms, which should be left to negotiations between the parties.

The primary difference between this proposed position and Option A is that _____. This proposed position should be adopted because ____________. SSOs should be free to establish the rules that their members choose because “one size does not fit all. Also, the scope of this statement is a bit unclear; are we saying that SSOs should not set rates, or that they should not require participants to disclose maximum rates?



Option 48B Where parties have engaged in arms-length FRAND negotiations and have entered into a license agreement, it should be presumed that the terms of the agreement are reasonable, and a reflection of a market-driven agreements benefitting both the licensor and licensee.

This position should be adopted because ____________. Such a presumption is warranted because continual challenges to agreed-upon FRAND terms would undermine the certainty of contracts, which in turn would diminish the confidence of SEP owners that they will receive a reasonable reward for their investment in innovation and contribution of technology to standards development, and likewise of implementers that rely upon FRAND commitment to support their investment into making and selling standard-compliant products and investing in the development of new, follow-on innovation. In addition, because FRAND commitments can provides a prospective licensee a cause of action under contract in the event that it believes that the SEP-holder has not complied with its FRAND obligation, when a licensee executes an agreement in the shadow of its contractual right to challenge the terms being offered, such terms must be viewed as reasonable given that the licensee has foregone challenging them. Licensees should not retain a perpetual right to challenge terms as not reasonable, and should be viewed as bargaining such challenges away by entering into a FRAND license.


Option B should not be adopted because ____________. This is highly partisan and largely incorrect and not reflective of applicable law.

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Drafting Team B had included this language in the proposed option. But it seems more the justification for the position, so I put this here as a starting place for their support of the position.

DRAFT

VII. Regulation of FRAND Royalty Rates

[This topic will include positions on whether and to what extent there should be governmental regulation of FRAND royalty rates]


Option 49A (Prior AIPLA Position) Governments should not prescribe guidelines on setting or fixing royalties for SEPs. AIPLA supports the traditional approach of not establishing specific licensing terms, including royalties, which should be determined through bilateral, good faith negotiations between SEP owners and prospective licensees. The parties to a specific FRAND negotiation are best positioned to evaluate the myriad factors pertinent to that specific situation, and to define the contractual terms that best meet the economic reality of both parties. Such licensing freedom is key to the evolution of technology and for facilitating competition.




Option 49C Governments should not prescribe guidelines on setting or fixing royalties for SEPs. AIPLA supports the traditional approach of not establishing specific licensing terms, including royalties, which should be determined through bilateral, good faith negotiations between SEP owners and prospective licensees. The parties to a specific FRAND negotiation are best positioned to evaluate the myriad factors pertinent to that specific situation, and to define the contractual terms that best meet the economic reality of both parties. Such licensing freedom is key to the evolution of technology and for facilitating competition. Governments properly may provide helpful guidelines for SEP licensing and competition law compliance. Such guidelines can assist parties and provided clarity about competition law concerns in SEP licensing.


Position 50. Option A, B and C.

Option 50A (Prior AIPLA Position) Governments should proceed cautiously and resist the urge to become price regulators, which would suppress incentives to innovate and adversely affect competition.



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DRAFT


Option 50B Governments should proceed cautiously and resist the urge to become price regulators, which would suppress incentives to innovate and adversely affect competition. Indeed, AIPLA strongly opposes governmental rate setting for IP licenses, including under the antitrust or competition laws. Application of excessive pricing theories to patent licensing is inappropriate because of the complexity of the issues involved, and the significant risk that procompetitive outcomes will be challenged .



Option 50C Governments should proceed cautiously and resist the applying competition law where such application is not necessary urge to become price regulators, which would suppress incentives to innovate and adversely affect competition. Indeed, AIPLA opposes governmental rate setting.



Position 51. Option B


Option 51B Government regulation of FRAND royalties or license fees (or any other FRAND terms) is an unnecessary intrusion into market dynamics, and risks over- or under-valuing SEPs, and in either event the implementer or SEP owner’s ability to realize the economic benefit inherent in a FRAND contract will be lost.

This proposed position should be adopted because ___________.


Option B should not be adopted because ___________. Governmental regulation of market abuses is not equivalent to rate setting.)

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I removed some of the language in Drafting Team B’s original proposal because it seemed more support for the position than a position itself. Drafting Team B’s original proposal is as follows:Indeed, AIPLA strongly opposes governmental rate setting for IP licenses, including under the antitrust or competition laws. Antitrust and competition law in many jurisdiction - e.g., the United States, Japan, Korea - generally do not regulate prices. And, even in jurisdictions that recognize excessive pricing antitrust theories, such theories are applied in only limited and exceptional circumstances, and application to patent licensing is inappropriate because of the complexity of the issues involved, and the significant risk that procompetitive outcomes will be challenged

DRAFT


Option 52A (Prior AIPLA Position) Attempts to place artificial limits on an SEP owner’s ability to seek reasonable royalties would upset the careful balance of the interests of all stakeholders that standard setting organizations (“SSOs”) considered in setting their intellectual property rights policies and risks redefining the patent holder’s commitment to the SSO to favor only the interests of potential licensees without giving due regard to the innovator’s interests.




Option 52C Attempts to place artificial limits on an SEP owner’s ability to seek reasonable royalties would upset the careful balance of the interests of all stakeholders that standard setting organizations (“SSOs”) considered in setting their intellectual property rights policies and risks redefining the patent holder’s commitment to the SSO to favor only the interests of potential licensees without giving due regard to the innovator’s interests. IPR policies are typically carefully balanced to reflect the interest of all stakeholders and advance two equally important goals: (1) ensuring implementers who want to practice a standard have reasonable access to FRAND licenses; and (2) providing reasonable compensation through licensing of standard-essential patents on fair and reasonable terms and conditions free of any unfair discrimination.




Option 53B Regulators or competition law enforcers are ill-equipped to determine FRAND royalties or licensing fees, or any other terms of a FRAND license. Such an exercise would need to take into account the complete, and often complex, commercial relationship between the particular parties to a license (n. 152). A regulator or enforcer could not appreciate all aspects of the multifaceted commercial negotiations of FRAND terms (n. 153).



Option B should not be adopted because ___________.

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Drafting Team C also had supported a shorter statement, pasted below, and should decide whether they would prefer to use that optional language instead. The proposed language is as follows:IPR policies are typically carefully balanced to reflect the interest of all stakeholders.


The proposed position was lengthy and included language that was more support for the position, so I redrafted it to reflect the concepts. I have pasted below the original proposed position:IPR policies are typically carefully balanced to reflect the interest of all stakeholders and advance two equally important goals: (1) ensuring implementers who want to practice a standard have reasonable access to FRAND licenses; and (2) providing reasonable compensation through licensing of standard-essential patents on fair and reasonable terms and conditions free of any unfair discrimination. Because the development of this technology may require great risk and enormous cost, standards might not attract the best technology without rewarding innovators with reasonable compensation. Letting market forces operate through bilateral negotiations enable IPR owners to realize market-driven financial rewards for their inventive investments while allowing licensees to enjoy similarly market-driven financial rewards from the use of IPR-protected technology in the development and sale of their own products and services, and the development of follow-on technology. Attempts to place artificial limitations on an SEP owner’s ability to seek reasonable royalties as damages would upset the critical balance between SSO participants by redefining the FRAND commitment to favor only the interests of potential licensees, without giving due regard to the interests of innovators.

DRAFT

VIII. SSO setting FRAND licensing terms

[This topic will address whether SSOs should set licensing terms or leave terms subject to bilateral negotiations].


Option 54A (Prior AIPLA Position) AIPLA supports SSOs’ traditional approach of not establishing specific licensing terms for standard essential patents, including monetary terms, which should be left to the negotiations of the parties.



Option 54B AIPLA supports SSOs’ traditional approach of not establishing specific licensing terms for standard essential patents, including monetary terms, which should be left to the negotiations of the parties or, where there is a dispute, via adjudication in the courts or tribunals of competent jurisdiction.

The primary difference between this proposed position and Option A is that ______. This proposed position should be adopted because ___________. The freedom to negotiate FRAND terms bilaterally and reach agreement, in fact, mitigates against the abuse of FRAND commitments. Implementers, owning the threat of challenging the offered terms through a breach of contract claim, are able to negotiate specific terms that provide them with value specific to its specific commercial situation. If FRAND terms were set by a SSO the same risks of over- or under-valuation of SEPs would exist as would be the case if FRAND terms were set by regulation. Consummation of a freely negotiated FRAND agreement should be considered presumptively reasonable.


Option 54C In most cases, AIPLA supports SSOs’ traditional common approach of not establishing specific licensing terms for standard essential patents, including specific monetary terms, which usually should be left to the negotiations of the parties, or, where there is a dispute, via court processes or, if so agreed, in arbitration.

The primary difference between this proposed position and Option A is that _____. This proposed position should be adopted because ____________. Again, this conflicts with AIPLA’s position that SSOs should be free to choose their own policies. We are also now attacking policies, such as the NGMN policy, which require disclosure of maximum licensing rates – i.e., AIPLA could be interpreted as saying that it knows better than the mobile operators about how to structure SSOs for their industry.

The primary difference between this proposed position and Option B is that _____. This proposed position should be adopted because _____________.

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Drafting Team B proposed this language as an AIPLA position. But it appears to be a rationale to support the position. Drafting Team C would oppose this as a position, and stated that this “is a business viewpoint, not a legal position.” Drafting Team B should see if the there are positions within this language that should be added to their proposed option, or if it will be used as put here as support for the current position.


Another proposed position in a different section of the prior draft document appeared to concern this same concept, so made good faith friendly amendments to merge it into this one. That other position states as follows:SSOs should not define or regulate specific license terms, including royalty or royalty rate that will be considered FRAND. FRAND terms should be determined, as is the norm, based on good faith bilateral negotiations between SEP owners and prospective licensees.Drafting Team B’s proposed edits to the above was as follows:SSOs should not define or regulate specific license terms, including royalty or royalty rate that will be considered FRAND. FRAND terms normally should be determined based on good faith bilateral negotiations between SEP owners and prospective licensees, or – where there is a dispute – via court processes adjudication in the courts or tribunals of competent jurisdiction.Drafting Team C’s proposed edits to the above was as follows: SSOs generally should not define or regulate specific license terms, including royalty or a specific royalty rate that will be considered FRAND. FRAND terms normally should be determined based on good faith bilateral negotiations between SEP owners and prospective licensees, or – where there is a dispute – via court processes or, if so agreed, in arbitration.

DRAFT

Position 55.

(Prior AIPLA Position?) Appropriate consideration in a particular bilateral negotiation may vary; therefore SSOs generally should not limit the ability to negotiate consideration that meets the needs of both licensee and licensor.


Position 56. Options B and C.


Option 56B Even if a consensus of all stakeholders determines that a patented technology offers the technical solution desired, it does not mean that the SEP owner can be compelled to make licenses available absent a voluntary agreement to do so, or to forego adequate compensation for making the technology available. Doing so would be tantamount to compulsory licensing and would undermine the bargain struck by innovators in consideration for their contribution of patented technology for inclusion in standards, and disrupt the incentive scheme critical to successful standards development (nn. 219, 220).


Option 56C Even if a consensus of all stakeholders (other than the patent holder) determines that a patented technology offers the technical solution desired, it does not mean that the SEP owner can should be compelled to make licenses available absent a voluntary agreement to do so, or to forego adequate compensation for making the technology available. Doing so would may be tantamount to compulsory licensing and would undermine the bargain struck by innovators in consideration for their contribution of patented technology for inclusion in standards, and disrupt the incentive scheme critical to successful standards development.

The primary difference between this proposed position and Option B, shown in redline above, is that ______. This proposed position should be adopted because ___________. The deleted portion of this text doesn’t make sense. Where a patent holder chooses not to contribute its technology to an SSO, there is no “bargain struck” with the SSO. Also, in regard to the change from “can” to “should”, I don’t think we mean to suggest that governments are powerless to (cannot) require compulsory licensing; we are suggesting that they generally should not do so.




Option C should not be adopted because ___________.

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Confirm with citation to prior AIPLA positions.

DRAFT

Option 57C SSOs may helpfully seek to provide clarity to their FRAND policies by identifying factors or considerations that may be relevant to FRAND negotiations.


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DRAFT

IX. SEPs and Competition Law

[This topic will address intersection between IP law and competition law regarding SEPs, such as whether contract law provides sufficient remedy].



Option 58B Like any patent an SEP should not, standing alone, be presumed to confer market power.


Option 58C Like any patent an SEP generally should not, standing alone, be presumed to confer market power.



Option 59A (Prior AIPLA Position) A FRAND commitment is a contractual obligation in which both parties must negotiate in good faith. In the event there is a dispute, the parties may pursue resolution under either contract or patent law. Competition law should intervene only when such remedies are insufficient, and where the challenged conduct has a proscribed anticompetitive effect under applicable antitrust or competition laws.




Option 59C A FRAND commitment is a contractual obligation in which both parties must negotiate in good faith. A FRAND commitment can encompass both a breach of contract and the duty of good faith and fair dealing, and a violation of competition law. In the event there is a dispute, the parties may pursue their legal remedies resolution under either contract or patent law. Competition law should intervene only when such remedies are insufficient, and where the challenged conduct has a proscribed anticompetitive effect under applicable antitrust or competition laws.

The primary difference between this proposed position and Option A is that _____. This proposed position should be adopted because ____________. FRAND commitments are designed specifically to mitigate a SEP owner’s dominant position, the threat of patent hold-up, and the harm that hold-up does to both consumers and to competition generally.

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Confirm Drafting Team B supports this position.


This position is a combination of a few proposed positions, all of which were somewhat wordy or contained supporting argument beyond just a position.Also, need to confirm that prior AIPLA position was that “both parties must negotiate in good faith.” If not, then drop here and provide as a Drafting Team B alternative since they supported that language and Drafting Team C did not.

DRAFT


Option 60A Limiting application of competition and antitrust laws to licensing SEPs is warranted because otherwise unacceptable risks that the legitimate exercise of rights by SEP owners will be challenged, and incentives to invest in innovation will be deterred.



The primary difference between this proposed position and Option C is that _____. This proposed position should be adopted because ____________.

[Option 60B] Limiting application of competition and antitrust laws to licensing SEPs is warranted because otherwise unacceptable risks to ensure that the legitimate exercise of IP rights by SEP owners will be challenged are not chilled because of the threat of liability under such laws, thereby undermining , and incentives to invest in innovation will be deterred.


Option 60B[Option 60C] Limiting application of Applying competition and antitrust laws to address SEP abuses licensing SEPs is warranted because otherwise unacceptable risks that the legitimate exercise of rights by SEP owners will be challenged, and incentives to invest in follow-on innovation will be deterred, and implementers would face the unacceptable risks of patent hold-up.

The primary difference between this proposed position and Option A is that _____. This proposed position should be adopted because ____________. “[…] [O]nce a standard becomes widely adopted, SEP holders obtain substantial leverage over new product developers, who have little choice but to incorporate SEP technologies into their products. Using that standard-development leverage, the SEP holders are in a position to demand more for a license than the patented technology, had it not been adopted by the SSO, would be worth. The tactic of withholding a license unless and until a manufacturer agrees to pay an unduly high royalty rate for a SEP is referred to as ‘hold-up.’”


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DRAFT

X. Patent Holdup, Holdout, Reverse Holdup/Holdout, Willing Licensee, Willing Licensor


Option 61A (Prior AIPLA Position) Patent hold up can expose a patent holder to significant risks, diminishing incentives to engage in such behavior.




Option 61B Patent hold up can expose a patent holder to significant business and legal risks, diminishing incentives to engage in such behavior.



Option 61C Patent hold up can expose a patent holder to significant risks competition law sanctions, diminishing incentives to engage in such behavior.




Option 62A (Prior AIPLA Position). The risks that the owner of an SEP faces if it engages in patent holdup severely diminishes (if not defeats) incentives to engage in holdup. Patent holdup may be considered in a particular instance if evidence of such is presented.




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This prior AIPLA position was added in this draft since its directly relevant to proposed and related options from Drafting Teams B and C. Drafting Teams B and C should consider whether they would revise their positions to be more consistent with the wording of this position in order to focus on the differences.

DRAFT

Option 62B To establish “hold up” in an SEP-licensing context, evidence must show that in connection with a specific transaction a SEP owner engaged in intentionally misleading or deceptive conduct, or otherwise acted opportunistically, in connection with its FRAND commitment, and thereby induced an implementer, in reliance on such conduct, to implement the standard for which the FRAND commitment was made. The mere exercise of a patent right, even where an implementer invests in implementing a standard, absent opportunistic conduct is not hold up, but is a proper exercise of a patent right, even in connection with a SEP.



Option 62C Patent holdup is a potential problem that could inhibit widespread adoption of a standard. Patent hold-up exists when the holder of a SEP demands excessive royalties after companies are locked into using a standard. The standards process can create substantial leverage and opportunities for patent hold up. In U.S. jury trials, some evidence of holdup should exists before a corresponding jury instruction is made, which instruction then may be required .

The primary difference between this proposed position and Option A is that _____. This proposed position should be adopted because ____________. Option A is about as biased a statement as AIPLA could possibly make. It is also contrary to Federal Circuit, 9th Circuit and district court precedent, not to mention international precedent. Again, we are not peering into our crystal balls to determine which business practices will or won’t be successful “in the long run”.

The primary difference between this proposed position and Option B is that ______. This proposed position should be adopted because ___________. 4 5 As noted by the U.S. Court of Appeals for the Federal Circuit in Ericsson, Inc. v. D-Link Sys., Inc.,6 “once a standard becomes widely adopted, SEP holders obtain substantial leverage over new product developers, who have little choice but to incorporate SEP technologies into their products. Using that standard-development leverage, the SEP holders are in a position to demand more for a license than the patented technology, had it not been adopted by the SSO, would be worth. The tactic of withholding a license unless and until a manufacturer agrees to pay an unduly high royalty rate for a SEP is referred to as ‘hold-up.’”7

4 Apple Inc. v. Motorola, Inc., 757 F.3d 1286, 1331-32 (Fed. Cir. 2014).5 Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 884 (9th Cir. 2012).6

7

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Remove a reference to royalty stacking, because that’s addressed in another section. Also, this is a combination of Drafting Team C proposals that seemed more like statements than proposed positions. The “meat” to the issue is the degree to which patent hold-up and royalty stacking is an issue—is it a theoreteical issue, one that may exists but need evidence in particular instance, or one that is so prevelant that it should be presumed and the patent holder should demonstrate it does not exists in a particular instance. Drafting Team C’s proposal don’t provide too much direction in that regard. For example, saying there are “potential” problems raises a theoretical issue of problems but begs the question whether AIPLA believes this is an actual problem (or the bare statement of a “potential” problem could be erroneously imply that AIPLA must think these are actual significant problems worth taking a position on when they may not be the case.Drafting Team C should consider whether it would like to draw a brighter line on its proposed position as to whether these are theoretical concens, actual concerns that may arise in some cases where such evidence is presented, or prevalent concerns that should be presumed in all instances absent evidence to the contrary.

DRAFT


Option 63A (Prior AIPLA Position) Holdout by a prospective licensee of an SEP may be more of a problem than holdup by the SEP patent owner because holdout by prospective licensees is not constrained by the reputational risks faced by SEP holders who engage in holdup.





Position 64. Option A and C

Option 64A (Prior AIPLA Position) Licensing transactions are complex and diverse business arrangements that may involve competitive business information and intellectual property beyond a specific SEP, the disclosure of which typically would provide little useful information in comparing one license agreement with another. One cannot not start with a premise that maintaining confidentiality on SEP licenses or cross-licenses is abusive. A demand for inapt transparency in licensing SEPs is largely unworkable, impractical, and harmful to licensing, competition, and standard participation.




Option 64C Patent holders must be willing to provide the potential licensee with information necessary to assess whether the patent holder’s license offer is FRAND-compliant. A licensor that refuses to provide such information is an unwilling licensor.


Position 65. Option A and C

Option 65A (Prior AIPLA Position) Insert.


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Need to confirm whether AIPLA has a position on point with the issues raised in Option C. AIPLA has said disputes can be resolved in court. But the wording of Option C is a bit vague on two points. One is whether saying a party “should be willing” to litigate in court means they can’t complain (or seek remedies or have other consequence) because they were forced to go to court. If, rather, the intent of Option C is simply to state that courts can resolve disputes between the parties, that already is covered in another proposed position.Another key point of ambiguity in Option C is whether saying an unwilling licensee is one who refuses to go to court is intended to meant that would be the only instance where one may be considered an unwilling licensee or suffer consequences for failed negotiations outside of court (as some have argued). If, rather, the intent is that this would be a non-exclusive example of an unwilling licensee, this already is covered by and could be added to an existing position that lists several circumstances of an unwilling licensee.


This prior AIPLA position is introduced in this version of the document for the first time as being related to the proposed position from Drafting Team C. Drafting Team B and C should consider whether to propose/revise positions to account for this as well as to focus on the important differences.

DRAFT



Option 65C Where disputes regarding SEPs occur, both parties should be willing to have their disputes resolved by the courts in accordance with national laws. A licensee that refuses to participate in court processes may be deemed an unwilling licensee.



Option 66A (Prior AIPLA Position) Whether a prospective licensee is a “willing licensee” depends on a variety of facts and circumstances. Even when the prospective licensee states a willingness to take a license, determining whether a prospective licensee is a willing licensee requires objectively evaluating the prospective licensee’s conduct, including whether an infringing implementer demands unreasonable or more favorable terms, refuses to grant a reciprocal license, is unable to pay royalties, causes undue delay in FRAND negotiations while refusing to compensate the SEP owner in the interim or other relevant considerations.




Option 66B Whether a prospective licensee is a “willing licensee” depends on a variety of facts and circumstances. Even when the prospective licensee states a willingness to take a license, determining whether a prospective licensee is a willing licensee requires objectively evaluating the prospective licensee’s conduct, including whether an infringing implementer demands unreasonable or more favorable terms, refuses to grant a reciprocal license, is unable to pay royalties, causes undue delay in FRAND negotiations while refusing to compensate the SEP owner in the interim, fails to provide assurance and/or security to the SEP owner that FRAND compensation will be made if the SEP owner’s FRAND offer is upheld, or other relevant considerations.

The primary difference between this proposed position and Option A is that _____. This proposed position should be adopted because ____________. See Huawei v. ZTE


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DRAFT

Option 66C Whether a prospective licensee is a “willing licensee” negotiating in good faith depends on a variety of facts and circumstances, including an unwillingness to grant reciprocal licenses or an inability to pay royalties. Even when the prospective licensee states a willingness to take a license, determining whether a prospective licensee is a willing licensee requires objectively evaluating the prospective licensee’s conduct, including whether an infringing implementer demands unreasonable or more favorable terms, refuses to grant a reciprocal license, is unable to pay royalties, causes undue delay in FRAND negotiations while refusing to compensate the SEP owner in the interim or other relevant considerations.

The primary difference between this proposed position and Option A is that _____. This proposed position should be adopted because ____________. There is no support in law or policy for Option A. It is literally just a made up legal standard.

The primary difference between this proposed position and Option B is that ______. This proposed position should be adopted because ___________. AIPLA’s position is based on citation to European law??? US law is different and this is not representative of US approaches.

Position 67. .

(Prior AIPLA Position) In assessing the FRAND dynamic, the licensee’s behavior also should be considered.


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DRAFT

XI. Royalty Stacking

[This topic will include general royalty stacking issues, evidentiary requirements and whether there should be a royalty cap.]

Royalty stacking is a speculative, theoretical concern that is not supported by actual evidence that the possibility of royalty stacking has inhibited access to or the adoption of any standard.


Option 68A (Prior AIPLA Position) Royalty stacking is a speculative, theoretical concern that is not supported by actual evidence that the possibility of royalty stacking has inhibited access to or the adoption of any standard. Royalty calculations should be based on evidence, not speculation.



Option 68B Royalty stacking is a speculative, theoretical concern without empirical support in the real world that is not supported by actual evidence that the possibility of royalty stacking has inhibited access to or the adoption of any standard or that markets are not functioning because of the royalty claims of SEP holders. Royalty calculations should be based on evidence, not speculation.

The primary difference between this proposed position and Option A is that ______. This proposed position should be adopted because ___________.

The primary difference between this proposed position and Option C is that ______. This proposed position should be adopted because ___________. The problem, if any, is rather that SEP holders, acting independently, may set royalties for licenses to their patents that exceed their actual value. This wouldn’t happen if there was a single licensor that was bound by a FRAND obligation. The royalty stacking problem is avoided by appropriate court apportionment rules that ensure that the value of the patent is related to its technological contribution to the device

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This is a good faith restatement of Drafting Team B proposed position, which includes omission of statements that were more rationale for the position and would go into supporting text. The original Drafting Team B proposal was as follows:Royalty stacking can arise is a threshold concern, without empirical support in the real world, about the potential for when a standards that incorporate implicates numerous essential patents, perhaps hundreds, if not thousands, to result in implementers paying aggregate royalties that greatly exceed the value of the technologies. The royalty stacking concern is that. I if companies are forced to pay royalties to all SEP holders, the royalties will “stack” on top of each other and, if some of the individual royalties are excessive may become excessive in the aggregate. To help alleviate these potential concerns, SDOs often seek assurances from patent owners before publishing the standard. However, there is no evidence that royalty stacking has occurred in the real world, or that markets are not functioning because of the royalty claims of SEP holders

DRAFT

Option 68C Royalty stacking is a speculative, theoretical concern that is not supported by actual evidence that the possibility of royalty stacking has inhibited access to or the adoption of any standard. Royalty stacking can arise when a standard implicates numerous patents, perhaps hundreds, if not thousands. If companies are forced to pay royalties to all SEP holders, the royalties will “stack” on top of each other and may become excessive in the aggregate. To help alleviate these potential concerns, SDOs often seek assurances from patent owners before publishing the standard. 8 Royalty stacking poses potential problems that could inhibit widespread adoption of a standard. Royalty calculations should not be based on evidence, not speculation.

The primary difference between this proposed position and Option A is that _____. This proposed position should be adopted because ____________.9


Position 69. .

Consideration of royalty stacking in establishing FRAND rates does not imply that all patents are valued the same. Rather, FRAND analysis should recognize that some patents are more valuable than others, and can adjust FRAND rates according to the value of the particular technology on a case-by-case basis.

This proposed position is proper because _________.


Option 70A (Prior AIPLA Position) FRAND generally does not establish any cap on the royalties or license fees that may be charged in connection with standards-essential IPR claims.



Option 70B FRAND generally does not establish any cap on the royalties or license fees that may be charged in connection with standards-essential IPR claims. Royalty caps are artificial and arbitrary limitations on SEP holders’ ability to receive adequate compensation for their inventions, which risk underminine the incentives that patent holders generally, and SEP holders specifically, must have to make the risky investments necessary to create new technologies that can then be made available for standardization to the benefit of users of such technology and consumers, and thereby risk harming effective standards development.


8

9

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Drafting Team C had supported this as a stand alone statement, which did not seem helpful outside of context, but was part of the royalty stacking is speculative context. Left this as a statement that Drafting Team C supports, but they may consider deleting it here.

DRAFT

Option 70C Opposes Options A and B.


Option B should not be adopted because _____________.


Option 71A (Prior AIPLA Position) Arbitrary limitations on royalties, based on concerns such as royalty stacking, inappropriately devalue patents and risk harming effective standards development. Even where there are numerous patents essential to a standard, royalty stacking concerns do not justify devaluing patents.





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DRAFT

XII. Patents are territorial rights enforceable only in issuing country or region


Option 72A (Prior AIPLA Position) Patents rights are territorial. As a result of the territorial limitation of patent rights, governments should not infringe on the rights of other sovereign governments’ to determine the exercise of IPR or attempt to regulate the use of IPRs beyond their borders.




Option 72B As patent rights are territorial in scope, governments and courts of one jurisdiction should not interfere in the ability of patent holders to exercise their patent rights in other jurisdictions according to the laws of such jurisdictions . As a result of the territorial limitation of patent rights, governments should not infringe on the rights of other sovereign governments’ to determine the exercise of IPR or attempt to regulate the use of IPRs beyond their borders.



Option 72C Patents rights are territorial. Patents are rights granted by a jurisdiction under its laws. As a result of the territorial limitation of patent rights, governments should not infringe on the rights of other sovereign governments’ to determine the exercise of IPR or attempt to regulate the use of IPRs beyond their borders that do not affect their national jurisdiction.



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DRAFT

XIII. Royalty Base and Apportionment

[This topic will concern whether and to what extent the smallest saleable patent practicing unit should be the royalty base for establishing a FRAND royalty, including consideration of the context – e.g., bilateral negotiation versus U.S. jury trial.]


Option 73A (Prior AIPLA Position) AIPLA cautions against setting a fixed requirement for a royalty base, such as requiring the royalty to be based on the end product, on the smallest saleable patent practicing unit or other set criteria. The parties should be free to use whatever combination royalty rate and royalty base fits their circumstances as long as the ultimate royalty—i.e., combination of royalty rate and royalty rate—is based on the value that the patented technology adds to the licensed product.




Option 73C Royalties usually should be calculated with reference to the smallest salable patent practicing unit and not on downstream technologies that are outside the patent’s scope. AIPLA cautions against setting a fixed requirement for a royalty base, such as requiring the royalty to be based on the end product, on the smallest saleable patent practicing unit or other set criteria. The parties should be free to use whatever combination royalty rate and royalty base fits their circumstances as long as The ultimate royalty—i.e., combination of royalty rate and royalty rate—is based on the value that the patented technology adds to the licensed product and not to value that the patent holder did not invent, did not claim in its patent, derived from standardization or the lock-in value thereof .

The primary difference between this proposed position and Option A is that _____. This proposed position should be adopted because ____________. Where small elements of multi-component products are accused of infringement, calculating a royalty on the entire product carries a considerable risk that the patentee will be improperly compensated for non-infringing components of that product. Thus, it is generally required that royalties be based not on the entire product, but instead on the smallest salable patent-practicing unit.

In the context of collaborative industry standards, calculating royalties based upon the entire market value of downstream products makes very little practical sense. It is difficult if not impossible to imagine a realistic scenario where a single patented technology alone is responsible for the entire market value of a device implementing a complex, industry-developed standard. Standardized technologies may require many hundreds of pages of technical specifications. Use of the entire market value of a downstream product as the basis for establishing royalties would be appropriate only where a single patent – among the thousands or even tens of thousands of declared patents applicable to a particular standard –alone motivates consumers to purchase a downstream product.

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Drafting Team C presented this as a proposed position, but it appears more an explanation to support its proposed position that the SSPPU usually applies.


This is a merger of a several positions posed or supported by Drafting Team C that were related or appeared to say essentially the same thing. The language of those proposed positions were as follows:The patentees’ royalty must be premised on the value of the patented feature.It would be unfair for a patentee to calculate value based on technologies or features invented or created by others.A royalty should be calculated based only on the value of the patented technology itself, not based on unpatented value or technologies.A FRAND reasonable royalty is a percentage share of the incremental value added of infringed SEP, not including the value of any other patented or unpatented technology or other value contributions to the product and not including the value added by standardization.As with other patents, it is important in all cases that FRAND compensation be closely tied to the patented technology, and not to value that the patent holder did not invent or claim in its patent. The value of the technology may not include any value added by standardization.SEP holder may not capture the value added by the standardization of its technology and licensing negotiations should focus first on apportioning the intrinsic technological value of the patent from its hold-up value as part of a standard prior to the incorporation of the invention in the standard.[Proposed alternative position?]: As with other patents, it is important in all cases that FRAND compensation be closely tied to the patented technology, and not to value that the patent holder did not invent or claim in its patent. The value of the technology may not include any lock-in value added by standardization.Even though royalties should usually be calculated with reference to the smallest salable patent practicing unit, evidence regarding prior licenses is not inadmissible to establish reasonable royalties simply because the licenses calculate royalties based on the market value of downstream products.To ensure that compensation is closely tied to the value of the patented technologies – no more and no less – it is usually required that compensation be based on the value of the technology that is claimed by the patent and not on downstream technologies that are outside of the patent’s scope.Where small elements of multi-component products are accused of infringement, calculating a royalty on the entire product carries a considerable risk that the patentee will be improperly compensated for non-infringing components of that product. Thus, it is generally required that royalties be based not on the entire product, but instead on the smallest salable patent-practicing unit.As with other patents, it is important in all cases that FRAND compensation be closely tied to the patented technology, and not to value that the patent holder did not invent or claim in its patent. The value of the technology may not include any value added by standardization.A reasonable royalty is a percentage share of the incremental value added of infringed Necessary Claims, not including the value of any other patented or unpatented technology or other value contributions to the product and not including the value added by standardization.

DRAFT

If a patentee wishes to claim a royalty based on the entire market value of a product, it is not enough to merely show that the patented technology is viewed as valuable, important, or even essential to the use of the product. Nor is it enough to show that a product without the patented technology would be commercially unviable. Rather, the entire market value rule must not be applied absent evidence that the infringing feature alone motivates consumers to purchase the downstream product.10



Option 74B Because a FRAND commitment is voluntary and establishes contractual obligations only as defined by the SSO’s IPR policy in which the standard is being developed, the FRAND commitment does not require licensing at the smallest saleable patent practicing unit (SSPPU) level unless the IPR policy directly requires such licensing and the patent holder voluntarily agreed to it.



Option B should not be adopted because ___________.





Option 75C Where the smallest salable unit is, in fact, a multi-component product containing several non-infringing features with no relation to the patented feature, the patentee must do more to estimate what portion of the value of that product is attributable to the patented technology. A patentee’s obligation to apportion damages only to the patented features does not end with the identification of the smallest salable unit if that unit still contains significant unpatented features.


10

11

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Broke this out of a proposed position because its distinct enough to be its own stand alone position. Also did some intended friendly amendment. The original proposed position was as follows:Because a FRAND commitment is voluntary and establishes contractual obligations only as defined by the IPR policy of the SSO in which the standard is being developed, it does not require licensing at the SSPPU level unless the policy directly places this limitation on the SEP-holder.


Drafting Team C proposed this as a separate position, but it appears to be simply a statement from the LaserDynamics decision to support the position that the SSPPU usually applies (e.g., given the apparent presumption that SSPPU applies absent certain evidence to invoke the EMVR). This is silent, or at least ambiguous, on the issue whether Drafting Team C intends this language to apply to both bilateral licensing negotiations and litigation, or if it is only a rule of evidence that applies only in U.S. jury trials as some people read the LaserDynamics, Virnetx and Ericsson v. D-Link decisions. That distinct issue may be worth breaking out into a separate position to vote upon – i.e., whether EMVR is a substantive valuation rule applied in all settings or merely an evidentiary rule applied only in U.S. jury trials.

DRAFT

XIV. Patent law guidance on “reasonable royalty”

Position 76. .

(Prior AIPLA Position) Patent law provides guidance for evaluating a FRAND royalty. This includes consideration of applicable Georgia Pacific factors (which may not be all inclusive,12 consideration of comparable licenses and other factor relevant for determining the incremental value contributed by a patent to a product. Put differently, as with any patent, licensing of SEPs involves a myriad of considerations and patent law provides guidance for accommodating all such relevant considerations..


12

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DRAFT

XV. Use of NDAs in negotiating SEP licenses

[This topic will address whether using NDAs in negotiating SEP licenses is an abusive practice.]


Option 77A (Prior AIPLA Position) Barring proof of actual competitive harm based on the particular facts of concern, the practice of requesting NDAs in licensing SEPs should not be viewed as an abusive practice..

This proposed position is based on past prior AIPLA positions __________. This existing AIPLA position remains proper because _________. AIPLA is concerned that, without NDAs, patent holders may face undue scrutiny whenever two licensees have different rates or terms. Justifying such rates may require disclosure of sensitive business information and undermines patent holders’ as well as the licensee’s basic rights of licensing and negotiating.



Option A should not be adopted because ____________. Requiring the implementer to accept discriminatory royalties and terms in licenses for SEPs, tying access to SEPs to prospective licensees’ agreement to mandatory non-disclosure terms while refusing to disclose license terms provided to competitors (to hide discriminatory pricing) can harm competition and innovation.


Option 78A Given the many different forms that license agreements can take, and the different monetary and non-monetary consideration that can be exchanged, AIPLA recommends against attempting to define what it means for contracts to be non-discriminatory or prohibiting use of NDAs in a quest to address non-discrimination that may yield limited benefit given the potential differences among licensing agreements while adversely disclosing competitively-sensitive licensing terms.



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Drafting Team C did not state its position here—does it support or oppose Option A?


This was offered as a separate position, but it appears more a reason to support this general proposition. Drafting Team B supported this, but thought the wording was clumsy. Drafting Team C supported this particular statement, but not the competitive harm/abusive practice position, and took the further statement concerning non-discrimination that would be a reason to oppose the position. Does Drafting Team C want this broken-out as a separate position? Drafting Team C’s proposal was as follows:AIPLA is concerned that, without NDAs, patent holders may face undue scrutiny whenever two licensees have different rates or terms. Justifying such rates may require disclosure of sensitive business information and undermines patent holders’ as well as the licensee’s basic rights of licensing and negotiating. However, requiring the implementer to accept discriminatory royalties and terms in licenses for SEPs, tying access to SEPs to prospective licensees’ agreement to mandatory non-disclosure terms while refusing to disclose license terms provided to competitors (to hide discriminatory pricing) can harm competition and innovation.

DRAFT


Option 78C The commitment to license SEPs on FRAND terms and conditions includes the concept of non-discrimination. If a prospective licensee requests that the SEP holder complies with its commitment and makes a FRAND offer for its impacted SEPs, then the SEP holder should not be permitted to condition access to that offer on the prospective licensee’s agreement to a non-disclosure agreement relating to that offer.





Option C should not be adopted because ___________. The question is whether claim charts can be included in an NDA.

Option 79C A SEP owner’s claim charts, when provided to a potential licensee to support a FRAND licensing demand, usually do not qualify as sensitive business information.


Position 80. Options B and C


Option 80B A SEP owner’s should be willing to share with a potential licensee the non-confidential information reasonably needed by the potential licensee to determine whether the SEP owner’s licensing offer is, or is not, compliant with its FRAND obligations, and an implementer equally should be willing to share with the SEP owner non-confidential information that supports the potential licensee’s contention that its counter-offer is consistent with FRAND.


Option 80C A SEP owner’s should be willing to share with a potential licensee the non-confidential information reasonably needed by the potential licensee to determine whether the SEP owner’s licensing offer is, or is not, compliant with its FRAND obligations, and an implementer equally should be willing to share with the SEP owner non-confidential information that supports the potential licensee’s contention that its counter-offer is consistent with FRAND.


- 49 -


Drafting Team B raised the issue of relevance of this statement. This concern may be based on the concept that parties in negotiation could agree to keep claim charts confidential under an NDA regardless whether such charts are sensitive business information (though, in contrast, whether charts are sensitive business information may matter as far as a court protective order in litigation). Drafting Team C should consider revising this to more directly address the point here of whether NDAs properly may preclude unauthorized disclosure of claim charts.

DRAFT





Option 81C A SEP owner should not use NDAs to enhance its bargaining power over a potential licensee that does not have access to information needed to evaluate a proposed license. Transparency in FRAND licensing is critical, and SEP owners should be careful to ensure that potential licensees are on a “level playing field” in terms of the information available to evaluate compliance with FRAND.






Option 82C Where a prior licensee is willing to disclose the terms of its license to a potential licensee (or its outside counsel) under the terms of an NDA and to assist the potential licensee’s evaluation of whether a proposed license to the potential licensee comports with FRAND, the SEP owner should not use confidentiality provisions to interfere with a potential licensee’s ability to evaluate the SEP owner’s compliance, or non-compliance, with FRAND.




Option 83B The flexibility needed by all parties to IP licensing agreements should be recognized so that companies can continue to make deals that are similar for similarly-situated participants, but nevertheless take into account the unique circumstances of each, while protecting sensitive competitive business information in the parties’ negotiations and licensing agreements through NDAs.


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DRAFT

Option 83C [Redline Compare With Option B] The flexibility needed by all parties to IP licensing agreements should be recognized so that companies can continue to make deals that are similar for similarly-situated participants, but nevertheless take into account the unique circumstances of each, while protecting sensitive competitive business information in the parties’ negotiations and licensing agreements through NDAs, provided such NDAs are not used as tools to evade FRAND obligations or to prevent a prospective licensee from having access to information needed to meaningfully evaluate proposed licensing terms.


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DRAFT

XVI. Non-discriminatory licensing of SEPs

[This topic will address the “non-discriminatory” part of the FRAND commitment]

Position 84. .

(Prior AIPLA Position) Improper discrimination does not exist merely because an IPR owner entered agreements with different terms and conditions for different entities; such circumstances do not mean that, as a whole, the different licensees provided and received different value of consideration overall.



Option 85A (Prior AIPLA Position) A FRAND commitment does not necessarily mean that all licensees must be offered with the same terms. In general, non-discriminatory licensing means only that similarly-situated licensees should be offered economically similar terms. There may be significant difference between license agreements reached based on the particular facts and circumstances, and commercial needs and desires of the companies, and these differences do not violate the non-discrimination principle.




Option 85C A FRAND commitment does not necessarily mean that all licensees must be offered with the same terms. In general, non-discriminatory licensing means only that Similarly-situated licensees should be offered economically similar terms. There may be significant difference between license agreements reached based on the particular facts and circumstances, and commercial needs and desires of the companies, and these differences do not violate the non-discrimination principle.






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DRAFT

Option 86C FRAND commitments to grant licenses to all applicants admit of no limitation as to who or how many applicants could receive a license. SEPs have regularly and historically been licensed at multiple levels of the supply chain.


Position 87. .

FRAND licensing, including the nondiscrimination aspect, apply only to SEP patents and licenses offered pursuant to the assurance made by the SEP holder to the SSO.




Option 88B The non-discrimination element of FRAND is intended to ensure that licenses are not withheld to certain implementers to achieve anticompetitive ends, and should not be viewed as requiring that all licensees receive identical terms.



This proposed position should not be adopted because ___________.

13

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Does Drafting Team C oppose or support this position?


On the fence whether this is a separate position or a basis to be used to support the position that non-discrimination does not mean identical terms. What is Drafting Team B and C’s view on this?


Combined positions proposed by Drafting Team C to provide better context and crystallize the issue being addressed. This proposed position of the first sentence, taken alone, is ambiguous, and somewhat hides a key issue of whether a FRAND commitment requires licensing to anyone in the vertical chain – e.g., a component supplier – or if it is sufficient that someone in the vertical chain is licensed in a manner that exhausts the patent right for all in the vertical chain. The second proposed sentence starts to hone in on that issue. Drafting Team C should consider revising to identify the specific issue being addressed.

DRAFT

XVII. Methodology for resolving SEP licensing disputes

Position 89. .

(Prior AIPLA Position) Promises pursuant to SSO IPR policies to disclose patents or to license on FRAND terms should be enforceable as a matter of contract law, which in turn looks to the intent of the parties.






Option 90C Parties seeking to enforce FRAND obligations must not be denied access to legal recourse in accordance with national laws.


Position 91. .

(Prior AIPLA Position) A FRAND commitment generally is enforceable by those who wish to implement the standard and secure a license to the patented technology, as third-party beneficiaries to the agreements between an SEP holder and the relevant SSOs.



Option 92A (Prior AIPLA Position) Disputes regarding licenses of FRAND-encumbered SEPs should be adjudicated by the courts or other tribunals of competent jurisdiction rather than an administrative agency. Such disputes often involve complex issues of patent law, including whether a product is covered by the patent claims and thus subject to license fees. The courts or other competent tribunals are best suited to resolve such disputes in light of their extensive patent experience to adjudicate such complex disputes.


- 54 -


Drafting Group B opposes this proposed position of Drafting Team C as “unnecessary.” It is not clear what the purpose of this statement is and what issue it is addressing. Drafting Team C should explain what denied access to legal recourse is at issue here.

DRAFT




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DRAFT

XIII. Cross-Licensing and Patent Pools involving SEPs


Option 93A (Prior AIPLA Position) Cross-licensing is pro-competitive and a strong showing should be made to establish that any competition law violation has occurred based on a cross-licensing agreement.




Option 93B Cross-licensing is often pro-competitive and should only be held to constitute a strong showing should be made to establish that any competition law violation has occurred based on a cross-licensing agreement if there is clear evidence that it is anticompetitive in the circumstances.



Option 93C Cross-licensing is can be pro-competitive and a strong showing should be made to establish that any competition law violation has occurred based on a cross-licensing agreement.




Option 94A (Prior AIPLA Position) Parties at arm’s length will typically arrive at a fair bargain.




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DRAFT

Option 94B Parties License terms arrived at through arm’s length negotiations between sophisticated partes with access to competent legal counsel should be presumed to represent will typically arrive at a fair bargain.



Option 94C Parties at arm’s length will typically arrive at a fair bargain assuming there is no unfair discrepancy in each party’s bargaining power and the absence of competitive abuses or “hold up” associated with SEP abuse.







Option 95C Parties can always jointly and voluntarily agree to a broader portfolio cross-license between the parties. Any conditions are only unreasonable if the SEP holder insists on such conditions when the implementer asks for a SEPs-only FRAND license. In that context, a licensee can question whether an SEP is infringed and enforceable (in addition to questioning whether it is valid).



Option 96A (Prior AIPLA Position) FRAND licensing involves complex business transaction that may involve monetary and non-monetary consideration, and the reasonableness of the agreement should be assessed on a case-by-case basis.



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DRAFT


Option 96C FRAND licensing involves complex business transaction that may involve monetary and non-monetary consideration, and the reasonableness of the agreement generally should be assessed on a case-by-case basis, though certain types of practices may be more likely to create competitive harm than others.



Option 97A (Prior AIPLA Position) An SSO participant could agree to license patents essential to implement a standard in return for a reciprocal licensing commitment from the implementer of the standard.




Option 97B An SSO participant could agree to license patents essential to implement a standard in return for a reciprocal licensing commitment from the implementer of the standard. Unless an SSO’s IPR policy expressly states otherwise, an SEP holder may grant a license to its SEPs on the condition that the licensee grant the SEP holder a license under the licensee’s SEPs.



Option 97C An SSO participant could agree to license patents essential to implement a standard in return for a reciprocal licensing commitment from the implementer of the standard. Where a patent policy provide for reciprocity, an SEP holder may grant a license under SEPs on the condition that the licensee grant the SEP holder a license under the licensee’s SEPs in the same standard .



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DRAFT

Position 98. .

(Prior AIPLA Position) Cross-licensing may involve confidential competitive information that should be protected from public disclosure.



Option 99A (Prior AIPLA Position) Pooling in standards may be efficient and convenient for patent holders and licensees.




Option 99B Pooling arrangements for licenses of SEPs in standards may be efficient and convenient for patent holders and licensees.



Option 99C Pooling in standards may be efficient and convenient for patent holders and licensees, provided the pools fully comply with the patent owner’s FRAND obligations.




Option 100A (Prior AIPLA Position) If there is a question about competition and SEP patent pools, the Rule of Reason should apply.



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DRAFT

Option 100B If there is a question about competition and SEP the consistentcy of patent pools for SEPs with antitrust law, the Rule of Reason usually should apply.


Option 100C Supports Option B.

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Documents

Web viewThis position should be adopted because ____________. Such a presumption is warranted because continual challenges to agreed-upon