Contreras on SEP Assertions by NPEs

One of the speakers at the TILEC Conference on Competition, Standardization, and Innovation that is taking place later this week in Amsterdam (see my previous post, here) is Jorge Contreras, who will be presenting a paper titled Assertion of Standards-Essential Patents by Non-Practicing Entities.  The paper was just recently uploaded to ssrn.  Here is a link to the paper, and here is the abstract:

An extensive literature exists regarding the patent disclosure and licensing commitments made by participants in standard-setting organizations (SSOs), and how such commitments affect the assertion of standards-essential patents (SEPs) by these participants. But this literature largely ignores the assertion of SEPs by entities that do not participate in SSOs (Outsiders). This study is the first to collect and analyze data relating to SEP assertions by SSO Outsiders, a large number of which are so-called non-practicing entities (NPEs).

We present descriptive statistics regarding NPE and Producer assertions of SEPs pertaining to seven broadly-adopted standards in the telecommunications and networking sectors over a 16.5-year period. Twenty-six NPEs were identified as asserting SEPs pertaining to the standards studied. NPEs initiated 64% of all SEP cases and 77% of all unique patent-defendant assertion events involving these SEPs. NPEs initiated 82% of all defendant-assertion events relating to the five standards subject to FRAND licensing commitments, but only 25% of such events relating to the two standards subject to royalty-free (RF) licensing commitments. When NPEs asserted SEPs from FRAND-based SSOs, the large majority of these assertions (73%) were of unencumbered SEPs. Producers, however, generally asserted FRAND-encumbered SEPs. In the case of SEPs from RF SSOs, NPEs asserted only unencumbered SEPs, while Producers asserted both encumbered and unencumbered SEPs. And while NPE SEP assertions were resolved by settlement at approximately the same rate as Producer SEP assertions, Producer plaintiffs were almost five times as likely to prevail on the merits as NPE plaintiffs.

We conclude with a discussion of the implications of these findings on current debates regarding FRAND licensing and SSO policy limitations, particularly proposals to impose SSO-based licensing encumbrances on SEPs held by Outsider.