IEEE Amends Its Patent Policy, Effective January 1

On Friday, the IEEE approved amendments to the IEEE SA Standards Board Bylaws.  The amendments retreat, to some degree, from the policy the IEEE adopted in February 2015, which stated among other things that the determination of reasonable royalties for FRAND-committed SEPs should include consideration of the SSPPU, and that owners of FRAND-committed SEPs should not seek injunctive relief against implementers unless the latter failed to participate in or comply with the outcome of, an adjudication that included first-level appellate review.  The new policy departs from these requirements, though it still obligates owners not to seek injunctive relief against willing licensees.  Below are the relevant provisions, with the revised portions highlighted and underscored by the IEEE.  The first part comes from Bylaw 6.1 (“Definitions”), and the second from Bylaw 6.2 (“Policy”):

“Reasonable Rate” shall mean appropriate compensation to the patent holder for the practice of an Essential Patent Claim excluding the value, if any, resulting from the inclusion of that Essential Patent Claim’s technology in the IEEE Standard. In addition, determination of such Reasonable Rates should include, but need not be limited to, the consideration of:

 

Some optional considerations for determination of Reasonable Rates are:

 

·      The value that the functionality of the claimed invention or inventive feature within the Essential Patent Claim contributes to the value of the relevant functionality of the smallest saleable Compliant Implementation that practices the Essential Patent Claim or to another appropriate value level of the Compliant Implementation.

 

·     The value that the Essential Patent Claim contributes to the smallest saleable Compliant Implementation or to another appropriate value level of the Compliant Implementation that practices that Essential Patent Cclaim, in light of the value contributed by all Essential Patent Claims for the same IEEE Standard practiced in that Compliant Implementation.

 

·         Existing licenses covering use of the Essential Patent Claim, where such licenses were not obtained under the explicit or implicit threat of a Prohibitive Order, and where the circumstances and resulting licenses are otherwise sufficiently comparable to the circumstances of the contemplated license. . . .

 

*                         *                        *

 

The Submitter and the Applicant should engage in good faith negotiations (if sought by either party) without unreasonable delay or may litigate or, with the parties’ mutual agreement, arbitrate: over patent validity, enforceability, essentiality, or infringement; Reasonable Rates or other reasonable licensing terms and conditions; compensation for unpaid past royalties or a future royalty rate; any defenses or counterclaims; or any other related issues. The Submitter of an Accepted LOA who has committed to make available a license for one or more Essential Patent Claims agrees that it shall neither seek nor seek to enforce a Prohibitive Order based on such Essential Patent Claim(s) in a jurisdiction unless the against an implementer who is willing to negotiate in good faith for a license. Seeking further information upon initial notice of infringement or choosing to litigate or arbitrate over any of the foregoing issues, however, does not by itself mean that a party so choosing is unwilling to negotiate in good faith. fails to participate in, or to comply with the outcome of, an adjudication, including an affirming first-level appellate review, if sought by any party within applicable deadlines, in that jurisdiction by one or more courts that have the authority to: determine Reasonable Rates and other reasonable terms and conditions; adjudicate patent validity, enforceability, essentiality, and infringement; award monetary damages; and resolve any defenses and counterclaims. In jurisdictions where the failure to request a Prohibitive Order in a pleading waives the right to seek a Prohibitive Order at a later time, a Submitter may conditionally plead the right to seek a Prohibitive Order to preserve its right to do so later, if and when this policy’s conditions for seeking, or seeking to enforce, a Prohibitive Order are met.

There are also corresponding changes to the IEEE’s document “Understanding Patent Issues During IEEE Standards Development,” essentially an FAQ.

Back in 2015, although I was critical of the part about the SSPPU (see here), I was in favor of the part about injunctive relief—though in retrospect I can see how requiring the parties to go all the way through first-level appellate review before an implementer would be considered unwilling may have gone too far.    

For discussion elsewhere, see FOSS Patents, IP Watchdog, and Law360.