Last week IP Europe Alliance--an association whose larger corporate members include, among others, Ericsson, Nokia, and Qualcomm--released a draft CEN-CENELEC Workshop Agreement (CWA) titled "Principles and Guidance for Licensing Standard Essential Patents in 5G and the Internet of Things (IoT)." Here is a link to the press release, and here is a link to the CWA itself. The document is open for public comment until December 13 (see the press release for more information). Here are the six principles:
Principle 1: Owners of patent rights which are essential for using standardised technologies (SEPs) should allow access to that patented technology for implementing and using the standard.
Principle 2: Both the SEP owner and the potential licensee should act in good faith with respect to each other with the aim of concluding a FRAND licence agreement in a timely and efficient manner.
Principle 3: Each party should provide to the other party, consistent with the protection of confidentiality, information that is reasonably necessary to enable the timely conclusion of a FRAND licence.
Principle 4: "Fair and reasonable" compensation should be based upon the value of the patented standardised technology to its users.
Principle 5: A SEP owner should not discriminate between similarly situated competitors.
Principle 6: If the parties are unable to conclude a FRAND licence agreement within a reasonable 1 timeframe they should seek to agree to third party determination of a FRAND licence either by a 2 court or through binding arbitration.
Each principle is followed by Guidance. For example, Principle 2's Guidance states:
• When a SEP owner believes that a party implementing a standard is infringing its SEPs and would require that party to take a licence, the SEP owner should notify that party, describe the alleged infringement and ask it to enter into negotiations over a FRAND licence.
• The SEP owner should provide the potential licensee with information about its SEP portfolio and why a licence is needed.
• The SEP owner should make an initial licence offer, and explain why it believes that the offer is FRAND. If the potential licensee does not agree, it should promptly provide a counter-offer, and explain why it believes that the SEP owner's offer is not FRAND and that its counter-offer is FRAND.
• The potential licensee is free to challenge the essentiality or validity of the SEP owner's patents, in parallel to the negotiation, but that should not be used to unnecessarily delay negotiations over a licence.
Principle 4's Guidance discusses compensation:
• Fair and reasonable compensation balances the incentive to contribute technology to standards with the cost of access to the standardised technology.
• Fair and reasonable compensation should be evaluated considering the facts and circumstances that reasonable commercial parties would take into account when negotiating a patent licence.
• Comparable licences which result from commercial negotiations are often reliable indicators for determining the value of the patented standardised technology to users of the licensed product or service.
• Other indicators which may be considered include consumer demand, measurable benefits of the patented standardised technology, and the price difference between substantially identical products with and without the standardised technology.
• As a cross-check when evaluating whether compensation is fair and reasonable, the aggregate of fair and reasonable royalties likely to be borne by users for the standard concerned may also be considered.
• Such aggregate royalties may be too high if wide access to the standard is prevented or too low if the royalties are not sufficient to incentivise the contribution of technology to standards.
The draft concludes with a series of questions and answers (e.g., "What is a patent?" "What is an injunction and how might this affect my organisation?").
For further discussion, see Joff Wild's recent write-up on the IAM blog here.
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