Context: The global debate over standard-essential patent (SEP) policy breeds hyperbole (April 11, 2024 ip fray article). Panel debates sometimes heat up. But it doesn’t have to be that way.
What’s new: At the first London edition of the IP Dealmakers Forum, ip fray‘s founder joined IBM’s (and formerly Apple’s) Tom Mavrakakis and IP Europe’s Patrick McCutcheon on a panel moderated by former Lord Justice of the UK Court of Appeal and now UCL professor Sir Robin Jacob (as announced in an April 12, 2024 ip fray article). The discussion was respectful and constructive despite different perspectives on such questions as the antitrust implications of standard-setting.
The IP Dealmakers Forum has been a key conference for the IP litigation finance community to attend in the United States for many years. It’s off to a great start in Europe with a very successful inaugural edition (ip fray heard only positive comments from participants). The IP Dealmakers Forum is a conference with keynotes and panels as well as a dealmaking event where participants can book private tables for confidential conversations. ip fray‘s founder is helping a U.S. litigation boutique raise funds ($20M+) for a high-potential patent enforcement campaign with first results (April 3, 2024 ip fray article) and primarily attended for that reason, but appreciated the opportunity to join the SEP policy panel.
Wider policy issues: It was mentioned yesterday that there are SEP policy initiatives and lobbying efforts underway not only in the EU but also in various other jurisdictions. Furthermore, there are objective issues to be addressed. For instance, it is unacceptable that three major smartphone brands — OPPO, OnePlus and vivo — were forced out of the German market by SEP abuse and bad rulings, which resulted in job losses, and that those products remain unavailable in Germany, which is a loss for competition and customer choice.
The panel met in a speakers’ prep room about 30 minutes prior to the session. Chances are that a certain audience would have enjoyed listening to that conversation. Sir Robin had interesting views to share and stories to tell, such as about the last thing he routinely did before entering the courtroom.
Naturally, the IP law and litigation finance communities are not an “anti-patent” audience. But surprisingly there was a small and medium-sized enterprise that also needs to license SEPs.
Just like other (in fact, most) high-profile patent judges, Sir Robin does not consider the EU SEP Regulation useful. No one on the panel defended that particular proposal, but Tom Mavrakakis, who worked on SEP licensing for the very first iPhone even prior to its launch, shared his personal (not his current employer’s perspective). There are issues with some SEP holders seeking overcompensation.
IP Europe’s Patrick McCutcheon made it clear that his organiation opposes the proposal. He respectfully disagreed with Mr. Mavrakakis on whether standard-setting means that competitors jointly decide what products to make or not to make: it’s about making products interoperable.
ip fray‘s founder (Florian Mueller) took the middle-ground position that there are indeed serious issues, particularly with German SEP case law, but the EU SEP Regulation doesn’t tackle those directly. Instead it would create delay, produce non-binding opinions that (as Sir Robin also noted) may or may not be taken seriously by the courts of law, and implementers may primarily welcome it because it sends out a message from the EU to the rest of the world that SEP enforcement should be weakened. And indeed, there are now lobbying activities in multiple jurisdictions to that effect.
Over the course of the past seveal years, only one defendant to a German SEP enforcement action managed to be deemed a willing licensee, and only because of double-dipping between two pools. It is not plausible that every implementer who gets sued is unwilling. Unwilling licensees can be reasonably presumed to be overrepresented among those against whom infringement actions are filed, but they can’t possibly all be objectively unwilling.
Sir Robin, who definitely believes in IP and its enforcement, shared an interesting observations. He has read a number of German patent judgments over the years, and he respects his German colleagues a great deal, yet sometimes feels that they should think a little more outside the box. They tend to make a box and then put everything into it is roughly how he described the situation.
While ip fray continues to criticize the EU proposal, the state of affairs is also unsustainable. With OPPO, OnePlus and vivo, three major smartphone brands (of which OnePlus was quite popular amoing those buying high-end Android phones in Germany) were forced out of the German market in recent years by SEP abuse (April 19, 2024 LinkedIn post by ip fray). If a SEP holder obtains German injunctions on the basis of the opposite of what the same company in the same dispute tells a UK court, it’s clear that they just wanted leverage and lacked a legitimate cause. Some further analysis is also needed with respect to one or more injunctions obtained by a company whose licensing terms were deemed discriminatory by the High Court of Justice in London. This doesn’t mean to say that every SEP assertion against those companies was malicious. But companies don’t just leave a market as large and lucrative as Germany for no reason.
In this context it bears remembering that this is not the first situation in which SEP abuse and bad German rulings had a negative impact. In 2012, Microsoft (which is also a major patent holder) moved a major logistics center across the German-Dutch border because of German SEP case law. A few years later, the European Court of Justice decision in Huawei v. ZTE appeared to have redressed the balance, but it was only a matter of time until the German judiciary reverted to its old ways of considering virtually every implementer of a standard an unwilling licensee.
ip fray‘s founder said that the problem basically comes down to just a couple of German rulings. Yesterday’s panel discussion had too much breadth to go into the German situation in more depth, which is why there was no time to name them. The worst one of them, by far and away, is Sisvel v. Haier, which must be overruled because it’s intellectually dishonest, unbalanced, and has negative economic effects. The overall debate continues, and ip fray will continue to take middle-ground positions.