The Politicization of IP Protection: The Case of Standard Essential Patents
Abstract
Standard essential patents (SEPs) exemplify the tension between the dual nature of intellectual property, which is both national and international. While standards have a global dimension, patents confer territorial rights, making the implementation of standards geographically constrained. As technical standards are a strategic tool, countries have developed national standards strategies that prioritize securing technological leadership. Unsurprisingly, SEPs have become a geopolitical issue and a significant factor in international tensions. In this context, China’s growing role in international standardization has further politicized the process of standard-setting. This paper argues, however, that the approaches taken by EU and US courts and policymakers regarding SEPs have inadvertently aided China in effectively implementing its strategy. The paper identifies the root of the problem in the uncertainty surrounding the economic and legal interpretation of fair, reasonable, and non-discriminatory (FRAND) licensing terms, as well as in the willingness of national courts to act as global licensing tribunals. Additionally, the paper investigates whether the ongoing strategies of the U.S. and the EU align with their stated goal of achieving technological leadership.
I. Introduction
National courts worldwide are increasingly resolving patent disputes in ways that carry significant global implications. In effect, these local courts are interpreting their national patent laws in ways that influence how companies operate internationally. This is evident, for instance, in the handling of standard essential patents (SEPs) disputes, where national courts are increasingly willing to set royalty rates that apply on a global scale.
This “glocal” interpretation of patent law has created a fragmented global intellectual property (IP) landscape marked by contradictions. Although it is often cited as a prime example of globalization, it is simultaneously influenced by economic nationalist concerns about domestic industries and local economic development.[1]
Such a dual nature has historically characterized the evolution of IP regimes and the pendulum swings back and forth over the years. Indeed, while it can be argued that IP protection has roots in economic nationalist motives, the international IP system has consistently expanded in territorial and regulatory scope over the last century. Nonetheless, at the same time, the more IP rights play a key role in the global economy, being essential in promoting international trade, the more their nationalist origins seem to resurface.[2]
The case of SEPs is a prominent example of this tension. Indeed, standards are seemingly one of the most important yet fragile pillars of the modern tech economy.
On the one side, as the growing interconnectedness of an increasing volume and diversity of things requires interoperability, technical standards are set to reinforce their role by enhancing network value, facilitating market integration, and creating a single global market. The development of the mobile communications industry clearly illustrates this globalization trend.[3] Specifically, the shift from the first generation of national standards to the second generation of regional standards aimed at fostering the European single market, and finally to global partnerships created to develop 3G, 4G, and 5G, reflects the increasing demand for a supranational standard.
On the other side, despite the global dimension of standards, patents grant territorial rights, making the deployment of standards territorial as well. As a result, both the filing and litigation of SEPs are matters of strategic decision-making, as countries may differ significantly in their approach to patent protection. Furthermore, the global reach of technology markets inevitably leads to transnational litigation over SEPs. Indeed, since SEPs are included in global portfolios and the related products are sold in multiple markets, legal action for perceived infringements may need to be taken in several jurisdictions. Moreover, with the rise of the Internet of Things (IoT) and the evolution of many industries depending on advanced mobile telecommunication standards, the latter are crucial to both national economies and security.[4]
As a result, countries have deployed national standards strategies prioritizing efforts to secure a technological leadership, in particular for critical and emerging technologies (CET), namely for advanced technologies carrying strategic significance for competitiveness and national security.[5] In addition, countries may have strong interests in preventing their companies’ SEPs from being adjudicated in foreign jurisdictions because of the risks of national measures that may adversely affect their protection and enforcement.[6]
As technical standards represent a strategic tool for technological competition among countries, it is no surprise that they have become a matter of geopolitics and a significant factor in potential tensions in international relationships.[7] Therefore, once again, the dilemma arising from the dual dimension (i.e., national and global) of patent protection comes to the forefront. While the pivotal role of standards nurtures the nationalist nature of patents, local regulatory solutions cannot ignore the intrinsic interdependency among economies in a highly interconnected global environment. Further, they must consider the potential countermeasures adopted by other countries to favor domestic firms, leading to a global race to the bottom.
Against this background, the paper traces the roots of the problem to the uncertainty surrounding the SEP protection. Interventions that affect the reliable enforcement of SEPs impact their value and the incentives to innovate, which are essential for supporting a country’s technological leadership. Therefore, by analyzing relevant policy documents, legislative initiatives, and case law, this paper aims to investigate the ongoing strategies undertaken by the U.S. and EU to assess whether they are consistent with the purported goal of pursuing technological leadership. Notably, the paper argues that, although China’s growing role in international standardization has indeed contributed to the politicization of standard-setting, it is not the sole cause. The underlying issues stem from ongoing debates about the interpretation of fair, reasonable, and non-discriminatory (FRAND) commitments, the role of national courts in setting royalties for global patent portfolios, and the issuance of anti-suit injunctions (ASIs). Together with China’s approach to standardization, policy decisions by Western countries have influenced the valuation of SEPs and created substantial opportunities for forum shopping.
The paper is structured as follows. Section 2 investigates the roots of the current geopolitical battle over SEPs. Section 3 outlines the recent standardization strategies of the U.S. and EU and analyzes whether their policy goals of pursuing technological leadership align with their approaches to the legal implications of FRAND commitments, particularly concerning the limited ability of FRAND-encumbered SEP holders to fully monetize their innovations through injunctions. Section 4 concludes.
II. Setting the SEPs Global Chessboard: The Problem and Its Roots
Since they are fundamentally a form of self-regulation, technical standards are not inherently subjects of geopolitical rivalry. However, their political relevance has increased alongside their growing strategic role in modern economies. As a result, technical standard-setting, once primarily the domain of cooperation and competition among private actors, has become a central arena for rivalry among countries.[8]
The turning point in this recent trend is often attributed to China’s new approach to standardization. While traditional Western leaders typically follow a model characterized by market leadership with government support, China has adopted a distinct strategy by actively pursuing state-driven standards as a key element of its national policies.[9]
While China’s growing influence in international standardization has certainly contributed to the politicization of standard-setting, this paper argues that it is not the sole explanation for the phenomenon. The roots of the issue lie in longstanding controversies over the meaning of FRAND commitments and the role of national courts in determining royalties for global patent portfolios. These factors have ultimately affected the value of SEPs and created significant opportunities for forum shopping.
Therefore, before illustrating the Chinese strategy, this Section examines the approaches emerged in Western countries regarding licensing rules for standard-setting participation, the possibility to set global royalty rates, and the availability of ASIs.
A. The Content of FRAND Commitments
A significant part of the geopolitical conflicts reflects the apparent failure of the main rules designed to manage the relationship between patent holders and implementers. In particular, the current situation seems to be a natural consequence of the flawed process for determining FRAND terms.
The standardization process is successful as long as it benefits all participants. Specifically, patent owners must receive fair compensation for their research efforts and implementers must have access to the best technological solutions under terms that enable them to profitably commercialize products incorporating those standards. However, while much of the policy debate has centered on reducing the leverage of patent holders in negotiations with implementers—allowing the latter to profitably commercialize products incorporating standardized technology—the equally important condition of ensuring proper compensation for patent holders has received far less attention from scholars and policymakers.[10]
Notably, in the early stages, many argued that the primary objective of standard development organizations (SDOs) in setting licensing rules should be to reduce the hold-up problem for implementers.[11] This would be achieved by preventing SEP holders from demanding excessively high royalties. According to this perspective, since implementers invest significant resources to comply with a standard, once the standard is established, due to the specific investments made and the impracticality of switching to a non-compliant alternative technology (which would hinder product marketability), SEP holders could gain substantial leverage and demand royalties far beyond the fair value of their contribution to the standard. In this context, FRAND policies are crucial, as implementers and SEP holders typically begin negotiations only after the implementers have already used and potentially infringed upon the technologies covered by SEPs. Consequently, to address the hold-up problem, SDOs generally require SEP holders to commit to FRAND terms when joining the working group.[12]
The pure hold-up rationale has been progressively questioned by a strand of literature which has raised doubts because of the lack of empirical evidence highlighting the relevance of the opposite risk (hold-out or reverse hold-up).[13] In this scenario, licensees might engage in strategic practices, such as refusing reasonable offers from patent holders and prolonging litigation to avoid paying royalties or to depress prices.[14]
Courts have finally and correctly interpreted the FRAND commitment as a tool for tackling both hold-up and hold-out opportunistic behaviour, aiming to strike a fair balance between the different interests involved.[15]
Nonetheless, there is still limited knowledge about the meaning of FRAND commitment and its economic and legal implications are largely controversial.
In general, from an economic perspective, requiring that licenses be provided on fair and reasonable terms aims to ensure that SEPs are available at a price equivalent to their market value before they were declared essential. Similarly, the non-discrimination requirement seeks to prevent SEP holders from extracting monopoly premiums through selective licensing. This includes preventing them from “migrating their monopoly power from the FRAND-regulated market to unregulated standard-implementing product markets” by licensing only to one or a few implementers or by offering favorable terms to selected implementers in a discriminatory manner.[16]
However, there are no generally accepted tests to determine whether a particular licence satisfies a FRAND commitment. Courts even differ on whether there is a single true FRAND rate or if FRAND can encompass a range of acceptable terms.[17]
Further, because of the divergence between hold-up and hold-out theories, no consensus also exists over the legal effects of FRAND commitments.
In particular, it is highly disputed whether the licensing of SEPs under FRAND terms is a competition issue. While proponents of the hold-up theory argue that the governance of SDOs should be subject to antitrust scrutiny and that compliance with FRAND commitments should be enforced through antitrust provisions, another perspective suggests that such enforcement would unfairly favor technology implementers. This latter viewpoint contends that SEP licensing should be governed by contract law, as hold-up risks arise from the sunk investments already made by implementers, affecting their negotiation power. Therefore, these risks are seen as a problem of contract incompleteness rather than an antitrust issue stemming from the misuse of market power.
Similar divergences arise regarding remedies. While, in principle, patent holders have the right to seek injunctions against the sale of infringing goods, the risk of hold-up has led policymakers and courts to limit injunctive relief for holders of FRAND-encumbered SEPs. Indeed, according to a well-established view, in certain circumstances, a FRAND commitment should be seen as a waiver of the general right to seek such remedies.[18] In addition, it is unclear whether SEP holders are required to grant a FRAND licence to any implementer seeking a licence, including component makers (so-called licence-to-all approach), or if they are allowed freely to target the supply chain level at which the licence is to be granted (so-called access-for-all approach).[19]
The regulatory framework on FRAND commitments developed in the U.S and EU has a counterpart in the Asian scenario, determining a progressive international convergence on a no-injunction rule stemming from the SEP holder’s acceptance to license on FRAND terms.[20] China, in particular, has consistently used its patent and competition laws to limit SEP enforcement, aiming to reduce the royalties that local device manufacturers must pay to foreign SEP holders.[21]
By and large, it’s not surprising that the illustrated uncertainty about the (relevant) economic and legal implications of FRAND commitments has led to litigation and incentivized forum shopping in countries perceived as more favorable to either patent holders or implementers.
B. The ‘Glocal’ Nature of FRAND Royalty Rates
Despite these uncertainties, national courts are increasingly positioning themselves as global licensing tribunals, which exacerbates the dual dimension (local and global) of SEPs.
This trend was triggered by the UK courts’ decisions in Unwired Planet v. Huawei.[22] In this case, the courts found that global portfolio licensing is a common industry practice that offers efficiency benefits, such as saving transaction costs for both licensors and licensees and eliminating the need to determine a royalty rate on a patent-by-patent basis. The UK Supreme Court, referencing judgments from key jurisdictions (i.e., Germany, China, Japan, EU, and the U.S.), argued that the principles outlined in these judgments suggest that, “in appropriate cases”, courts in those jurisdictions would determine the terms of a global FRAND license.[23]
Following the lead of UK courts, other national courts have also asserted the authority to set the terms of FRAND licenses for global SEP portfolios. For instance, the Judicial Court of Paris did so in TCL v. Philips[24] and Xiaomi v. Philips[25], the District Court of The Hague in Vestel v. Philips[26], and the U.S. District Court for the Central District of California in TCL v. Ericsson.[27]
Chinese courts have also joined this trend as the Supreme Court has repeatedly affirmed their jurisdiction over global royalty rates of SEPs.[28] After all, in Sharp v. Oppo, the Supreme Court celebrated the emergence of China as a guide, rather than a follower, in setting international intellectual property rules.[29]
Finally, in delivering a proposal for a regulation that would overhaul the entire SEPs licensing system, the European Commission has recently suggested that the FRAND determination may refer to global rates.[30] Indeed, although the new regulation would apply only to SEPs in force in the EU, FRAND determinations would still concern global SEP licenses unless otherwise specified by the parties, either through mutual agreement or by the party requesting the continuation of the FRAND determination. The EU’s focus on this issue seems partly in response to concerns over forum shopping, particularly in light of “certain emerging economies” that are adopting a “much more aggressive approach in promoting home-grown standards and providing their industries with a competitive edge in terms of market access and technology roll-out.”[31]
The phenomenon of national courts determining global FRAND rates has further heightened the risk of a “race to the courthouse” among litigants and a “race to the bottom” among jurisdictions.[32] This trend incentivizes forum shopping and the adoption of countermeasures like ASIs. Indeed, by setting global licensing terms, courts may seek to position themselves as attractive venues for specific types of litigants (SEP holders or implementers), while parties are encouraged to file suits in favorable jurisdictions as quickly as possible to capitalize on the advantages of being the first to act.
C. Shootout at the ASIs Corral
The increasing politicization of patent protection has been finally intensified by ASIs, which have recently emerged as a phenomenon that significantly impacts the dynamics of SEP litigation, drawing considerable attention from specialized literature.[33] It is sufficient to note that the EU has filed a case against China at the WTO, arguing that Chinese ASIs are inconsistent with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).[34] According to the EU, starting from 2020, Chinese courts have deprived SEP holders of the ability to effectively protect their technologies in non-Chinese courts. Notably, through ASIs, China unilaterally imposes rules that benefit its own enterprises, as Chinese manufacturers have requested these injunctions to pressure patent holders into granting them cheaper access to European technology.
ASIs are orders that restrain a party from pursuing foreign proceedings or enforcing a judgment obtained in foreign courts. Although they have existed in transnational litigation since fifteenth-century England, SEP disputes have brought ASIs into a new dimension. Generally, ASIs can be beneficial by containing litigation costs and reducing the likelihood of inconsistent outcomes across jurisdictions. However, rather than resolving disputes, the issuance of an ASI has sparked a new form of unwelcome competition. Litigants and courts have begun to devise anti-anti-suit injunctions (AASIs), which block a party from seeking or enforcing an ASI, and anti-anti-anti-suit injunctions (AAASIs), which prevent a party from obtaining an AASI to block another party from requesting or enforcing an ASI, and so on. In sum, given the significant national interests associated with standard-setting, anti-suit strategies have become effective tools for countries to protect and entrench their technological, economic, and political advantages in the international political economy.
The surge in ASIs and the risks associated with their opportunistic use in the SEP landscape are linked to the previously illustrated role certain national courts have assumed as de facto global licensing tribunals. Some courts’ tendency to set high rates may attract patent holders to those jurisdictions, while implementers, in turn, may seek to challenge these outcomes in courts known for being hostile to patent holders and inclined to set lower rates.
In this context, the primary reason behind the recent stance of Chinese courts on ASIs is their desire to become the ultimate venue for setting global FRAND licensing rates between parties. Indeed, Chinese courts are known for determining FRAND royalty rates that are lower than those set by judges in other countries, making China an attractive jurisdiction for SEP implementers.
However, although interest in the role of ASIs in SEP litigation has been sparked by a sudden increase in the number of ASIs issued by Chinese courts, it is worth noting that the first ASIs in SEP litigation were granted in the U.S.[35] As US courts initiated the first ASI battles, primarily involving the U.S. and China, Chinese courts have essentially followed the same path as their US counterparts. Meanwhile, other jurisdictions have mostly responded to anti-suit orders that preclude actions within their own territories. Moreover, in the EU, a clear divide has emerged between common law jurisdictions (e.g., the UK) and civil law jurisdictions (e.g., France and Germany). The latter are more reluctant to recognize the effectiveness of ASIs and are more inclined to resist interference by foreign courts.
D. The Chinese Threat
As mentioned, China has established itself as a major jurisdiction for SEP litigation, competing with other countries, in particular EU and the U.S. It has been noted that, as a latecomer, China has adopted a distinct approach compared to traditional leaders like the U.S. and Europe.[36] This strategy, often referred to as techno-nationalism, involves a country’s deliberate efforts to promote and protect its own technological capabilities and industries to gain a competitive edge in advanced technology innovation.[37]
While EU and the U.S. follow a model based on market leadership with government support, China has actively pursued a state-driven standards strategy as a key element of its national policy. More specifically, recognizing the crucial importance of technical standard-setting, China has shifted from a state-controlled to a state-centric approach to technical standardization.[38] Namely, despite all aspects of the standardization system remain closely guided by the party-state, China has recently implemented a two-tier standardization system that integrates both state and market elements. Indeed, the 2015 strategic industrial plan, commonly known as “Made in China 2015,” emphasized the need to strengthen IP protection by leveraging market institutions, enabling firms to self-declare their own technology standards and actively participate in international SDOs. As a result, to align strategic policy objectives with domestic technical standard-setting, China has steadily expanded its influence in international technical standardization, leading to a growing number of leadership roles within standardization bodies.[39] Finally, through the “China Standards 2035” plan, China seeks to set the global standards for next-generation technologies.
The new Chinese stance has raised concerns among US and EU policymakers, who are worried about the challenges it poses to their longstanding leadership in standards, as well as the implications for competitiveness and national security. However, it should not be overlooked that the Western countries’ approach to SEPs have contributed to China’s increasingly central role in global standard-setting, which is a key factor in the ongoing geopolitical tensions. Notably, the analysis of the economic and legal meaning of FRAND, the (limited) rote of injunctive reliefs, the willingness to set global royalty rates and to issue ASIs generates a sort of crowding out. Indeed, on all of these issues, Western countries have been the first movers, allowing other nations, including China, to adopt and adapt these strategies for their own benefit.
Considering the current geopolitical scenario, one might wonder whether the solutions adopted to address the challenges posed by SEPs are part of a coherent strategy after all.
Against this background, the next Section aims at investigating the coherence of EU and US approaches to SEPs and whether recent and ongoing policy initiatives are effective in safeguard (or reclaiming) their technological leadership.
III. The (In)Consistency of EU and US Approaches to Standards Leadership: Is It Time to Reconsider the Anti-Injunction Policy?
The growing role of China in international standardization has contributed to the politicization of standard-setting. At the same time, the approaches taken by EU and US courts and policymakers regarding the legal implications of FRAND commitments, as well as the extraterritorial impact of decisions on royalty rates and ASIs, have aided China in effectively implementing its strategy.
In particular, the strategy pursued in the EU and the U.S. regarding the availability of injunctions for SEP holders appears quite inconsistent with the concerns raised about Chinese policy. US and EU policymakers complain about Chinese courts’ and authorities’ willingness to promote domestic economic interests by undervaluing foreign SEPs and setting lower FRAND rates.[40] Indeed, it has been noted that, in the wireless communications supply chain, companies based in the Western countries (e.g, Arm, Ericsson, Nokia, and Qualcomm) are net technology suppliers, meanwhile companies based in China or primarily operating there (e.g., Apple) are implementers.[41] As a net technology user in the smartphone supply chain, China has a vested economic interest in devaluing SEPs. However, as traditional leaders, the EU and the U.S. have promoted, from very beginning, an approach aimed at challenging the economic value of SEPs imposing limits on royalty rates that SEP holders can demand. This approach has been justified with the need to avoid hold-up problems and the goal has been pursued by enforcing FRAND commitments and reducing the possibility for FRAND-encumbered SEPs holders to seek injunctions.
As policymakers on both sides of the Atlantic are considering new initiatives on SEPs, it is worth examining whether these efforts align with the stated goal of achieving technological leadership.
A. The US Scenario
In May 2023, the Biden-Harris Administration announced the “United States Government National Standards Strategy for Critical and Emerging Technology”, which is intended to support ongoing private sector-led initiatives and plans, with a specific focus on CET.[42]
The strategy, as stated in its premise, is a response to the challenges the U.S. faces regarding its longstanding leadership in standards and the core principles of international standard-setting, which it has upheld for decades alongside like-minded partners.[43] Indeed, “[s]trategic competitors are actively seeking to influence international standards development, particularly for CET, to advance their military-industrial policies and autocratic objectives.”[44] Therefore, the U.S. is committed to renew its efforts to “the rules-based and private sector-led approach to standards development, and complement the innovative power of the private sector with strategic government and economic policies, public engagements, and investments in CET.”[45] To this end, the U.S. Government states it will also deepen standards cooperation with allies and partners to support a robust standards governance process, specifically to enhance and protect the private sector-led international standards process.[46]
Consistent with such a strategy, in July 2024 the U.S. Department of Commerce published an interim final rule amending the Export Administration Regulations to reinforce the U.S. leadership and participation in global standards development by making it easier for US companies to navigate export controls while participating in standards-setting.[47] According to the U.S. Department of Commerce, without these revisions, there is greater risk that standards would be developed without the participation and input of U.S. companies, which harms U.S. national security.
At the same time, some bills that would strengthen patent rights have been put before the U.S. Congress. For instance, the Defending American Courts Act would penalize parties seeking to assert foreign ASIs to restrict an action for patent infringement before a US court or the International Trade Commission.[48] More recently, the Realizing Engineering, Science, and Technology Opportunities by Restoring Exclusive (RESTORE) Patent Rights Act would restore the rebuttable presumption that an injunction is warranted after a court makes a final ruling that patent rights are being infringed[49], thus overriding the Supreme Court’s decision in eBay v. MercExchange.[50] The bill moves from the premise that, since eBay, obtaining both permanent and preliminary injunctions in patent cases has become extremely difficult and rare, as recently shown by a study.[51] As a result, the current patent law would fail to protect inventors and “leaves them vulnerable to intellectual property theft from adversaries like China.”[52]
In this context, with regards to SEPs, U.S. agencies have traditionally been influenced by proponents of the hold-up theory. This strand of literature suggests that SEP owners inherently possess market power, which they can leverage to impose unfair terms on implementers, and that, therefore, a FRAND commitment should prevent the SEP owner from seeking injunctive relief.[53]
Accordingly, in a 2007 report, the Federal Trade Commission (FTC) and the Department of Justice (DoJ) focused entirely on the hold-up problem, starting from the premise that SEP owners can hold up firms wishing to implement the standard by setting higher royalties and less favorable licensing terms than they could have before the standard was established.[54] The risk of hold-out is not addressed at all, with the term hold-out mentioned only once in a footnote.[55]
In a similar vein, in 2011, the FTC proposed aligning the eBay framework with competition policy, recommending that courts consider the public interest in avoiding patent hold-up, which “can increase costs and deter innovation.”[56] The FTC further noted that hold-up in the standard-setting context can be “particularly acute.”[57] Therefore, it argued that a FRAND commitment should be relevant to the injunction analysis, as it provides strong evidence that denying the injunction would not irreparably harm the patentee.[58]
Moreover, in 2013, the DoJ, in collaboration with the U.S. Patent and Trademark Office (PTO), issued a policy statement recommending caution in granting injunctions based on infringement of FRAND-encumbered SEPs.[59] By their view, the remedy of an injunction may be inconsistent with the public interest when it is incompatible with the terms of a patent holder’s existing FRAND licensing commitment to an SDO.[60] Nonetheless, the 2013 policy statement acknowledged that injunctive relief may be an appropriate remedy in some circumstances, such as when the putative licensee constructively refuses to engage in a negotiation to determine FRAND terms.[61]
In 2019, the DoJ, the PTO, and the National Institute of Standards and Technology (NIST) endorsed a significant policy shift by rejecting the no-injunction rule and recognizing hold-out as a more serious impediment to dynamic innovation than hold-up.[62] Notably, the agencies moved from the concern that the 2013 policy statement was misinterpreted to suggest that a unique set of legal rules should be applied in disputes concerning patents subject to a FRAND commitment and that injunctions and other exclusionary remedies should not be available in actions for infringement of SEPs. Such an approach would be “detrimental to a carefully balanced patent system, ultimately resulting in harm to innovation and dynamic competition.”[63] Accordingly, by withdrawing the 2013 policy statement, the agencies clarified thata patent owner’s FRAND commitment is a relevant factor in determining appropriate remedies, but need not act as a bar to any particular remedy.[64]
Further, the 2019 policy statement rejected the idea that antitrust law is applicable to FRAND dispute arguing that antitrust law should not be used to police FRAND commitments made by patent holders to SDOs.[65] By this view, deriving antitrust liability from an alleged violation of FRAND commitments discourages the established principle of market-based pricing, distorts SEP licensing negotiations, and ultimately deters pro-competitive or competitively neutral behavior.[66]
Moreover, updating its previous IEEE’s Business Review Letter, the DoJ stated that “concerns over hold-up as a real-world competition problem have largely dissipated” and the 2015 Letter proved to be incorrect in focusing on the risk of hold-up without considering the possibility of hold-out by patent implementers or the effect on patent holders’ innovation incentives.[67]
In 2021 the pendulum swung back again. The White House Executive Order on “Promoting Competition in the American Economy” suggested to reconsider the 2019 SEP policy statement “[t]o avoid the potential for anticompetitive extension of market power beyond the scope of granted patents, and to protect standard-setting processes from abuse.”[68] As a result, in 2022 it was withdrawn and the DoJ stated that it will “review conduct by SEP holders or standards implementers on a case-by-case basis to determine if either party is engaging in practices that result in the anticompetitive use of market power or other abusive processes that harm competition.”[69]
B. The EU Scenario
In February 2022, the EU presented its new standardization strategy.[70] Standards are considered “at the core of the EU single market” and, according to the strategy, “Europe’s competitiveness, technological sovereignty, ability to reduce dependencies and protection of EU values … will depend on how successful European actors are in standardization at international level.”[71] Therefore, by adopting language similar to that used by US policymakers, the goal is to position the EU as a “global frontrunner” in standards development, enhancing its potential as a “first-mover” in leading international standards-setting by leveraging cooperation with like-minded international partners, particularly in emerging technology areas of strategic interest.[72]
Against this backdrop, it is however acknowledged that “the strategic importance of standards has not been adequately recognised at the cost of EU leadership in standards-setting.”[73] Notably, while traditionally the EU has maintained a strong global presence in international standardization and has a solid track record of translating international standards into European ones, the geopolitical landscape has shifted significantly in recent years.[74] Indeed, other actors now take a much more assertive approach to international standardization and have gained influence within international standardization committees.[75] Therefore, the EU is required to promote a “more strategic approach” to international standardization activities.[76]
At the same time, the European Commission has delivered a proposal for a regulation that would overhaul the entire SEPs licensing system.[77]
The purported goals are to make the EU “attractive” for standards innovation and encourage both SEP holders and implementers to innovate in the EU and be “competitive in non-EU markets.”[78] The proposed initiative moves from the premises that standardisation is a “key contributor” to industrial innovation and competitiveness, and successful standards rest on cutting-edge technologies, which require “substantial investments in research and development.”[79] Finally, the initiative is also considered important in the context of global developments as certain emerging economies are taking a much more “aggressive approach in promoting home-grown standards” and providing their industries with a competitive edge in terms of market access and technology roll-out.[80]
Against this background, in the context of SEPs, the EU has initially adopted a similarly restrictive approach to the availability of injunctive reliefs as seen in the U.S. This is well illustrated by the longstanding conflict between the European Commission and the German courts.
The largest number of SEP disputes in the EU are litigated in Germany, where courts are traditionally perceived patent owner-friendly. Indeed, under the framework crafted by the German Federal Supreme Court (Bundesgerichtshof) in the Orange Book Standard decision to clarify whether a SEP holder could claim for injunction, the competition law defence has been granted to implementers/infringers in a very few cases.[81] Namely, according to Orange Book Standard, the defendant had to advance an unconditional licence offer and was required to behave from the point of its offer as if the plaintiff had accepted it, hence the defendant must have already paid the offered royalties, albeit in escrow. Against this approach, in Motorola and Samsung the Commission took a different stance, establishing that infringers could avoid an injunction by stating a rather unspecific willingness to license and by accepting the binding determination by a third party.[82]
In Huawei, in order to strike a fair balance between the different interests involved and address both the risks of hold-up and hold-out, the Court of Justice delivered its own framework introducing a code of conduct that would shield SEP holders from the risk of an antitrust proceedings and implementers from injunction requests.[83] In this scenario, the CJEU acknowledged that the exercise of remedies to protect IP rights may be considered unlawful for the purposes of competition law only in “exceptional circumstances” and subordinated any limitation of injunctions to the demonstration of the licensee’s willingness to sign a FRAND deal. Nonetheless, tension between the European Commission and German courts persist, as the former remains sensitive to complaints from stakeholders that the current German court practices contradict Huawei by increasing the availability of injunctions and effectively reinstating Orange Book Standard.[84]
In this scenario, by further restraining the availability of injunctive reliefs, the recent EU Commission’s regulatory proposal brings back the conflict with German courts.[85] Moreover, the Commission endorses an anti-injunction approach which is inconsistent with the CJEU’s stance in Huawei.[86]
The proposal notably introduces a mandatory dispute resolution process as a prerequisite for accessing the competent courts of Member States. Before a SEP holder can initiate patent infringement proceedings, or an implementer can seek a determination or assessment of FRAND terms and conditions, a FRAND determination by a conciliator must first occur.[87] Furthermore, enforcement before a national court is also barred when FRAND terms and conditions are at issue in antitrust cases, particularly under the national application of the Huawei framework.[88]
Although the mandatory conciliation is not supposed to replace the Huawei process[89], nonetheless such a mechanism represents an attempt to discard the CJEU’s framework, rather than complementing it. After all, the Commission has not concealed its dissatisfaction with the Huawei framework and its implementation by national courts, arguing that it has proven inadequate for handling the complexities of SEP licensing negotiations, as both licensing and enforcement remain inefficient.[90] As a result, the approach outlined in the proposal marks a departure from the one adopted by the CJEU. While the latter developed the willing licensee test to balance the interests of all parties, the proposed pre-trial compulsory conciliation would limit SEP holders’ ability to seek injunctions beyond what Huawei allows, tilting the balance in favour of implementers. Indeed, implementers could freely challenge SEPs, whereas patent owners would be unable to initiate infringement proceedings without first undergoing the mandatory FRAND determination process.
In general, the proposal is imbalanced, driven primarily by a hold-up bias while completely disregarding hold-out risks. Notably, its provisions seem one-sided, suggesting a need to redistribute value from SEP owners to implementers. The regulation’s costs would be borne solely by SEP holders, while the implementers would gain all the benefits.[91] Furthermore, with less than 10% of implementers based in Europe, the regulation would effectively subsidize non-EU implementers.[92]
The immediate effect of this approach would be to devalue European SEPs, potentially jeopardizing future investments in innovation. This outcome should be especially concerning for EU policymakers, as the Impact Assessment shows that while Chinese companies now own one-third of all SEPs —doubling their share in just seven years— EU ownership has dropped from 22% to 15% over the same period.[93]
Moreover, against this background, the significant role of the long-awaited, newly established Unified Patent Court (UPC) in the SEPs landscape should not be overlooked.[94] Notably, the UPC has the authority to decide on FRAND terms (especially when raised as a defense in infringement proceedings), as well as on injunctions and ASIs. This brings about the further challenge of ensuring coordination between the UPC and the EU Intellectual Property Office’s Competence Center, which is tasked with key responsibilities under the proposed Regulation. These include creating and managing the SEP register, conducting essential checks, and facilitating licensing agreements, particularly concerning aggregate FRAND royalty determinations.
Finally, it is worth noting that the criticism surrounding the proposal has also been echoed by the EU’s traditional global partners, which questioned its economic justification as there is no discernible evidence of a market failure that needs to be addressed.
Former government U.S. officials have publicly expressed serious concerns about the European Commission’s policy, warning that it threatens European and American innovation leadership, and, by extension, the economic success and security of both regions.[95] In a Senate hearing, the Secretary of Commerce revealed that the U.S. Government has expressed concerns about the impact of the EU’s proposed legislation on US patent holders.[96]
With regards to the UK, as part of the Government’s long-term plan for delivering innovation-led growth[97], in 2021 the Intellectual Property Office (IPO) launched a consultation seeking views as to whether the ecosystem surrounding SEPs is functioning efficiently and effectively, thus assessing whether government intervention is required.[98] In response to IPO’s findings, the UK Government opted for some non-regulatory interventions aimed at improving implementers’ understanding of the SEPs ecosystem through the introduction of a SEPs Resource Hub and improving international collaboration.[99] More importantly, announcing the launch of a technical consultation to deliver these objectives, the UK Government expressly stated that it “will not be consulting on making legislative changes to narrow the use of injunctions in SEPs disputes.”[100]
The U.S. PTO and the UK IPO have recently signed a memorandum of understanding that will provide a framework for collaboration between on SEP policies to ensure a balanced standards ecosystem.[101] The alliance between the two offices further highlights the contrast with the unilateral regulatory approach proposed by the European Commission.
C. The Value of Patents and the Role of Injunctions
The analysis of the EU and US scenarios reveals a disconnect between the goals of their standardization strategies and their policies regarding SEPs.
On one hand, Western policymakers recognize the strategic importance of standards and the challenges posed by China’s industrial policy, which is accused to promote domestic economic interests by undermining foreign IP protection. Consequently, there is an emphasized need to intensify efforts to safeguard leadership in standard-setting in response to the shifting geopolitical landscape, including strengthening cooperation with like-minded international partners. The scenario is constantly evolving as other countries, such as Brazil and India, are emerging as attractive venues for SEP litigations.[102]
On the other hand, the U.S. and the EU continue to support a no-injunction policy for FRAND-encumbered SEPs, whose rationale is to tackle hold-up concerns preventing SEP holders from requesting injunctions because of the alleged risk of charging higher royalties on implementers. Further, the recent SEP regulatory initiative by the European Commission and the different approaches adopted by the U.S. and the UK demonstrate unilateralism, rather than alliance.
In summary, while the EU and U.S. criticize Chinese practices aimed at undervaluing their patents before the WTO, they simultaneously endorse a policy that limits SEP holders’ ability to fully monetize their innovations, rather than providing strong protection for SEPs. Since many SEP holders are based in the EU or U.S., this policy effectively benefits Chinese implementers.
The no-injunction policy becomes even more perplexing given the doubts surrounding the very existence of hold-up. If there is no empirical evidence to support hold-up, denying patent owners the ability to seek injunctions effectively encourages implementers to engage in efficient infringement, resulting in undercompensation and underdeterrence for SEP violations.[103] Indeed, in the absence of injunctions, the legal remedies available are insufficient to fully compensate for willful infringement. Therefore, without the credible threat of an injunction as a safeguard, users have strong incentives to violate their obligations under the FRAND contract.
The Impact Assessment Report accompanying the European Commission’s regulatory proposal offers a clear illustration of the perspective of SEP owners, although this perspective was ultimately disregarded in the proposal.[104] To participate in standard creation, prospective SEP holders must invest significant time and resources in R&D to develop and patent new technology globally. This investment is made without any guarantee that the inventor’s patents will be included in the standard or that the standard will gain market acceptance. Even once a standard is accepted, it can take time before it is widely adopted, while patents have a limited duration. Consequently, SEP holders have a limited window to earn returns on their R&D investments through royalties. Additionally, unlike other patents, SEP holders are bound by the FRAND commitment.
Against this background, the risk of holdout is particularly significant for SEP owners with large, global portfolios of complementary patents across multiple jurisdictions.[105] These patentees typically prefer to license their entire SEP portfolio at once to reduce transaction costs. However, implementers may be incentivized to challenge the validity or essentiality of each patent on a jurisdiction-by-jurisdiction basis. Indeed, this approach leads to high litigation costs, and licensees may use it to delay negotiations, aiming to secure lower royalties and more favorable licensing terms.[106] As a consequence, injunctive remedies are essential to ensuring that patent holders and implementers engage in good-faith negotiations.[107]
There is general consensus, even among supporters of hold-up theory, that effective patent remedies are essential to maintaining the patent system’s incentives for innovation.[108] Injunctions, in particular, safeguard the exclusivity that underpins the patent system’s innovation incentives. Additionally, the credible threat of an injunction serves as a deterrent to infringement and encourages parties to engage in licensing.
Therefore, limitations on the availability of injunctive relief should be permitted only under strict and exceptional circumstances. Since FRAND commitments are meant to address both hold-up and hold-out opportunistic behavior, any limitations on injunctions should be contingent upon the licensee demonstrating a genuine willingness to agree to a FRAND deal. From this perspective, rather than being criticized, the German courts’ approach should be welcomed for imposing strict requirements on implementers to prove their willingness.
IV. Concluding Remarks
US and EU policymakers are increasingly concerned about China’s “predatory” approach to standardization.[109] They complain that China has moved beyond relying on central planning to direct the business decisions of its industries and enterprises. Instead, it now employs a state-led strategy aimed at securing the dominance of Chinese companies in both domestic and global markets. As part of this effort to achieve international dominance, China is focusing on both traditional and emerging industries. It is not only providing its own industries with unprecedented financial and regulatory support but also actively implementing policies designed to disadvantage and eventually displace foreign competitors.[110]
These concerns, however, are not being addressed with a coherent strategy on SEPs. IP protection is shaping the geopolitical landscape and SEP enforcement is crucial for promoting innovation. By limiting the ability of SEP holders to fully monetize their innovations, the EU and US no-injunction policies is inconsistent with their ambitions for technological leadership. Meanwhile, due to their approach to remedies in SEP litigation, other countries (such as Brazil and India) have become increasingly attractive to foreign companies.
Despite their stated goals, the EU and US strategies will be unable to support the standards ecosystem without providing adequate protection for SEPs.
[1] See Alexander Peukert, Economic Nationalism in Intellectual Property Policy and Law, in Intellectual Property Ordering beyond Borders (eds., Henning Grosse Ruse-Khan and Axel Metzger), Cambridge University Press, 2022, 64, arguing that economic nationalist concerns lie at the heart of the global IP system.
[2] Ibid., 95.
[3] Jianwei Dang, Byeongwoo Kang, and Ke Ding, International protection of standard essential patents, (2019) 139 Technological Forecasting & Social Change 75.
[4] See, more in general, the recent Draghi report (Mario Draghi, The future of European competitiveness, (2024)
https://commission.europa.eu/topics/strengthening-european-competitiveness/eu-competitiveness-looking-ahead_en), where it is suggested that security should play an increasingly important role in light of geopolitical changes affecting trade policy. Therefore, a modern competitiveness agenda must also incorporate security considerations.
[5] See, e.g., U.S. Government, National Standards Strategy for Critical and Emerging Technology, (2023) https://www.whitehouse.gov/wp-content/uploads/2023/05/US-Gov-National-Standards-Strategy-2023.pdf; UK Foreign Secretary and the Secretary of State for Science, Innovation and Technology, The UK’s International Technology Strategy, (2023) https://www.gov.uk/government/publications/uk-international-technology-strategy/the-uks-international-technology-strategy; European Commission, An EU Strategy on Standardisation. Setting global standards in support of a resilient, green and digital EU single market, COM(2022) 31 final; Chinese Communist Party, National Standardization Development Outline, (2021) https://cset.georgetown.edu/wp-content/uploads/t0406_standardization_outline_EN.pdf.
[6] The EU has filed a case against China at the World Trade Organization (WTO) for restricting EU companies from going to foreign courts to protect their SEPs: see World Trade Organization, China – Enforcement of intellectual property rights, (2022) File No. DS611, https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds611_e.htm.
[7] See, e.g., Mi-jin Kim, Doyoung Eom, and Heejin Lee, The geopolitics of next generation mobile communication standardization: The case of open RAN, (2023) 47 Telecommunications Policy 102625; Tim Ru?hlig, The New geopolitics of technical standardisation: A European perspective, (2023) 3 Future Europe 102; Sophie Faaborg-Andersen and Lindsay Temes, The Geopolitics of Digital Standards, (2022) https://www.belfercenter.org/publication/geopolitics-digital-standards. More in general, see Maximilian von Laera, Knut Blinda, and Florian Ramel, Standard essential patents and global ICT value chains with a focus on the catching-up of China, (2022) 46 Telecommunications Policy 102110, showing that the relevant macroeconomic effects of SEPs and arguing that they should be regarded as tools for maintaining value creation within a country.
[8] Ru?hlig, supra note 7.
[9] Kim, Eom, and Lee, supra note 7.
[10] Jorge Padilla and Andrew Tuffin, The Geopolitical Implications of Patent Holdout and the Ensuing Race to the Home Court, (2023) 5G and Beyond. Intellectual Property and Competition Policy in the Internet of Things (Jonathan M. Barnett and Sean M. O’Connor, eds.), Cambridge University Press: Cambridge, 195.
[11] See, e.g., Carl Shapiro, Injunctions, Hold-Up, and Patent Royalties, (2010) 12 American Law and Economics Review 280; Joseph Farrell, John Hayes, Carl Shapiro, and Theresa Sullivan, Standard Setting, Patents, and Hold-Up, (2007) 74 Antitrust Law Journal 603; Mark A. Lemley and Carl Shapiro, Patent Holdup and Royalty Stacking, (2007) 85 Texas Law Review 1991.
[12] See, e.g., European Commission, Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements, (2023) OJ C 259/1, §458.
[13] See, e.g., Bowman Heiden and Justus Baron, The Economic Impact of Patent Holdout, (2023) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4505268; Gerard Llobet and Jorge Padilla, A theory of socially inefficient patent holdout, (2023) 32 Journal of Economics & Management Strategy 424; Bowman Heiden and Nicolas Petit, Patent “Trespass” and the Royalty Gap: Exploring the Nature and Impact of Patent Holdout, (2018) 34 Santa Clara High Technology Law Journal 179; Richard A. Epstein and Kayvan B. Noroozi, Why incentives for “patent holdout” threaten to dismantle FRAND and why it matters, (2017) 32 Berkeley Technology Law Journal 1381. See also U.S. Department of Justice, U.S. Patent and Trademark Office, and National Institute of Standards and Technology, Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments, (2019) https://www.justice.gov/atr/page/file/1228016/dl, considering hold-out an even more serious impediment to dynamic innovation than hold-up.
[14] See, e.g., Llobet and Padilla, supra note 13, arguing that patent holdout often leads to socially excessive litigation, thus causing innovators to be undercompensated or even allowing implementers to steal, especially when patent owners are relatively small, financially constrained, or have a local dimension and, therefore, they may be unable to afford litigation costs.
[15] See CJEU, 16 July 2015, Case C-170/13, Huawei Technologies v. ZTE, ECLI:EU:C:2015:477.
[16] A Douglas Melamed and Carl Shapiro, How Antitrust Law Can Make FRAND Commitments More Effective, (2018) 127 The Yale Law Journal 2110, 2113-2115.
[17] Notably, while the US methodological approach aims at developing tools that allow courts to define royalty rates, the European view relies on a set of conditions that assess the FRAND-compliance of the licensing parties during the negotiations, in order to leave the actual determination of FRAND rates to the parties. See CJEU, supra note 15; and European Commission, Setting out the EU approach to Standard Essential Patents, COM(2017) 712 final, stating that “there is no one-size-fits-all solution to what FRAND is”, since what can be considered fair and reasonable differs from sector to sector and over time. See also UK Court of Appeal, Unwired Planet [2018] EWCA Civ 2344, overturning the single FRAND rate definition endorsed by Justice Birss in Unwired Planet [2017] EWHC 1304 (Pat) and stating that the economic evidence does not support such an inflexible approach and that it is unreal to suggest that two parties, acting fairly and reasonably, will necessarily arrive at precisely the same set of license terms as two other parties, also acting fairly and reasonably and faced with the same set of circumstances.
[18] See, e.g., Apple v. Motorola, 869 F. Supp. 2d 901 (N.D. Ill. 2012), stating that the patent holder that accepts a FRAND commitment voluntarily agrees to a liability rule since it considers his interest adequately satisfied by FRAND terms. See also U.S. Department of Justice and U.S. Patent and Trademark Office, Policy Statement on Remedies for Standard-Essential Patents Subject to Voluntary F/RAND Commitments, (2013) https://www.justice.gov/atr/page/file/1118381/dl, arguing that, in some circumstances, the remedy of an injunction or exclusion order may be inconsistent with the public interest and, more precisely, that an exclusion order based on a FRAND-encumbered patent “may harm competition and consumers by degrading one of the tools SDOs employ to mitigate the threat of such opportunistic actions by the holders of F/RAND-encumbered patents that are essential to their standards.” In the EU scenario, the CJEU in Huawei (supra note 15) established a new set of exceptional circumstances under which the exercise of an exclusive right linked to an intellectual property right may involve abusive conduct for the purposes of competition law (the so-called willing licensee test).
[19] See Oscar Borgogno and Giuseppe Colangelo, SEPs licensing across the supply chain: an antitrust perspective, (2021) 11 Queen Mary Journal of Intellectual Property 484.
[20] With specific regard to China, see State Administration for Market Regulation (SAMR), Provisions on Prohibiting the Abuse of Intellectual Property Rights to Eliminate or Restrict Competition, (2023) https://www.samr.gov.cn/zw/zfxxgk/fdzdgknr/fgs/art/2023/art_e155397fbe5c4c05ad3c1838c1322ad2.hml; SAMR, Anti-Monopoly Guidelines in the Field of Standard Essential Patents, (2023) https://www.samr.gov.cn/hd/zjdc/art/2023/art_6422b2fb728f486b9814349213ea07c6.html. For an overview of the Chinese case law, see Ying Du and Chengyue Zhang, Navigating the new approach and evolving theory: a study of injunctive relief for SEPs in China, (forthcoming) Asia Pacific Law Review.
[21] See, e.g., Jonathan M. Barnett, Antitrust Mercantilism: The Strategic Devaluation of Intellectual Property Rights in Wireless Markets, (2023) 38 Berkeley Technology Law Journal 259 (2023).
[22] Unwired Planet International v. Huawei Technologies, [2017] EWHC 711 (Pat), [2019] 4 CMLR 7, aff’d [2018] EWCA Civ 2344, [2018] RPC 20, aff’d [2020] UKSC 37. The High Court of Justice, under Mr Justice Birss, described country-by-country licensing as “madness.” However, it is worth noting that, in the previous Vringo Infrastucture v. ZTE, [2015] EWHC 214 (Pat), the same judge dismissed the argument that the refusal to accept a particular global license would indicate the unwillingness of the licensee to agree to global licensing in general, stating that “just because it may be so that the global portfolio offer is a FRAND offer, it does not follow that the global portfolio licence on offer is the only set of terms which could be FRAND.”
[23] [2020] UKSC 37, 67.
[24] Tribunal Judiciaire de Paris, Case No. RG 19/02085 (2020).
[25] Tribunal Judiciaire de Paris, Case No. RG 20/12558 (2021).
[26] Court of The Hague, Case No. C/09/604737 / HA ZA 20-1236 (2022).
[27] TCL Commc’n Tech Holdings v. Telefonaktiebolaget LM Ericsson, 2017 WL 6611635 (C.D. Cal. 2017), superseded by TCL Commc’n Tech Holdings v. Telefonaktiebolaget LM Ericsson, 2018 WL 4488286 (C.D. Cal. 2018), rev’d in part and vacated in part, TCL Commc’n Tech Holdings v. Telefonaktiebolaget LM Ericsson, 943 F3d (Fed. Cir. 2019).
[28] Supreme People’s Court of China, Case Zhi Min Ju No. 282 (2023), Inter Digital v. Oppo; Case Zhi Min Xia No. 167 (2022), Oppo v. Nokia; Case Zhi Min Xia No. 517 (2020), Oppo v. Sharp. See also Intermediate People’s Court of Chongqing, Case Yu Min Chu No. 1232 (2023), Nokia v. Oppo; Hubei Province – Wuhan Intermediate People’s Court, Case E 01 Zhi Min Chu No. 169 (2020), Xiaomi v. Inter Digital; Intermediate People’s Court of Shenzhen City of Guangdong Province, Case Yue 03 Min Chu No. 689 (2020), Oppo v. Sharp; Hubei Province – Wuhan Intermediate People’s Court, Case E 01 Zhi Min Chu No. 743 (2020), Samsung v. Ericsson.
[29] Case Zhi Min Xia No. 517, supra note 28.
[30] European Commission, Proposal for a Regulation of the European Parliament and of the Council on Standard Essential Patents and Amending Regulation (EU) 2017/1001, COM(2023)232, Recital 8 and Article 38(6). For an analysis of the EU proposal, see, e.g., Giuseppe Colangelo, FRAND determination under the European SEP Regulation Proposal: discarding the Huawei framework? (2024) 70 European Competition Journal 393; Oscar Borgogno and Giuseppe Colangelo, Devaluing SEPs: Hold-up bias and side effects of the European Draft Regulation, (2024) 15 Journal of Intellectual Property, Information Technology and E-Commerce Law 27; Josef Drexl, Dietmar Harhoff, Beatriz Conde Gallego, and Peter R. Slowinski, Position Statement of the Max Planck Institute for Innovation and Competition of 6 February 2024 on the Commission’s Proposal for a Regulation on Standard Essential Patents, (2024) 73 GRUR International 647.
[31] European Commission, supra note 30, Explanatory Memorandum, 2.
[32] See Jorge L. Contreras, The New Extraterritoriality: FRAND Royalties, Anti-Suit Injunctions and the Global Race to the Bottom in Disputes over Standards-Essential Patents, (2019) 25 Boston University Journal of Science & Technology Law 251.
[33] For an analysis also of the growing case law, see, e.g., Alexandr Svetlicinii and Fali Xie, The anti-suit injunctions in patent litigation in China: what role for judicial self-restraint? (2024) 19 Journal of Intellectual Property Law & Practice 734; Yurong Zhang, Jincheng Li, and Wei Yang, The dilemma and improvement of anti-suit injunctions in standard-essential patent litigation in China, (2024) 52 Computer Law & Security Review 105929; Igor Nikolic, Global Standard Essential Patent Litigation: The Anti-Suit and Anti- Anti-Suit Injunctions, (2023) 30 George Mason Law Review 427; Wentong Zheng, Weaponizing Anti-Suit Injunctions in Global FRAND Litigation, (2023) 30 George Mason Law Review 413; Enrico Bonadio and Nicola Lucchi, Antisuit injunctions in SEP disputes and the recent EU’s WTO/TRIPS case against China, (2023) 26 The Journal of World Intellectual Property 477; Giuseppe Colangelo and Valerio Torti, Anti?Suit Injunctions and Geopolitics in Transnational SEPs Litigation, (2022)14 European Journal of Legal Studies 45; Jorge L. Contreras, Anti-Suit Injunctions and Jurisdictional Competition in Global FRAND Litigation: The Case for Judicial Restraint, (2022) 11 NYU Journal of Intellectual Property & Entertainment Law 171; Felix K. Hess, US anti?suit injunctions and German anti?anti?suit injunctions in SEP disputes, (2022) 25 The Journal of World Intellectual Property 536.
[34] European Commission, EU requests two WTO panels against China: trade restrictions on Lithuania and high-tech patents, (2022) https://ec.europa.eu/commission/presscorner/detail/en/ip_22_7528.
[35] Microsoft v. Motorola, 871 F Supp 2d 1089 (W.D. Wash. 2012).
[36] Kim, Eom, and Lee, supra note 7.
[37] Ibid.
[38] Ru?hlig, supra note 7.
[39] Kim, Eom, and Lee, supra note 7; Ru?hlig, supra note 7.
[40] See, e.g., Office of the U.S. Trade Representative, 2023 Report to Congress on China’s WTO Compliance, (2024) https://ustr.gov/sites/default/files/2023%20USTR%20Report%20on%20China’s%20WTO%20Complaince%20(Final)%20(USTR%20Website).pdf; European Commission, Report on the protection and enforcement of intellectual property rights in third countries, SWD (2021) 97 final, 19; Office of the U.S. Trade Representative, 2021 Special 301 Report, (2021) 47-48, https://ustr.gov/sites/default/files/files/reports/2021/2021%20Special%20301%20Report%20(final).pdf.
[41] Jonathan M. Barnett, Why Robust Intellectual Property Rights in Wireless Technologies Are a National Security Imperative, (2024) https://www.hudson.org/intellectual-property/why-robust-intellectual-property-rights-wireless-technologies-are-national-jonathan-barnett.
[42] U.S. Government, supra note 5. See also U.S. Government, Implementing the National Standards Strategy for Critical and Emerging Technology, (2024) https://www.whitehouse.gov/briefing-room/statements-releases/2024/07/26/fact-sheet-implementing-the-national-standards-strategy-for-critical-and-emerging-technology/. Previously, a proposed bill, the Technology Standards Task Force Act, S 1498, Cong. 117th (2021) directed the Office of Science and Technology Policy to establish a task force on setting emerging technology standards.
[43] U.S. Government, supra note 5, 3.
[44] Ibid.
[45] Ibid.
[46] Ibid., 12.
[47] U.S. Department of Commerce, Bureau of Industry and Security, Standards-Related Activities and the Export Administration Regulations, (2024) https://www.federalregister.gov/documents/2024/07/25/2024-16379/standards-related-activities-and-the-export-administration-regulations-corrections.
[48] S 3772, 117th Cong. (2022).
[49] S 4840, 118th Cong. (2024).
[50] 547 U.S. 388 (2006). In Apple v. Motorola, 757 F.3d 1286 (Fed. Cir. 2014), the Federal Circuit stated that the eBay framework “provides ample strength and flexibility for analyzing FRAND-committed patents and industry standards in general,” finding no reason to create “a separate rule or analytical framework for addressing injunctions for FRAND-committed patents.”
[51] Kristina M.L. Acri ne?e Lybecker, Injunctive Relief in Patent Cases: the Impact of eBay, (2024) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4866108. See also U.S. Department of Justice, U.S. Patent and Trademark Office, and National Institute of Standards and Technology, Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments, (2019) 9, https://www.justice.gov/atr/page/file/1228016/dl.
[52] Press release, Senator Coons, colleagues introduce bipartisan, bicameral bill to restore injunctive relief for patent infringement, (2024) https://www.coons.senate.gov/news/press-releases/senator-coons-colleagues-introduce-bipartisan-bicameral-bill-to-restore-injunctive-relief-for-patent-infringement.
[53] See, recently, Letter from Former Government Officials, Professors, & Academics to DOJ regarding Avanci Business Review Letter, (2022) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4250512.
[54] U.S. Federal Trade Commission and U.S. Department of Justice, Antitrust Enforcement and Intellectual Property Rights: Promoting Innovation and Competition, (2007), https://www.ftc.gov/reports/antitrust-enforcement-intellectual-property-rights-promoting-innovation-competition-report-issued-us.
[55] Ibid., 65, fn 40.
[56] U.S. Federal Trade Commission, The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition, (2011) 233, https://www.ftc.gov/sites/default/files/documents/reports/evolving-ip-marketplace-aligning-patent-notice-and-remedies-competition-report-federal-trade/110307patentreport.pdf.
[57] Ibid., 234.
[58] Ibid., 235.
[59] U.S. Department of Justice and U.S. Patent and Trademark Office, Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments, (2013) https://www.justice.gov/atr/page/file/1118381/dl.
[60] See, ibid., 6, arguing that a SEP holder may attempt to use an exclusion order to pressure an implementer of a standard to accept more onerous licensing terms than the patent holder would be entitled to receive consistent with the FRAND commitment.
[61] Ibid., 7.
[62] U.S. Department of Justice, U.S. Patent and Trademark Office, and National Institute of Standards and Technology, supra note 51.
[63] Ibid., 4.
[64] Ibid.
[65] Ibid., fn 9.
[66] Makan Delrahim, The “New Madison” Approach to Antitrust and Intellectual Property, (2018) https://www.justice.gov/opa/speech/file/1044316/dl. See also Statement of Interest of the United States in Continental Automotive Systems v. Avanci, No. 3:19- CV-02933-M (N.D. Tex. 2020), https://www.justice.gov/atr/case-document/file/1253361/dl. See also FTC v. Qualcomm (969 F.3d 974, 9th Cir. 2020), highlighting “the persuasive policy arguments of several academics and practitioners with significant experience in SSOs, FRAND, and antitrust enforcement, who have expressed caution about using antitrust laws to remedy what are essentially contractual disputes between private parties engaged in the pursuit of technological innovation.”
[67] See U.S. Department of Justice, Update to the 2015 Business Review Letter, (2020) https://www.justice.gov/atr/business-review-letters-and-request-letters, expressing concerns that the 2015 Letter was misinterpreted and subject to intentional manipulation abroad allowing foreign competition authorities’ actions against SEP holders.
[68] §5(d), https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/. See also Rebecca Kelly Slaughter, SEPs, Antitrust, and the FTC, (2021) 5, https://www.ftc.gov/system/files/documents/public_statements/1598103/commissioner_slaughter_ansi_102921_final_to_pdf.pdf, arguing that “[w]hile [holdout] may well be a problem in the licensing world, it does not pose the same concerns from a competition standpoint as holdup, which has the potential to exclude firms from implementing a standard. … If a potential licensee has engaged in willful infringement, the patent holder has remedies in patent law, including the potential for enhanced damages. Unilateral holdout does not involve the abuse of market power to stymie consumer choice that holdup does, and therefore does not trigger antitrust concerns in the same way” (emphasis in original).
[69] U.S. Department of Justice, U.S. Patent and Trademark Office, and National Institute of Standards and Technology, Withdraw 2019 Standards-Essential Patents (SEP) Policy Statement, (2022) https://www.justice.gov/opa/pr/justice-department-us-patent-and-trademark-office-and-national-institute-standards-and#:~:text=“The%20withdrawal%20of%20the%202019,of%20Commerce%20for%20Standards%20and.
[70] European Commission, supra note 5.
[71] Ibid., 1.
[72] Ibid., 9-10.
[73] Ibid., 1.
[74] Ibid., 5.
[75] Ibid.
[76] Ibid.
[77] European Commission, supra note 30.
[78] Ibid., Explanatory Memorandum, 1.
[79] Ibid.
[80] Ibid., 2.
[81] Bundesgerichtshof (BGH), 6 May 2009, Case KZR 39/06.
[82] European Commission, 29 April 2014, Cases AT.39985 and AT.39939.
[83] CJEU, supra note 15.
[84] European Commission, Impact Assessment Report Accompanying the Document Proposal for a Regulation of the European Parliament and of the Council on Standard Essential Patents and Amending Regulation (EU) 2017/1001, SWD(2023) 124 final, 154 and 158. The reference is, in particular, to the Sisvel v. Haier decision (5 May 2020, Case KZR 36/17), where the German Federal Supreme Court held that an implementer must participate in licence agreement negotiations in a target-oriented manner, making offers of its own and showing willingness to accept a licence on any terms that are FRAND, rather than merely rejecting the patent holder’s offers. On the evolution of the German case law and its compliance with Huawei, see Andrea Aguggia and Giuseppe Colangelo, SEPs infringement and competition law defence in German case law, (2024) 14 Queen Mary Journal of Intellectual Property 73; Nicholas Banasevic and Zuzanna Bobowiec, SEP-Based Injunctions: How Much Has the Huawei v ZTE Judgment Achieved in Practice, (2023) 14 Journal of European Competition Law & Practice 121.
[85] See European Commission, supra note 84, 158, arguing that the German Federal Court “effectively contradicted the CJEU’s judgement Huawei v. ZTE and brought back the Orange Book Standard … re-shift[ing] the main burden of negotiations on licensees and increase[ing] the availability of injunctions.” Recently, the Commission has even intervened in a German dispute (HMD v. VoiceAge EVS) submitting an amicus curiae brief to criticize the German patent jurisprudence and advocate for a stringent and sequential application of the negotiation steps outlined in Huawei (https://competition-policy.ec.europa.eu/document/download/66e0bd63-36da-4b27-9eef-70602a8c7be2_en?filename=2024_Amicus_Curiae_6U3824_22Kart_de.pdf).
[86] Colangelo, supra note 30.
[87] European Commission, supra note 30, Article 34.
[88] Ibid., Article 56(4).
[89] European Commission, supra note 84, 43 and 58.
[90] European Commission, Intellectual property – new framework for standard-essential patents, (2022) 3, https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13109-Intellectual-property-new-framework-for-standard-essential-patents_en.
[91] See the comparison between the expected costs and benefits envisaged by the European Commission, supra note 84, 58.
[92] Robin Jacob and Igor Nikolic, ICLE Feedback to EU Commission’s public consultation, (2023) https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13109-Intellectual-property-new-framework-for-standard-essential-patents/F3433917_en.
[93] European Commission, supra note 84, 8.
[94] See Enrico Bonadio and Magali Contardi, The Unified Patent Court and Standard Essential Patents, (2024) 46 European Intellectual Property Review 571.
[95] Christine A. Varney, Makan Delrahim, David J. Kappos, Andrei Iancu, Walter G Copan, and Noah Joshua Phillips, Comments on European Commission’s Draft “Proposal for Regulation of the European Parliament and of the Council Establishing a Framework for Transparent Licensing of Standard Essential Patents”, (2023) https://ipwatchdog.com/wp-content/uploads/2023/04/Comments-on-European-Commission-Draft-SEP-Regulation-by-Former-US-Officials-1.pdf.
[96] http://www.fosspatents.com/2023/05/us-secretary-of-commerce-expressed.html?m=1.
[97] UK Government, UK Innovation Strategy: leading the future by creating it, (2021) https://www.gov.uk/government/publications/uk-innovation-strategy-leading-the-future-by-creating-it/uk-innovation-strategy-leading-the-future-by-creating-it-accessible-webpage.
[98] UK Intellectual Property Office, Standard Essential Patents and Innovation: Call for views, (2021) https://www.gov.uk/government/consultations/standard-essential-pate…for-views/standard-essential-patents-and-innovation-call-for-views.
[99] UK Government, Standard Essential Patents: 2024 forward look, (2024) https://www.gov.uk/government/publications/standard-essential-patents-2024-forward-look/standard-essential-patents-2024-forward-look.
[100] Ibid.
[101] U.S. Patent and Trademark Office, USPTO and the UK IP office agree to collaborate on policies related to standard essential patents, (2024) https://www.uspto.gov/about-us/news-updates/uspto-and-uk-ip-office-agree-collaborate-policies-related-standard-essential.
[102] See, e.g., IAM, India: the rising sun of SEP enforcement in 2024, (2024) https://www.iam-media.com/article/india-the-rising-sun-of-sep-enforcement-in-2024; IAM, Availability of preliminary injunctions makes Brazil an attractive litigation venue for SEP owners, (2023)
https://www.iam-media.com/hub/sepfrand-hub/2023/article/availability-of-preliminary-injunctions-makes-brazil-attractive-litigation-venue-sep-owners . See also Enrico Bonadio and Shreya Sampathkumar, Mapping the Indian Case Law on Standard Essential Patents, (2024) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4838382; Enrico Bonadio, Jorge Tinoco, and Daniel Leopoldino, SEPs Injunctions with a Tropical Flavour: the Brazilian Scenario, (2024) https://patentblog.kluweriplaw.com/2024/10/08/seps-injunctions-with-a-tropical-flavour-the-brazilian-scenario/.
[103] See, e.g., Jonathan M. Barnett and David J. Kappos, Restoring Deterrence. The Case for Enhanced Damages in a No-Injunction Patent System, in 5G and Beyond. Intellectual Property and Competition Policy in the Internet of Things, supra note 10, 129; Kristen Osenga, Efficient Infringement in the SEP Space, ibid., 111; Epstein and Noroozi, supra note 13.
[104] European Commission, supra note 84, 11-15.
[105] Padilla and Tuffin, supra note 10, 197. See also Kirti Gupta and Urska Petrovcic, Evidence of Systematic “Patent Holdout”, (2023) 38 Berkeley Technology Law Journal 575.
[106] See European Commission, supra note 84, 12-14, reporting that SEP owners’ main challenges include facing lengthy negotiations and the high cost of licensing due to the various means used by implementers to delay the obtaining of a licence. The Commission’s Impact Assessment also documented that, in order to be able to better assess the value that their technology brings to the standard implementations, a SEP holder would wait around 2 to 4 years until the standard is implemented in the market and then approach companies in specific markets to offer them licences. This is followed by negotiations, which take on average 3 years and potentially litigation in case parties cannot reach an agreement (adding another 1 to 2.5 years).
[107] See, e.g., Lybecker, supra note 51; Kristen J. Osenga, The Loss of Injunctions under eBay: Evidence of the Negative Impact on the Innovation Economy, (2024) https://www.hudson.org/regulation/loss-injunctions-under-ebay-evidence-negative-impact-innovation-economy; Adam Mossoff, The Injunction Function: How and Why Courts Secure Property Rights in Patents, (2021) 96 Notre Dame Law Review 1581.
[108] See, e.g., U.S. Federal Trade Commission, supra note 56, 4 and 26.
[109] Office of the U.S. Trade Representative, 2023 Report to Congress on China’s WTO Compliance, supra note 40, 3.
[110] Ibid.