5G’s increased speed and reliability have fostered new use cases in a variety of industries, from self-driving cars to remote surgery. Disputes about 5G’s standard essential patents (SEPs) have already started—and if 4G and 3G are any guide, more will ramp up in the coming months.
But where and how will these battles about what constitutes a “fair, reasonable and non-discriminatory” (FRAND) royalty for 5G patents be resolved?
SEPs are patented innovations that have been incorporated into the standard for a product or industry—meaning that practicing the industry standard is tantamount to patent infringement unless the implementer has a license. It’s likely that the US will continue to be the favored venue for bringing the new wave of disputes about SEPs—and about the FRAND terms for their use. Although the US has waffled on whether SEP holders can seek an injunction against the unlicensed use of their patents—and injunction prospects have a heavy impact on filing trends—we can still expect the US to remain a front-runner in SEP disputes.
Heating Up
Two separate injunction issues are hot topics to watch in worldwide 5G SEP litigation during 2023:
- jurisdictional policy on granting injunctions against implementers during licensing fights; and
- the propriety and enforcement of anti-suit injunctions that protect the jurisdiction of foreign courts already adjudicating a given dispute.
Although there’s little consensus among countries (and even within the US) regarding these two issues, the usual jurisdictions—the US, UK, EU, and China—remain popular venues for disputing them. But coming changes may make the US the most attractive litigation locale.
US Policy Steps Back
In the US, several recent seesaws in official policy regarding the interplay of antitrust and patent law have shifted the playing field between patent holders and licensees. The Justice Department (along with the US Patent and Trademark Office and the National Institute of Standards and Technology) withdrew a joint official policy statement on the remedies appropriate in SEP/FRAND disputes. That official policy, written in 2019, staked out a position that all patent holders (including those under a FRAND obligation) can obtain an injunction against any licensees practicing the patent.
The Biden administration published a draft replacement for that policy in 2021. However, following public comment, the relevant agencies elected simply to withdraw the 2019 policy—without replacing it—in June. The result is that the US doesn’t have an official policy on what remedies are appropriate in a SEP/FRAND dispute, or when a SEP case raises antitrust concerns.
This leaves considerable uncertainty for parties litigating 5G patents, but it likely also signals a hands-off approach to the vast majority of cases. The Justice Department pledged to use 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.”
Global Policy in Flux
The US isn’t alone in reviewing its policies on the treatment of SEP holders and attendant FRAND disputes. In fact, the level of uncertainty in SEP/FRAND policy is higher abroad than in the US.
The EU is assessing a new framework for SEP regulation, with next steps due in Q2 2023. The EU’s initiative would focus primarily on transparency and efficiency in seeking to minimize licensing disputes. However, observers expect that the new framework will tighten regulation of SEP holders, recognizing that a patent being “essential” to an industry standard conveys real market power.
The UK’s Competition and Markets Authority is also currently reviewing its SEP policy. China is an interesting jurisdiction, given its manufacturing of many 5G devices. But there’s little transparency as to its policies, which may discourage SEP holders from filing there.
Essentially, many important global jurisdictions for patent disputes are reassessing their official positions about balancing the interests at stake in SEP/FRAND battles. Until these new policies solidify—and courts interpret them—the “back to the drawing board” approach of the US is, ironically, the most predictable among its patent peers.
Fewer Anti-Suit Injunctions?
SEP holders have tried filing suit in courts that issue anti-suit injunctions, seeking an advantage by choosing the forum and seeking leverage by halting the potential licensee’s business entirely. Because the US generally won’t honor anti-suit injunctions entered elsewhere, parties must often also litigate in the US in parallel.
For example, US District Court for the Eastern District of Texas Judge Rodney Gilstrap refused in January 2021 to honor a Chinese court’s global anti-suit injunction in protection of its jurisdiction over a FRAND dispute between telecom giant Ericsson and rival Samsung. Gilstrap’s order permitted Ericsson to continue a second battle over licensing in US courts while Chinese litigation was pending.
Many support this result, citing US sovereignty and national security. However, allowing multiple suits around the globe increases costs, uncertainty, and the potential for inconsistent rulings. But the US isn’t alone in rejecting anti-suit injunctions: Courts in the EU and India have done so, too. This reluctance to defer to another jurisdiction likely stems as much from differences in IP policies as from geopolitical tensions.
Balancing Competing Goals
The question of who ultimately will decide the global FRAND royalty for a given SEP may not be determined by the venue for suit, however. The vast majority of US SEP cases settle prior to a final adjudication, meaning that parties almost always determine the rate between themselves, once forced to the table.
The best way for SEP holders to force implementers to the negotiating table is with an injunction against the potential licensee. If the licensee’s business is halted until it signs a license, the SEP holder is in a dominant position in negotiations. How the big patent jurisdictions ultimately view the SEP holder’s market power—and what they consider to the be hallmarks of a fair license—will be important factors in determining the favored venue for these disputes.
Going into 2023, watch for each jurisdiction to elaborate on how it intends to balance innovation, fairness, competition, and standardization. But for the time being, the US should hold its position as the prime spot to settle 5G SEP battles.
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