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issue, it is reasonable to cap total payment electronic industry with the threat of banning
of royalty in case of various SEPs used in one competitors’ products from the market
product. The parties can negotiate to reach an through injunctions for patent infringements.
agreement on this cap limit. When the parties This would be a classic case of abuse of
cannot reach an agreement, they can go to the dominant position.
court or settle disputes through arbitration.
The arbitrator or the Court can decide the cap Also threat of injunctions may be used by
based on the fair and reasonable principles on dominant parties to force competitors to
a case to case basis. accept unreasonable terms e.g. higher royalties
etc. which are likely to be passed on to the
g) Whether the practice of Non-Disclosure general public.
Agreements (NDA) leads to misuse of
dominant position and is against the FRAND i) What steps can be taken to make the practice
terms? of cross-licensing transparent so that royalty
rates are fair & reasonable?
AA proposition: The primary purpose of any
NDA is to create a contractual obligation upon AA proposition: The factors for determining fair
parties concerned to not disclose information and reasonable royalties for SEPs could be
marked “confidential” to unspecified third either:
parties. This is a fairly reasonable restriction
and cannot be automatically construed as being a) entire market value of infringing
misuse of dominant position or against FRAND products (e.g., smartphones) or
terms.
b) entire market value of the infringing
It is the actual “terms” imposed in a NDA components that actually perform the
that determine whether such terms fall under standard functionalities (e.g. processor
FRAND terms or not. of a smartphone).
h) What should be the appropriate mode and SEP holders usually would like to prefer
remedy for settlement of disputes in matters approach a) i.e. entire market value so that
related to SEPs, especially while deciding they can sue/license each and every infringer
FRAND terms? Whether injunctions are a involved.
suitable remedy in cases pertaining to SEPs and
their availability on FRAND terms? However, if FRAND royalties are determined
according to the value of the technology
AA proposition: Injunctions shall not be the first covered by the SEPs, then approach a) may
remedy or most preferred remedy awarded by not be preferable and the royalty rate should
the Courts. be chosen to precisely capture this technology
value.
In a typical scenario, considering a patent on an SEPs may be relatively easier to compare (than
electronic device e.g. a mobile phone, one may ordinary patents) as their value stems precisely
need multiple SEPs. from standard essentiality.
Assuming the holders of such SEPs are in a Now, to increase the transparency in cross
dominant position in the market then they can, licensing:
if they wish to, in essence hold-up the entire
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