2023 Year in Review: Opportunistic Patent Trolls, Invention vs. Innovation, and Europe Defines Successful Standards
In 2023, Innovators Network Foundation fellows published some groundbreaking work on the relationship between open standards, intellectual property, and innovation.
Here are a few of the highlights from the fellows’ work in 2023.
Patent Trolls with SEPs are Opportunistic and Abusive
Brian J. Love and Christian Helmers published original research on whether non-practicing entities (NPEs, sometimes referred to as patent trolls) are more opportunistic than practicing entities when enforcing standard-essential patents (SEPs).
The researchers examined patent litigation involving SEPs from 2010-2019 and found that NPEs are more likely “to take advantage of opportunism in the patent-declaration process, as well as to embrace strategies that leverage the SEP market’s lack of transparency.” Yet, practicing entities are “more likely to strategically leverage supply chain dynamics when licensing SEPs, as well as to pursue bans on the sale and importation of alleged infringers’ products.”
The most surprising findings from the study was that NPEs “account for more than two-thirds of all declared SEP assertions initiated during the period of our study” despite the fact that “large technology companies typically control the standard development process.” This supports the concept of “‘patent privateering’ which posits that operating technology companies transfer patents to NPEs at least in part to exploit the latter’s relative ability to engage in opportunistic conduct targeting the former’s competitors.”
Innovation is More Than Initial Invention
Michael Carrier dismantled the argument that the application of antitrust to patent abuse in standards will harm innovation. In an article for Competition Policy International, Carrier argued that:
“In the standards context, many who have taken a ‘pro-licensor’ perspective have focused only on the initial invention, claiming that any weakening of patents for or application of antitrust to this stage will harm innovation. These arguments, however, do not capture the economic realities of innovation, which is multi-generational in nature. The debate has most frequently taken place in the context of standards.”
Europe Proposes a Strong Standard-Essential Patent Regulation
In an article for the Kluwer Patent Blog, Enrico Bonadio and Shreya Sampathkumar make the case for the European Commission’s proposed regulation to regulate SEPs. The authors argue that the fundamental strength of the proposal is its recognition that the success of a standard is defined by wide implementation and it “offers a clear framework which aims at mitigating the anticompetitive effects of SEP licensing abuse – which is necessary to keep the EU innovation landscape fair and accessible.”
“Specifically, the proposed Regulation is expected to increase transparency in SEPs licensing, decrease transaction costs, and ease SEP dispute resolution for both SEPs holders and implementers. As is known, its prominent features include a publicly available SEP register and an e-database that holds vast amounts of facts and numbers relating to SEPs, independent essentiality checks, and a compulsory, out-of-court procedure to determine FRAND terms and conditions before litigation can be initiated.”
Other Important Publications from Our Fellows
InterDigital V. Lenovo: a win for SMEs, Managing IP article, Jim Beveridge
IEEE Patent Licensing Policy Updates Need Clarity, Law360 article, Michael Carrier and Brian Scarpelli
A Short Summary of the Recently Leaked EU Regulation Proposal on Standard Essential Patents, Kluwer Patent Blog, Enrico Bonadio
Global FRAND rates in China, Kluwer Patent Blog, Enrico Bonadio