Will patent wars disrupt innovation in the 5G era?

Patents BlogInnovations in the field of information and communication technology (ICT) account for nearly 40 per cent of all patents awarded by the United States Patent and Trademark Office. The ICT industry is one of the most innovative the world has ever seen. It is home to an extraordinary volume of intellectual property rights (IPR), and has hosted many of the most publicized IPR disputes of recent years.

The upcoming Patents in Telecoms Conference in Washington D.C., 5-6 November 2015, will share insight into the trends emerging in the legal sphere of ICT as we approach the ‘5G era’. The conference will discuss the relationship between innovation and standardization, focusing on the behaviour of standard-essential patents (SEPs) in the ICT sector, as well as the impact of patent assertion entities (PAEs), which some would classify as ‘patent trolls’, on 5G innovation and investment.

Co-organized by University College London, George Washington University, ITU, ETSI and GSMA, the conference will call on industry experts, standards developers, judges and competition authorities to tackle the most pressing issues in patents and telecoms, from every possible perspective.

The Rt. Hon. Prof. Sir Robin Jacob is the Sir Hugh Laddie Chair of Intellectual Property Law at UCL Faculty of Laws and a former judge in the Court of Appeal of England and Wales. Sir Robin has been instrumental in the development of the Patents in Telecom Conference as one of the event’s co-organizers. ITU spoke with him to learn more about the IPR issues at play in the ICT field and his expectations for the 2015 edition of the conference.

Many argue that patent litigation is part of the process of innovation and technological advance. Has it gone past that point, or is it still fair to argue that patent wars are a natural part of technological advance?

It’s very fair to argue that it’s natural; there’s a marked resemblance to the sewing machine wars of the 1850s, or the light bulb wars of the early 21st Century. And it is vital to realize that litigation, although it has a large public profile, is but a minor incident in the way the technology is developed.

What are the main issues in patents and telecoms, to companies, regulators and courts?

The main issue is, how far should competition regulators become involved in how patentees exercise their patents, in particular with respect to their ability to bring legal proceedings to stop infringement? As regards standardization, patentees are obliged to license under (F)RAND* terms, but what is a (F)RAND term and how do you calculate (F)RAND terms? And can companies license patent-by-patent, or can they license by portfolio and how are those valued?

This brings us to the subject of how far a court should go in granting an injunction if it finds a patent valid and infringed. What if the patent covers a very minor aspect of the phone, regardless of whether the patent is for a standard-essential feature or a non-standard-essential feature?

*Standards-essential patents (SEPs) are indispensable to the implementation of a standard. The IPR policies of several major standards bodies require that SEP owners license their SEPs to standards implementers on (fair), reasonable and non-discriminatory ((F)RAND) terms.

On the meaning of ‘reasonable’ in the (F)RAND context, and the availability of injunctions, has the industry made any progress in clarifying these principles?

No. They’re very concerned about it. They’re very concerned about the new European Patent Court and how much it will follow the German automatic injunction if a patent is valid and infringed, versus how much they will follow more of an American style. It’s a question of proportionality.

And the next subject is the effect of PAEs. These are all related subjects because, if a PAE can get an injunction, the price they can ask is much higher. But of course the court could say, “You’re not going to get an injunction, you’re just going to get a small amount of damages because your invention is very minor in the great structure of the whole system.”

From the programme of the conference, it looks as if PAEs take centre-stage this year. Is that an indication of growing concern around PAEs’ actions?

It’s an indication of growing concern in the United States but perhaps not elsewhere. In my view, this is largely caused by the cumulative effect of various defects of the US patent litigation system.

There are stories of PAEs threatening to seek injunctions that would force operators to shut down a network, even in cases of patents covering dormant networking technologies. Is this an exaggeration of this issue or can it go that far?

It hasn’t actually happened, but it has been close to it. That’s why it’s such a live issue. Some people have been paying money to PAEs – big money – to make sure that it doesn’t happen to them.

Is the threat of regulatory intervention a deterrent to patent litigation?

I think it’s certainly been a huge distraction to many patentees of important innovations.

How so?

In Europe, for example, regulators took very strong action against Samsung and Motorola for starting legal actions.

As we approach the 5G era, are we in need of a better understanding of how (F)RAND is applied?

I doubt we’ll ever really understand. It would be nice if there was a formula, but there isn’t one. Let’s imagine that there are 100 identical houses on a street. If one or two are being sold, you can value the others. But that’s not like this at all; here every house is different. You can only ever have a general feel, and that’s the way it works with (F)RAND.

When speaking of 5G, we’re speaking of a huge density of ICT infrastructure, with many patents at play. Could patent proliferation stifle innovation in the 5G era?

Absolutely not. Some economists fear that patents might stifle innovation, but I don’t believe that they have grounds to substantiate this argument. There is no evidence throughout history that this has ever actually happened. On the contrary, innovation breeds innovation. I dispute the existence of what economists call the frightening “patent thickets”.

Last year’s Patents in Telecom Conference was very successful, hosting a good mix of the interests involved. What is it about this event that attracts such a variety of participants?

One of the things is that it’s not a commercial event. It’s co-organized by universities and the non-profit bodies, ETSI, GSMA and ITU. We’re not lawyers trying to make money out of it, nor are we companies with a particular point of view. We are in a unique position to bring together all stakeholders. Of course, we’ve got some lawyers, we’ve got some companies, we’ve got regulators and we’ve got judges. We can bring together these different perspectives, which I don’t think anybody else is in a position to do. In fact, I don’t think, I know that there isn’t anything else like it in the world.

Rt. Hon. Prof. Sir Robin Jacob

UCL graduateThe Rt. Hon. Prof. Sir Robin Jacob is the Sir Hugh Laddie Professor of Intellectual Property at the UCL Faculty of Laws. He was previously a Court of Appeal Judge in charge of the Court of Appeal intellectual property list and sitting on most appeals in IP cases and nearly all patent cases. He still sits part-time in the Court of Appeal. After reading Natural Sciences at Cambridge, Sir Robin then read for the Bar and an LLB from the LSE. He practiced at the Intellectual Property Bar from 1967. From 1976 to 1981 he was the Junior Counsel for the Comptroller of Patents and for Government departments in intellectual property. He was made a Queen’s Counsel in 1981 and his practice took him abroad often (Hong Kong, Singapore, Europe, USA, Australia). His practice at the Bar involved working with experts in many fields – scientists or engineers concerned with the technology of a particular patent case, accountants concerned with valuation of patents and so on. He was appointed to the Bench in 1993. From 1997 to 2001 he was Supervising Chancery Judge for Birmingham, Bristol and Cardiff. He was appointed a Lord Justice of Appeal in October 2003. He was Treasurer of Gray’s Inn in 2007. He has written extensively on all forms of intellectual property. He is President of the Intellectual Property Institute, Hon President of the UK branch of the Licensing Executive Society, and Hon President of the Association of Law Teachers.

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