les Nouvelles April 2022 Article of the Month:
Patent Landscaping Studies And Essentiality Checks:
Rigorous (And Less Rigorous) Approaches

Haris Tsilikas¹

Doctoral Candidate
Max Planck Institute for Innovation and Competition (Munich)
Edison Fellow
Center for the Protection of Intellectual Property
George Mason University

Introduction

Determining which patents are essential to a particular standard (standard essential patents or SEPs) had long been an issue preoccupying almost exclusively technical experts directly involved in essentiality assessments. Recently, however, the topic of essentiality assessment has attracted the attention of policymakers, courts, and the press. This is unsurprising considering the importance of standards for innovation, competition, consumer welfare, and commercial success and competitiveness. In particular, parties involved in essential patent licensing either are keenly interested in how many patents are essential to a specific standard and what is the share of essential intellectual property rights (IPR) owned by each patent owner.

In response to this growing demand for information regarding standard essentiality, a number of empirical studies have been recently conducted (“patent landscaping studies”). These studies analyse a sample of patents, typically disclosed as potentially essential to a standards development organisation (SDO) and map the SEP landscape for particular standards (mainly wireless telecommunications standards such as 4G and 5G).²

However, not all essential patent landscaping studies adopt equally rigorous approaches to essentiality assessment.³ Some studies follow strict essentiality assessment protocols, are precise in their wording, transparent on their methodology and aims, and produce results that can be peer-reviewed and reproduced. Many studies do not demonstrate such rigour. Rigorous (and less rigorous) patent landscaping studies may have an important impact on (a) patent litigation, (b) commercial negotiations by essential IPR owners and standard users, (c) regulation of standardisation and standard essential patents (SEPs), and (d) press coverage and, hence, public perceptions of standardisation and technology leadership.

II. Disclosure of Potentially Essential Patents under the ETSI IPR Policy

Disclosure of (potentially) essential IPR is not uniformly regulated by SDOs in their IPR policies. In principle, SDO declaration clauses vary according to each SDO’s goals, membership, and relevant industry practice. A fundamental point about SDO declarations is that these depend on the SEP-owners’ self-assessment of whether they own IPR that may be, or may become, essential (i.e., potentially essential patents and patent applications).⁴ SDOs do not provide for independent, third-party essentiality checks (a common practice with patent pools).⁵ Hence, sophisticated parties are well aware that declarations to SDOs represent only SEP-owners’ individual estimates regarding the potential essentiality of their patents (and, in some SDOs, also patent applications) at a particular point in time.

A further crucial point about disclosure of potentially essential IPR is that they are linked with licensing declaration obligations fundamentally aiming at reassuring standards users that SEPs will be accessible on fair, reasonable and non-discriminatory (FRAND) terms and conditions. Stakeholders are cognisant of the reality that disclosure of potentially essential IPR does not necessarily represent which IPRs are actually standard essential. Thus, declarations of potentially essential IPR are typically not meant to:

1. Reflect perfectly accurate and reliable information on exactly how many patents read on a given standard;
2. Be relied upon by private parties in commercial negotiations for FRAND licenses, as to actually essential IPR;
3. Inform FRAND royalty determination by courts or arbitration tribunals in patent infringement disputes, as to actually essential IPR;
4. Serve as a source of reliable information for academic research, as to actually essential IPR;
5. Guide policymaking by public regulators, as to actually essential IPR; and,
6. Inform the press and the broader public on which companies and nations hold the lead in standards development or as to actually essential IPR.

Moreover, SDO participants are fully aware that not all IPRs disclosed as potentially essential are essential in actual fact:

First, as far as disclosures of patent applications are concerned, the scope of protection of the actually granted patent may be different (narrower) than what the original patent application claimed,⁶ and, consequently, the patent granted may not be essential.⁷

Second, a particular technical specification may develop over time towards a technical path that diverges from what was foreseen by participants at the time of filing of their declaration(s).

Third, which IPRs actually are essential may vary with each iteration of a standard: IPR that was enabling a specific functionality in an early release of the standard may subsequently become non-essential if this technical functionality is not included in later releases.

The foregoing is well illustrated in the IPR Policy of the European Telecommunications Standards Institute (ETSI). ETSI is holding a leading role both in international standardisation in many ICT technological domains,⁸ but also in IPR policymaking having developed the best drafted and most balanced SDO IPR policy to date.⁹ For these reasons, ETSI serves as the IPR rules provider for the broader ecosystem and in practice most disclosures of potentially essential IPR and licensing declarations are filed with ETSI and appear in the ETSI database.¹⁰

Disclosure of potentially essential IPR is regulated in Article 4.1 ETSI IPR policy, which comprises the following substantive elements:

1. Patent owners are to disclose IPR that “might be ESSENTIAL,” i.e., potentially essential. This is to be assessed in good faith and according to the proprietors’ best assessment;
2. Patent owners are only obliged to expend “reasonable endeavours” to identify essential IPR; and,
3. These disclosures are to be filed “in a timely fashion.”

ETSI requires its members to use the ETSI IPR Licensing Declaration form, which provides the exact language of the IPR disclosure:

In accordance with Clause 4.1 of the ETSI IPR Policy the Declarant and/or its AFFILIATES hereby informs ETSI that it is the Declarant’s and/or its AFFILIATES’ present belief that the IPR(s) disclosed in the attached IPR Information Statement Annex may be or may become ESSENTIAL in relation to at least the ETSI Work Item(s), STANDARD(S) and/or TECHNICAL SPECIFICATION(S) identified in the attached IPR Information Statement Annex.

[…]

To the extent that the IPR(s) disclosed in the attached IPR Information Statement Annex are or become, and remain ESSENTIAL in respect of the ETSI Work Item, STANDARD and/or TECHNICAL SPECIFICATION identified in the attached IPR Information Statement Annex, the Declarant and/or its AFFILIATES are (1) prepared to grant irrevocable licences under this/these IPR(s) on terms and conditions which are in accordance with Clause 6.1 of the ETSI IPR Policy; and (2) will comply with Clause 6.1bis of the ETSI IPR Policy. [emphasis added]

In ETSI practice, technical and working group meetings begin with the chair of the meeting reminding participants of the declaration and licensing obligations under the ETSI IPR Policy, and calling participants to disclose their potentially essential IPR.¹¹ At the initial stages of standards development work, participants are also encouraged to submit a “blanket” or general IPR licensing declaration (GILD), which includes a broad statement that the declarer might possess essential IPR and is prepared to grant licenses on FRAND terms and conditions.¹² The “blanket” declaration provides further assurances to standard users that potentially essential IPR will be accessible on FRAND terms and conditions. Members can, thus, focus on the technical work of their working group undistracted by IPR issues.

III. Patent Landscaping Studies: Rigorous (and less Rigorous) Approaches to Essentiality Checks

Issues around essentiality and declarations of potentially essential IPR have recently become the focus of attention on the part of some stakeholders, adjudicatory bodies (courts and arbitration tribunals) in patent infringement and licensing disputes, regulatory bodies (such as the European Commission), and the broader public and press.¹³ This attention has spurred a number of patent landscaping studies, commissioned by private parties and regulatory bodies, which purport to “map” essential IPR for various commercially important standards (mainly in the telecommunications sector). Unless these studies follow rigorous essentiality-assessment methodologies, their results are likely to be misleading and cannot be relied upon for an accurate picture of the actual conditions on the ground.

a. Rigorous Essential Patent Landscaping Studies—Good Industry Practice

Determining whether a patent is essential is a challenging task that requires substantial investment of resources and time, and it involves highly qualified, experienced, and specialised technical experts. Empirical studies and anecdotal evidence indicate that sufficiently rigorous essentiality assessment is very costly (from $5,000 to $10,000 per patent).¹⁴ Hence, for a relatively sizable SEP portfolio these costs can reach multi-million dollar figures.

In assessing essentiality, technical experts typically perform the following steps:¹⁵

1. Compare the elements of the patent claim(s) to the relevant part of the standard. This task is particularly complicated by the fact that the language in technical specifications usually does not replicate the language in the claim(s). Thus, this step requires interpretative skills and relevant experience and expertise in the particular technical field. Also, the expert must have a clear understanding of the technical specifications that constitute the standard (e.g., 5G versus 4G) and the product type being considered (e.g., a smartphone versus a base station).
2. Assess whether, despite differences in language between the claim(s) and the technical specification, the claim(s) covers the technical feature described in the technical specification.
3. Assess whether the relevant parts of the standard on which the patent claim(s) reads “coherently fit together to describe some common aspect or operation of the system.”¹⁶

These assessments are then put on paper, in the form of detailed claim charts that provide the evidence for the mapping or explain the lack of correspondence. To draft adequately strong claim charts that can be presented in good faith in license negotiations, one may need to spend many hours on a single claim.¹⁷ Exchanging claim charts is customary in the licensing practice of many standard-reliant industries, and claim charts are recognised by European courts as a generally reliable method of establishing essentiality.¹⁸

Although private parties while engaging in licensing negotiations typically review claim charts for this purpose, start-ups and some SMEs introducing standardized technologies in their products or services may lack the necessary experience.

On a more positive note, and despite the challenges landscaping studies face (mainly their duration, finding skilled persons and costs), reasonably rigorous and reliable landscaping studies are possible. Indeed, industry practice suggests that rigorous landscaping studies are feasible, provided the following conditions are met:

1. Transparent methodology: The study should clearly state in detail the approach followed in the landscaping exercise. The methodology should be publicly accessible.
2. Reproducible results: Landscaping methodologies that are reproducible by peer review have higher chances to be considered credible and reliable.
3. Sufficient documentation: As landscaping studies may be produced as evidence in court, their results should from the beginning be sufficiently well documented, preferably in claim charts that can be reviewed and assessed.
4. Expertise: The experts undertaking the landscaping should have relevant experience in essentiality assessment in the specific technical fields as well as good command of the language in which the patent claims are drafted.
5. Time: Experts should dedicate a sufficient amount of time to assess essentiality. This would typically require several hours of examination. On the other hand, spending only a few minutes per patent is clearly insufficient.
6. Credible protocol: The landscaping study should follow a credible protocol for essentiality assessment. This includes (i) precisely identifying the relevant standard (e.g., 4G, 5G), and (ii) identify in detail the implementing embodiments (e.g., smartphone, base station). Missing the mark in these two aspects can undermine the credibility of a study from the outset. For instance, if a study claims to review essential IPR for 5G, it should clarify whether patents reading on previous iterations of wireless standards (3G, 4G) are also included in the study.

A sensible approach to patent landscaping studies would be to follow the same level of rigour as parties with experience in licensing, albeit at a smaller (yet still statistically significant) scale. This approach was followed by Cooper, et al., in two landscaping studies for 4G and 5G essential patents, and in the case of the 4G study the methodology was favourably received by courts (see below, section IV.a).¹⁹ These studies started with a very clear and precise identification of the relevant standard (4G- and 5G-only patents, respectively) and the implementing embodiment (end user device, i.e., mobile phone). 200 patents disclosed as potentially essential to ETSI were randomly picked, and their actual essentiality was thoroughly assessed over many hours per patent. The results of the exercise were illustrated in detailed claim charts, and statistically extrapolated to provide meaningful information about the population of essential patents as a whole, with a corresponding confidence level and error band.

b. Less Rigorous Approaches

Essential patent landscaping studies do not always follow a rigorous approach to essentiality assessment:

1. Lack of transparency regarding methodology: Failing to clearly state the methodology adopted for assessing standard essentiality is an indication of lack of rigour. When the methodology is not sufficiently disclosed and explained, the credibility and limitations of a landscaping study are difficult to ascertain. In particular, patent landscaping studies that perform little or no essentiality assessment beyond simple counting of SDO disclosures should clearly state the serious limitations of their findings. Such patent counting exercises offer little, if any, insights on actual contributions to standards and ownership of SEPs. They actually reflect companies’ patent development and disclosure policies and not innovation capacity and potential. This important distinction is easy to miss without the necessary technical expertise (see below, IV.b).
2. Lack of transparency in funding: A further important limitation of some landscaping studies is insufficient disclosure (or non-disclosure) of funding. Because patent landscaping studies are often used in commercial negotiations for FRAND licenses, it is common that such studies are commissioned by commercial entities. Disclosure of funding allows for accountability and ensures the legitimacy of the study.
3. Lack of precision in the study’s scope: Patent landscaping studies that do not precisely define the standards and the embodiments on which the assembled sample of patents reads may relay a misleading picture. For example, “5G” may include 5G-only technical specifications, or earlier generation technical specifications as well. Likewise, a study may be directed to smartphones, or to all consumer products as well as network infrastructure. A lack of precision in the study’s scope can mislead the audience as to the relevance of the study’s findings.
4. Lack of time, expertise, or documentation: A rigorous essentiality assessment is both costly and time-consuming. When patent landscaping studies review thousands of patents, some may choose not to invest the necessary time, resources, and expertise for such rigorous essentiality assessment. Essentiality checks devoting only minutes are clearly insufficient for credible essentiality findings (see below IV.a).
5. Unreliable automated assessment: Another related and important aspect of patent landscaping studies is transparency on use of machine learning and AI in essentiality assessment. Essentiality assessment requires a strong level of expert human involvement because of the difficulty of matching the respective language in patent claims and technical specifications. Claim interpretation is necessary in essentiality assessment, and this task cannot be reliably performed by automated processes alone, without input from human experts.²⁰

The distinction between rigorous and less rigorous patent landscaping studies may appear at first sight to be a technical detail, yet it has a discernible impact on litigation and licensing of essential patents. Moreover, because some patent landscaping studies purport to show individual companies’ or countries’ innovation performance, they are reproduced in the press, often without mention of their serious limitations.

IV. Impact of Patent Landscaping Studies

Patent landscaping studies may appear at first sight too technical an issue to attract attention from a broader audience. However, essential patent landscaping studies are increasingly: (a) admitted as trial evidence in patent litigation, where courts rely on such studies to determine the aggregate number of SEPs reading on a standard when determining FRAND rates under the “top-down” approach, (b) influencing perceptions of technological leadership by policymakers, the press, and the public at large, and (c) influencing FRAND licensing negotiations between private parties.

a. Litigation

SEP landscaping studies have been recently produced as evidence in patent litigation and have decisively impacted judicial determinations of what royalty rates are FRAND. Specifically, in two occasions, TCL v. Ericsson and Unwired Planet v. Huawei, courts in the United States and the United Kingdom have followed the “top-down” approach in determining FRAND rates for SEP portfolios.²¹ While TCL v. Ericsson was vacated on appeal by the Federal Circuit,²² it cannot be excluded that future U.S. courts may apply the methodology in one way or another. Indeed, in both cases, it should be noted, the top-down determination was not the sole methodology employed by these courts, but was deployed to complement and cross-check the courts’ analyses of comparable license agreements. Because the two courts examined an almost identical factual background and nearly identical essential patent landscaping studies, the two cases offer a unique illustration of the effects of these studies on litigation and judicial determination of FRAND rates.

Specifically, although both cases calculated the FRAND rate for the same SEP portfolio (Ericsson’s) and for the same standards (2G, 3G, and 4G), the two courts reached radically different conclusions on what rate is FRAND: The Unwired Planet court determined a FRAND rate that was substantially higher than the rate determined by the TCL court.

Arguably, this divergence can largely be attributed to the different path the two courts followed in calculating the aggregate number of SEPs reading on wireless standards, the inputs of different quality that were used in these calculations, and the way the two courts analysed and relied upon SEP landscaping studies admitted as evidence.

More precisely, the TCL court adopted a hybrid method to arrive at a royalty rate it considered to be FRAND. It broke up FRAND into two distinct components—FR (fair and reasonable) and ND (non-discriminatory)—and it then used the top-down approach to determine a rate that was fair and reasonable, and checked whether this rate was also non-discriminatory by analysing comparable FRAND licences. In the top-down royalty calculation method, the U.S. court estimated (a) the aggregate number of SEPs that read on a specific standard, (b) the aggregate royalty rate that would be FR for this standard, (c) the number of SEPs owned by the patent holder in the case at hand, and (d) the royalty rate to which this patent holder is entitled, based on its relative share of SEPs. According to the court, the main benefit of this approach is that it “prevents royalty stacking” and patent holdup (yet the court did not cite any actual evidence that royalty stacking and patent holdup were real concerns in this case, or in this industry more generally).²³

To calculate the aggregate number of SEPs that read on the three wireless standards—2G, 3G, and 4G— practiced in TCL products, the court relied on an essential patent landscaping study produced by TCL. This was not an obvious choice since the weaknesses of this study were explicitly recognised by the TCL court and the study’s royalty rate calculations were rejected as unreliable.²⁴ Specifically, the essential patent landscaping study by Concur IP and Ernst & Young India relied on essential IPR disclosures submitted to ETSI and uploaded on its online database. They filtered out those patent families that had at least one patent family member that was still active (non-expired) and published in English and divided these patents into 2G, 3G, and 4G patents.²⁵ The essentiality of those patents was then assessed by a group of recent engineers in India. The average per-patent time devoted to essentiality assessment was 20 minutes and concerns were raised at trial regarding the engineers’ qualifications and independence.²⁶ The findings of the patent landscaping study were cross-checked by two experts that selected a random sample and performed a second essentiality assessment. Crucially, the cross-check analysis was based on a presumption of essentiality for the patents assessed:

When conducting the essentiality analysis, Dr. Kakaes and Dr. Jayant ranked the patents on a scale of 1 to 3, where a 1 meant they did not see any evidence precluding a finding that the claim is essential under ETSI’s IPR Policy, a 2 meant that under a proper claim construction the claim is not essential, and a 3 meant the claim is not essential under any reasonable claim construction.²⁷ (emphasis added)

Because this assessment did not seek to establish whether a patent is essential but sought for evidence that a patent presumed essential was in fact non-essential, the results of the assessment were systemically skewed towards over-estimating the number of essential patents.

Moreover, the TCL court further made matters worse by relying on essentiality assessments of demonstrably different rigour to perform the top-down calculation of a FR rate for Ericsson’s portfolio.²⁸ Specifically, the court gave the same value to the less rigorous (based on its own admission) method advanced by TCL to establish the aggregate number of SEPs for 2G, 3G, and 4G, as that given to to Ericsson’s more rigorous method of assessing its own patents (that resulted from more laborious examinations and were demonstrated in detailed claim charts). Using as inputs calculations resulting from a less rigorous approach (for the aggregate number of SEPs) and more rigorous approach (for Ericsson’s SEPs) the court’s assessment was predicated to overestimate the aggregate number of SEPs and underestimate the specific patent holder’s essential IPR.

The UK Unwired Planet ruling, conversely, illustrates the major difference that rigorous and less rigorous approaches to essentiality assessment can make in patent litigation. The parties presented to the Unwired Planet court landscaping studies and methods almost identical to the ones in TCL v. Ericsson. Yet the court assessed these studies very differently, and the resulting calculations departed markedly from the ones in TCL.

As in TCL, the Unwired Planet court noted that the essentiality assessments provided by one of the parties (Huawei) was less rigorous: it involved a large sample of ETSI-declared patents and only half an hour per patent assessment. On the other hand, the other party (Unwired Planet) presented a study that involved a smaller (but statistically significant) sample of patents (out of those declared by Huawei and Samsung) and devoted five to six hours per patent. Its findings were presented in detailed claim charts that the defendant and the court could then review.²⁹ Moreover, the Unwired Planet court recognised that because the less rigorous approach was effectively only “a coarse filter to screen out nonessential patents” it tended to systematically “err on the side of including a patent in the deemed essential pool” and, thus, to “overestimate the true number of essential patents.”³⁰

Contrary to TCL, the Unwired Planet court rejected the less rigorous approach and relied on the rigorous Unwired Planet essentiality study for its calculations under the top-down approach.³¹ In particular, the court noted that the Unwired Planet essentiality study presented a “more careful analysis” and, thus, it was “likely to be closer to the true figure.”³² Hence, the two courts reached markedly different conclusions, under almost identical factual conditions, on the aggregate number of essential patent families that read on the three wireless standards, 2G, 3G, and 4G:

Because one court (the TCL court) relied more on a less rigorous essentiality assessment and substantially overestimated the aggregate number of essential patents (and relied more on its top-down calculation than on comparable licences), the two decisions reached markedly different conclusions on which rate is FRAND despite the almost identical factual background of the two cases.

b. Public Perceptions and Press Coverage

Beyond litigation and judicial determination of FRAND royalty rates, essential patent landscaping studies have had a distinctive influence on press and public perception of technological leadership. One recurrent theme in (online and offline) reporting and commentary on 5G is that Chinese and Asian companies are assuming the leadership in 5G development at the expense of European and U.S. stakeholders that were the protagonists in standards development of previous generations of wireless standards.³³ These statements are typically grounded on less rigorous essential patent landscaping studies that do not go beyond a simple counting of patent declarations submitted to ETSI and uploaded on the online ETSI database.

Such less rigorous studies show at most the different patent disclosure (and patent development) policies of various companies and not the actual leadership in 5G technology development. However, this point is typically lost on readers and columnists that lack the necessary technical expertise and understanding of how and why companies disclose potentially essential IPR to ETSI or other SDOs. Thus, press coverage of these less rigorous studies is often based on an insufficient understanding of their broader context and limitations.

This can be even more unfortunate to the extent these less rigorous approaches to essentiality assessment are impacting public policy by conveying a distorted view of the actual conditions on the ground. European policymakers operating, for instance, under the (erroneous) assumption of declining European influence in standardisation of 5G may reach wrong conclusions and policy prescriptions that may actually distort, rather than facilitate, the international standardisation ecosystem. These policymaking errors are avoidable, insofar as one bears in mind the crucial distinction between rigorous and less rigorous approaches to essentiality checks and understands the serious limitations of the latter.

c. Licensing Negotiations

Finally, essential patent landscaping studies may exert an influence (direct or indirect) on commercial bilateral negotiations for FRAND licences. In particular, patent landscaping studies may directly impact licensing negotiations by being produced by the parties to these negotiations to establish relative portfolio strength. As already noted above, an inaccurate picture of how many essential patents read on a standard and of the relative essential IPR share of each company can strongly bear upon FRAND rate calculation. Parties that rely on essentiality assessments of substantially varying rigour will unavoidably form substantially different views of each other’s portfolio strength and the appropriate terms and conditions of a FRAND licence. This can lead to protracted negotiations at best, and years of costly litigation at worst.

Moreover, essential patent landscaping studies can have an indirect impact on licensing negotiations by shaping the surrounding judicial, regulatory, and public perception framework. Licensing negotiations occur in the shadow of SEP infringement litigation. Case law can directly shape the behaviour of the parties to the negotiations and affect the strength of their respective bargaining positions. In the EU, for example, FRAND licensing negotiations are regulated by the Huawei v. ZTE judgment of the Court of Justice of the EU (CJEU), in which the Court laid down a detailed negotiation framework.³⁴ Because essential patent landscaping studies can be crucial inputs to the judicial process (see above, IV.a) and the judicial process directly impacts licensing negotiations, patent landscaping studies can also have an indirect impact on negotiations. For instance, the two cases examined above (see, IV.a) decided specifically on which rates for a particular SEP portfolio are FRAND. As already indicated above, the two judgments reached very different conclusions on which rates are FRAND for the very same portfolio, in large part because they relied on patent landscaping studies of uneven rigour.

Similarly, patent landscaping studies can indirectly impact licensing negotiations by influencing regulatory processes and public perceptions. Regulators interested in the situation on the ground may commission essential patent landscaping studies of their own or rely on those already available by third parties. The information they receive from these studies along with the public perceptions these studies create by being reported in the press may shape regulators’ views regarding SEPs, essentiality rates, leadership in technology development and contributions to standards. These insights may in turn shape policymaking and set the regulatory framework for SEP licensing negotiations and standardisation more broadly.

V. Conclusion

The topic of standard essentiality assessment has recently attracted attention from unexpected quarters (beyond technical experts involved in these assessments and parties involved in licensing negotiations): policymakers, the press and the broader public have shown an increasing interest in patent landscaping studies that include published figures on the number of essential patents for “popular” standards (e.g., 4G and 5G). For many, these figures are interpreted (mistakenly) as indicators of leadership in technology and standards development.
Rigorous (and less rigorous) patent landscaping studies may therefore have an important impact on (a) patent litigation, (b) commercial negotiations by essential IPR owners and standard users, (c) standardisation and SEP policies, and (d) press coverage and public perceptions of standardisation and technology leadership.

This article briefly outlined some of the elements of a rigorous approach to essentiality assessment: (i) transparent methodology, (ii) reproducible results, (iii) sufficient documentation, (iv) expertise, (v) sufficient time, and (vi) a credible protocol. It is respectfully submitted that studies that do not tick these boxes yet purport to convey an accurate picture of the standards development landscape are to be treated with healthy scepticism. A misleading picture of standard essentiality can have a negative influence on patent litigation and commercial negotiations involving essentiality assessments and the setting of FRAND rates, and on public policy on standardisation more broadly. ■

Available at Social Science Research Network (SSRN): https://ssrn.com/abstract=4019630.

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1. Doctoral Candidate and Visitor Scholar, Max Planck Institute for Innovation and Competition. The views expressed herein represent the author’s strictly personal opinion.
2. Not all SDOs require technology contributors to disclose individual patents as potentially essential. For some SDOs, it is sufficient for contributors to submit a general (“blanket”) disclosure, i.e., a general statement disclosing ownership of essential IPR without identifying specific rights.
3. Axel Contreras, “Why automated patent analysis can be wrong, even when it’s right” (2021) 3 The Patent Lawyer 30-33.
4. Rudi Bekkers, Christian Catalini, Arianna Martinelli, Cesare Righi, and Timothy Simcoe, “Disclosure Rules and Declared Essential Patents” (2019) NBER Working Paper 23627 6 <http:// www.nber.org/papers/w23627> accessed 5 October 2021.
5. Under EU competition law (Article 101 TFEU) patent pools must be formed by owners of essential patents pooling complementary (not competing) technologies and must operate in accordance with the framework developed by the European Commission in its Guidelines on Technology Transfer Agreements (“TTBER Guidelines”). See, European Commission, Communication from the Commission — Guidelines on the application of Article 101 of the Treaty on the Functioning of the European Union to technology transfer agreements [TTBER Guidelines] [2014] OJ C 89/3.
6. Bekkers, et al., (n. 4) 19-20; Jorge L. Contreras, “Essentiality and Standards-Essential Patents” (2017) 16 <https://papers. ssrn.com/sol3/papers.cfm?abstract_id=2958853> accessed 5 October 2021.
7. Claudia Tapia and Gabriele Mohsler, “The current cost of transparency in IoT patent licensing” (IAM, 8 April 2019) https://www.iam-media.com/frandseps/transparency-iot-licensing accessed 5 October 2021.
8. ETSI has developed, inter alia, the first digital telecommunications standard, the 2nd generation ‘GSM’ wireless standard. Subsequently, ETSI became one of the founding members of the 3rd Generation Partnership Project (3GPP), which has developed the enormously important and successful 3G and 4G standards and is at the moment developing the breakthrough 5G standard. More on standards development at 3GPP in, Justus Baron and Kirti Gupta, “Unpacking 3GPP Standards” (2018) 27 J. Econ. Manage. Strat. 433.
9. European Telecommunications Standards Institute (ETSI), ETSI Intellectual Property Rights Policy, Annex 6 ETSI Directives (2019) <https://www.etsi.org/images/files/IPR/etsi-ipr-policy.pdf> accessed 5 October 2021.
10. Ibid, 452; Justus Baron and Tim Pohlman, “Mapping standards to patents using declarations of standard-essential patents” (2018) 27 J. Econ. Manage. Strat. 504, 509.
11. Ibid, 61.
12. Ibid, 59.
13. See, for instance, European Commission, Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee on Setting Out the EU Approach to Standard Essential Patents [2017] COM(2017) 712 final.
14. Jorge L. Contreras, “Essentiality and Standards-Essential Patents” (2017) 7-8 (and literature cited therein) <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2958853> accessed 13 June 2021.
15. Kelce Wilson, “Designing a Standard Essential Patent (SEP) Program” (2018) 53 les Nouvelles 202, 202-3.
16. Ibid.
17. David Cooper, Johanna Dwyer and Alexander Haimovich, “Survey Of Mobile Cellular 5G Essentiality Rate” [5G Study] (2021) 56(1) les Nouvelles 11, 16.
18. Sisvel v. Haier, Federal Court of Justice (Bundesgerichtshof) Case No. KZR 36/17 (5 May 2020) para 86; Sisvel v. Wiko, Higher Regional Court Karlsruhe (Oberlandesgericht Karlsruhe) Case No. 6 U 103/19 (9 December 2020) para 293; Nokia v. Daimler, Munich District Court (Landgericht München) Case No. 2 O 34/19 (18 August 2020) paras 152-154.
19. David Cooper, et al., 5G Study (n. 17) 11; David Cooper, “Evaluating Standards Essential Patents In Mobile Cellular” [4G Study] (2019) 54(4) les Nouvelles 274.
20. See, Héctor Axel Contreras Alvarez, “Estimating the value of patents: reliability of automated methods” (2020) 55(3) les Nouvelles 206.
21. TCL Comm’n Tech. Holdings, Ltd. v. Telefonaktiebolaget LM Ericsson, Case No. SACV 14-341 NS(DFMx) (C.D. Cal. 2017), vacated-in-part, reversed-in-part and remanded, TCL Communication Tech. Holdings, Ltd. v. Telefonaktiebolaget LM Ericsson, 943 F.3d 1360 (Fed. Cir. 2019); Unwired Planet v. Huawei [2017] EWHC 711(Pat), affirmed Unwired Planet v. Huawei [2018] EWCA Civ 2344, Unwired Planet v. Huawei [2020] UKSC 37.
22. TCL Communication Tech. Holdings, Ltd. v. Telefonaktiebolaget LM Ericsson, 943 F.3d 1360 (Fed. Cir. 2019).
23. TCL v. Ericsson (n. 21) 15, 25-26. See also, Gregory Sidak, “Judge Selna’s Errors in TCL v. Ericsson Concerning Apportionment, Nondiscrimination, and Royalties Under the FRAND Contract” (2019) 4 The Criterion Journal on Innovation 101, 162 et seq.
24. TCL v. Ericsson (n. 21) 16-17, 43 (“Because the Court has found fatal flaws with certain steps in TCL’s top-down approach, it does not accept Dr. Leonard’s final numbers. However, the Court does find some value in the technical analysis”).
25. Ibid, 18.
26. Ibid, 30. Characteristically, the cost of essentiality assessment by the team performing the TCL landscaping study was $100 per patent, whilst a well-established patent pool, Via Licensing, spends $10,000 per patent.
27. Ibid, 33-34.
28. Sidak (n. 23) 127 (“Judge Selna calculated a FRAND royalty based on the top-down methodology using two different estimates of the number of Ericsson’s relevant U.S. SEP families—one advocated by Ericsson and the other advocated by TCL”).
29. Unwired Planet v. Huawei (n. 21) para 345.
30. Ibid, para 361.
31. A further crucial difference in the approaches of the two courts is that in Unwired Planet the top-down approach was used only as a cross-check of the court’s analysis of comparable licences. The merits and demerits of the two distinct approaches go beyond the scope of this article, but see Haris Tsilikas, “Emerging Patterns in the Judicial Determination of FRAND Rates: Comparable Agreements and the Top-Down Approach for FRAND Royalties Determination” (2020) 69(9) GRUR International 885.
32. Unwired Planet v. Huawei (n. 21) para 362.
33. See, for instance, Stu Woo, “In the Race to Dominate 5G, China Sprints Ahead” (Wall Street Journal, 7 Sep. 2019) https:// www.wsj.com/articles/in-the-race-to-dominate-5g-china-has-an-edge-11567828888 accessed 5 October 2021; David Sacks, “China’s Huawei Is Winning the 5G Race. Here’s What the United States Should Do To Respond” (Council of Foreign Relations, 29 March 2021) https://www.cfr.org/blog/china-huawei-5g accessed 5 October 2021; Nina Xiang, “How China winning the race to install 5G will be good for the world” (Nikkei Asia, 8 September 2020) https://asia.nikkei.com/Opinion/How-China-winning-the-race-to-install-5G-will-be-good-for-the-world accessed 5 October 2021; Shuli Ren, “China’s 5G Riches Are a Blocked Number for Investors” (Bloomberg, 12 February 2019) https:// www.bloombergquint.com/global-economics/china-s-5g-winners-are-out-of-reach-for-stock-investors accessed 5 October 2021.
34. Case C‑170/13, Huawei Technologies Co. Ltd v. ZTE Corp. [2015] ECLI:EU:C:2015:477. The Huawei v. ZTE framework has been further elaborated by European courts. See among many rulings, Sisvel v. Haier, Federal Court of Justice (Bundesgerichtshof) Case No. KZR 36/17 (5 May 2020) [Germany]; Unwired Planet International Ltd v. Huawei Technologies (UK) Co Ltd [2020] UKSC 37 [United Kingdom].