We assist businesses in the licensing of patents related to technical standards. Licensing of essential and non-essential patents is not just about negotiation of the patent licensing agreement.
Many other factors can influence the amount that each business may have to allocate for essential licensing, including the cross-licensing of relevant intellectual property that is of value to a prospective licensor. This may be by filing homegrown patents or acquiring relevant patents that are capable of being cross-licensed with the prospective licensor, thereby reducing overall licensing fees.
An essential patent is a patent in respect of which it is not technically possible to make a product which complies with a standard without infringing the patent. GSM/GPRS/W-CDMA/LTE cellular standards are administered by the European Telecommunications Standards Institute (“ETSI”).
ETSI defines “Essential” as meaning that it is not possible on technical (but not commercial) grounds, taking into account normal technical practice and the state of the art generally available at the time of standardization, to make, sell, lease, otherwise dispose of, repair, use or operate equipment or methods which comply with a standard without infringing that IPR. For the avoidance of doubt in exceptional cases where a standard can only be implemented by technical solutions, all of which are infringements of IPRs, all such IPRs shall be considered essential. The term SEP, or Standard Essential Patent, also corresponds to this ETSI definition.
A technically essential patent is not the same as a “commercially essential” patent; such a patent is where it is technically possible for a third party to design a product which does not infringe the patent, but the feature making use of the patent has become commonplace and “required” by customers/end-users. Patent holders are not obliged to license their commercially essential patents.
In accordance with the Intellectual Property Rights policy (the IPR policy) of ETSI, holders of essential patents are obliged to license their essential patents to those requesting a license to use them on fair reasonable and non-discriminatory terms (FRAND, or RAND).