Thoughts About SEPs and Non-SEPs Hint: It’s Not About Mushrooms Standard Essential Patent Dim Sum – A Selection of Tasty IP/Antitrust Issues AIPLA Mid-Winter Institute David W. Long Essential Patent LLC Intellectual Property Law February 2, 2017

The “Hint” Explained SEPs Cep Mushrooms “A meaty, creamy yellow mushroom with a spongy underside rather than gills. Ceps have a strong flavor and a velvety texture.” www.thinkvegetables.co.uk SEPs “[C]ompliant devices necessarily infringe certain claims in patents that cover technology incorporated into the standard. These patents are called ‘standard essential patents’ (‘SEPs’).” Ericsson v. D-Link, 773 F.3d 1201 (Fed. Cir. 2014)

“But Oz never did give nothing to the Tin Man That he didn’t, didn’t already have …” America, Tin Man (1974)

Standard Essential Patents Technical Industry Standard Standard Setting Organization (SSO) Standard Development Organization (SDO) Intellectual Property Rights (IPR) Policy e.g., license IPR on Fair, Reasonable And Non-Discriminatory Terms & Conditions Essential Patent Claims Specific patent claims that actually read onto final standard SEPs typically have both essential claims and non-essential claims Essentiality may be defined by IPR Policy; may or may not include optional parts of standard Misnomer: Declared SEPs Disclose patent with claims reasonably believed essential (but may not end up being essential) If patent claims are essential, then agree to … .

Standard Setting Commitment Does SEP have a standard-setting commitment? Some do. Some do not. Patent claim-by-claim basis (i.e., not all claims in the patent) Voluntary Commitment Patent Owner’s informed, voluntary agreement to a specific commitment Participation-Based: Agreement to participate in standards activity includes commitment to disclose potential SEPs or to license SEPs under certain terms. Declaration-Based: Participant during standards process affirmatively declares whether it will or will not license SEPs on certain terms. What is the commitment? Governed by IPR Policy and/or Patent Owner Statement Do not consider “FRAND” as an abstract idea; must look to specific commitment at issue. Ericsson v. D-Link, 773 F.3d 1201 (Fed. Cir. 2014) “[W]e must look at the patentee’s actual FRAND commitment. We need not be stampeded into abandoning the rule of law, or burden of proof simply because the respondents shout ‘FRAND’.” ALJ Essex (ITC 337-TA-613)

Essentiality If you agreed to license patent claims on FRAND terms if they are essential to a standard, must you license a patent claim on FRAND terms if it is not essential to the standard? Q: A: No

Apportionment In determining a reasonable royalty for an infringing device, should you consider the value attributed to the invention as distinguished from the value attributed to non-patented elements? Q: A: YES Georgia Pacific v. U.S. Plywood, 318 F. Supp. 1116 (S.D.N.Y. 1970) (Factor 13)

Apportionment Can you seek a higher royalty because the defendant could not sell standard-compliant products without your invention—i.e., seek value derived from being in the standard? Q: A: No GPNE v. Apple, 12-CV-02885-LHK (N.D. Cal. Apr. 16, 2014) Ericsson v. D-Link, 773 F.3d 1201 (Fed. Cir. 2014) (RAND-encumbered SEP) CSIRO v. Cisco, 809 F.3d 1295 ,1304-06 (Fed. Cir. 2015) (SEP with no standard commitment)

Probably Not eBay v. MercExchange, 547 U.S. 388 (2006) Injunction If you have licensed or offered to license your patent to an entire industry, can you readily obtain an injunction? Q: A: Probably Not eBay v. MercExchange, 547 U.S. 388 (2006) Are you automatically barred from seeking an injunction? Q: A: No

Injunction If you agreed to license your SEP on FRAND terms, can you readily obtain an injunction? Q: A: Probably Not Apple v. Motorola, 757 F.3d 1286, 1331-32 (Fed. Cir. 2014) Are you automatically barred from seeking an injunction? Q: A: No Apple v. Motorola, 757 F.3d 1286, 1331-32 (Fed. Cir. 2014)

Georgia-Pacific Is there a special, modified Georgia-Pacific method that you must use for all FRAND-encumbered SEPs to derive a reasonable royalty? Q: A: No Ericsson v. D-Link, 773 F.3d 1201, 1231-32 (Fed. Cir. 2014)

Key Take-Aways Look at the specific standard-setting commitment at issue, if any, to determine what the patent owner has and has not agreed to do. Apply eBay injunction factors to the specific circumstances at issue, whether its an SEP or non-SEP. Apply Georgia-Pacific factors (or other damages methodologies) to the specific circumstances at issue, whether its an SEP or non-SEP.

The End David W. Long Essential Patent LLC www.essentialpatentblog.com