IP: Licensing standard essential patents in a changing legal environment

SEP licensors and prospective licensees have little choice but to negotiate in an uncertain environment, but due diligence can help

Standard Essential Patents (SEPs) are patents that cover adopted standards in a particular industry. The standards themselves may be de facto (i.e., adopted by a particular industry without any deliberative process or other agreement or coordination, de jure (i.e., imposed by statute or regulation), or adopted by consensus of industry participants acting as voluntary members of a standard setting organization (SSO). In recent years, SEPs have become featured players in high profile and high stakes litigation, particularly in the telecommunications industry.  .

Generally, licensing SEPs is much different from traditional patent licensing. Licensors of SEPs are ordinarily required to offer non-exclusive licenses to all those wishing to obtain a license on fair, reasonable and non-discriminatory (FRAND) terms. Recent case law makes it clear, however, that the precise meaning of the FRAND obligation imposed on SEP licensors is far from settled (such as Microsoft Corp. v. Motorola, Inc.,; In re Innovatio IP Ventures, LLC Patent Litig.; Microsoft Corp. v. Motorola, Inc.; Apple, Inc. v. Motorola Mobility, Inc.; and In re Certain Wireless Devices With 3G Capabilities And Components Thereof). As a result, both licensees and licensors of SEPs are obliged to navigate a dynamic landscape of legal rights and duties that inevitably have material impacts on the terms and conditions of SEP licenses.

Contributing Author

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Jeffrey C. Johnson

Jeffrey C. Johnson is a partner in Pryor Cashman’s Intellectual Property Group. He is experienced in the transactional aspects of technology and intellectual property exploitation...

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