5G standard-essential patents: new challenges
Eric Augarde, Ghislain de Trémiolles, and Samuel Deschamps, partners of Santarelli Group, discuss 5G mobile telecommunications technology and potential stakeholder challenges.
Santarelli handed x Leaders League
5G services have now been launched in Europe, North America and Asia. They provide enhanced connectivity, and can be used with smartphones, but also with IoT (“Internet of Things”) devices.
5G mobile telecommunications technology
5G is the fifth-generation of mobile communications technology. It was developed to satisfy the performance requirements issued by the International Telecommunications Union. Beyond traditional mobile communications, 5G will notably facilitate logistics, factory automation, connected vehicles and autonomous driving, e-health and robotic surgery, for instance. Indeed, 5G is no longer limited to the use of smartphones, and 5G connectivity will be present in cars and in a variety of smart devices, at home and in professional settings. The speed of data processing and the volume of processed data will both be much higher than users experienced with 4G technology. 5G is expected to have a high impact on manufacturing, mobility, healthcare, media and entertainment.
There are numerous 5G patents, held by traditional telecommunications companies, by telecommunications operators and also by smaller companies. 5G patents relate not only to terminal devices (smartphones), base station equipment or core network products, but now also to a plurality of connected devices operating together, as in IoT nodes.
Standard-essential patents (SEPs) have a particularly high economic value. A characteristic of a SEP is that all legal entities using the corresponding standard-based technology are deemed to infringe and therefore owe royalty payments to the patent owner. Mobile communications are based on standards. A smartphone manufacturer must implement the telecommunications standards relating to 5G in its products and therefore faces many requests from SEP owners. The economic value of a SEP is in principle much higher than the value of a patent that covers only a product or a function of a product and that is not standard-essential.
Beyond the inherent complexity of 5G systems, protecting inventions and leveraging patent protection in this technical area raises specific issues.
It is unlikely that a single licensing mechanism will be found for 5G technology
Patent protection issues
Firstly, inventions relating to 5G tend to be more software-oriented than those of previous generations of mobile technology. They may also concern virtualized or non-localized features. Hence, drafting patent applications for 5G requires special care and skill in order to avoid legal pitfalls which can lead to claim rejection or severely undermine the scope of protection sought. Depending upon the terminology adopted in the specification, the claimed features may be construed narrowly in infringement proceedings.
Secondly, inventions relating to 5G are often distributed across the network or consist in the cooperation of several elements which are spatially distributed. The protection of each separate element is not always possible because of the absence of a technical problem solved by the element alone, possible lack of unity or, before some patent offices, a bar on claims belonging to the same category. This is a sensitive issue as national jurisdictions have adopted different approaches towards contributory infringement and divided infringement. It is therefore necessary to devise imaginative drafting strategies in order to circumvent these legal difficulties.
Lastly, SEPs have to be drafted and prosecuted with special attention. The specification of a SEP application should employ well-defined terminology and contain various embodiments resorting to equivalent technical features in order to prevent any attempt to design around the invention while complying with the standard. In the early phase of standard adoption, the claims may need to be refocused or steered towards the standard. Once the latter is set by the SSO (Standards Setting Organizations), the amendments of the claims have to be closely monitored and the amended claims compared with the standard based on claim charts. These claim charts are then instrumental when the assessment of essentiality comes into play, e.g. when this criterion is checked by an independent evaluation expert such as the IPEC (International Patent Evaluation Consortium).
- Standard-essential patents have a particularly high economic value.
- Special attention is needed for drafting and prosecuting 5G patents.
- 5G patent licensing mechanisms and strategies are quite different from 3G and 4G.
5G SEP licensing issues
As stated above, 5G technology may be used in many applications ranging from smartphones to automotive, medical devices to IoT. Such heterogeneity leads to many difficulties, especially with respect to the negotiation of the licenses, from both the licensor and the licensee points of view, and the conditions to which the holders of SEPs have committed themselves, referred to as fair, reasonable and non-discriminatory (FRAND) terms.
From the 5G perspective, the situation is very different from the previous licensing mechanisms, since numerous potential SEP users, who are not 5G players, only seek data transmission capabilities through the 5G technology in order to deploy new applications in their own field. They have a poor knowledge of the technology and of licensing practice.
Moreover, while the SEP holders are keen to negotiate with end-product manufacturers because of the high-value basis on which the license royalties are calculated, these manufacturers push for the Access To All approach to have the negotiations conducted upstream, at a higher level of the supply chain. This results in a complex situation involving opposing interests between SEP holders and manufacturers. Such issues are pending before the Court of Justice of the European Union (CJEU) in the Nokia vs. Daimler case referral. The formal commitment made by SEP holders during standardization discussions, to offer a license under FRAND terms complying with competition rules should play a key role when exploring the question.
FRAND terms entail numerous individual license conditions such as inter alia royalty rates and bases, geographical scope, and portfolio size. While these conditions can (hardly) be defined between competitors, they are even more difficult to define between a technology provider and a non-specialist user of that technology. In view of all these difficulties, a one-sizefits- all licensing mechanism is unlikely to be found for 5G technology. Therefore, a deep knowledge of the technology, of the patent and patent litigation issues, and of the FRAND conditions are required to succeed in 5G SEP license negotiation. However, the CJEU negotiation framework set forth in the Huawei vs. ZTE ruling should be kept in mind to avoid unbalanced strategies (hold-up or hold-out).
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