8 Japanese Guidelines on Standardization and Patent Pool
Arrangements: Practical and Legal Considerations under
the Current Antimonopoly Act - A Global Perspective(*)
Invited Researcher: Monica Armillotta(**)

Patent pools are essentially agreements where different patent holders "pool" together, i.e. assemble,
their respective technologies in order to license them as a unique "package" to third parties. Nowadays, in
response to the globalization of technologies and more severe conditions of competition, resulting in a
faster pace for innovation also at international level, technology pools have gained increasingly relevance,
as successful cooperative IP licensing models.
Reflecting the importance won by such institutions, the purpose of this research is to outline thedefining features and the strategic considerations underlying the establishment of patent pools, both in alegal and empirical context, in order to identify what are the best conditions for such cooperative practices
to prosper in a competitive setting, with a view of cultivating innovation.
In this respect, attention will be brought both on the internal organizational framework adopted, withregard to the particular nature of the technologies involved, and on the legislative treatment that patentpools have been reserved in different jurisdictions, by summarily comparing US, EU and Japan, the latter
having adopted in relation to the other systems in consideration the most recent Guidelines on"Standardization and Patent Pool Arrangements".
Finally, there are many questions still to be answered, and correspondingly many new fields ofapplication where the successful implementation of patent pools still needs to be explored. However, within
the scope of this project, the present research hopes to shed at least some light and raise interest on suchcollaborative IP mechanisms and their goal to promote technology access.

Introduction
1

Outlook on patent pools: a cooperative
solution to a business and legal deadlock

The observation of modern economic andsocial environments shows that nowadays
technologies have become more and more
complex. Indeed, competitive pressure forinteroperability, increased functionality andimproved product performance are to a great
extent driven by growing consumers demand.
This pressure leads to an urgent need for avariety of patents, which in this context are
typically detained by multiple right holders andsimultaneously needed in order to develop new
products based on complex technologies.
From a legal angle, this means that it has
become increasingly hard to innovate without
infringing prior intellectual property (IP) rights, aproblem which is sadly known in the patent
literature as the one of so-called “blocking
patents”, i.e. overlapping rights leading to theself-explanatory metaphorical image of a “patent
thicket”.
It is to counter this problem that thiscontribution deals with patent pools, which
represent a collaborative IP strategy, where rightowners can overcome respective blocking
positions by bringing their patents together, while
granting each other mutual technology accessthrough licenses.
2

Structural approach and objectives ofthis contribution

The first part of the report is going to retrace
the recent Japanese legislative endeavours toregulate patent pools, in compliance with the IP
strategic program set by the government, having
placed the protection of IP rights on the top
priorities of his agenda. Therefore, this researchaims at analysing how a well-thought patentpools’ policy may help attain the targeted goal ofpromoting innovation in a “knowledge-based”
economy, such as Japan, which is certainly placed(*)

This is a summary of the report published under the Industrial Property Research Promotion Project FY2008
entrusted by the Japan Patent Office.
(**) LL.M. in IP, Doctoral Candidate at the Max Planck Institute for Intellectual Property, Competition and Tax Law /Munich Intellectual Property Law Center, Munich, Germany.

IIP Bulletin 2009

● 56 ●

at the forefront of technological breakthroughs. In
this context, close consideration will be dedicatedto the recently issued Japanese Guidelines onStandardization and Patent Pool Arrangements,
under which the business practices at issue haveto undergo a competitive assessment, pursuant to
the parameters set forth by the Antimonopoly Act.
Indeed, the core of this project relies on the legal
treatment of patent pools in a competitive
perspective, taking Japan as the main standpoint,having adopted the most recent Guidelines whencompared with the US and the EU.
Subsequently, the second part of thisresearch is going to focus on different businessendeavours underlying technology transfer
agreements, taking into account their actual
impact on promoting innovation and, ultimately,
economic growth. In fact, the legal formal
framework built around patent pools, as outlined
in Part I, shall be coupled by some practicalsignificant instances of actually concluded poolingagreements. These latter shall be closely
investigated in order to determine the directionin which market trends in Japan are evolving, also
in a business-oriented perspective. Indeed, thevalue of this research relies on a global analysis of“best practices”, involving examples ofundertakings setting forth collaborative IP
mechanism to enhance access to key technologies.
In this respect, the Japanese paradigm is taken asa standpoint, since the Japanese market is placedat the forefront of technological innovation,
thereby often acting as “anticipator” of new
promising trends around the world.
Finally, the report is going to encompass theessential traits of both EU and US’ current
legislative
treatmentofpatentpoolingagreements, in order to place the undergone
respectively complementary legal and businessanalysis in a wider context. Therefore, theembraced conclusions are going to be set within abroader reference frame, taking into due
consideration the closely intertwined effects ofour global economy.

Ⅰ From the IP Strategic Program to
the Guidelines: Japan’s legal
framework for patent consortiums
1

Current Japanese regulation of patent
pools

In June 2005 the Japanese Fair Trade
Commission (hereinafter JFTC) announced i t s
lastly issued Guidelines on Standardization andPatent Pool Arrangements (hereinafter PP
Guidelines).
These were also followed, in September 2007,
by the same JFTC with some Guidelines for the
Use of Intellectual Property under the
Antimonopoly Act, further specifying theprinciples for the application of the Antimonopoly
Act to restrictions in relation to the use oftechnology. These also included patent pools,
which were examined from an antitrust viewpoint
to the extent that they may represent an“unreasonable restraint of trade”, in casecompetition in the field of trade associate with thetechnology at issue is “substantially restrained”.
Otherwise, it is acknowledged that: “A patent poolcan be useful for encouraging the effective use oftechnologies required for business activities andsetting up a patent pool does not immediately
constitute an unreasonable restraint of trade”.
The above-mentioned PP Guidelines shallenlighten patent pool practices in relation to
standard-setting activities, as scrutinized though
the antitrust lenses. In Japan the relevant piece oflegislation regulating antitrust law is the Act
Concerning
ProhibitionofPrivateMonopolization and Maintenance of Fair Trade,so-called Anti-Monopoly Act (hereinafter
AMA), which dates back to 1947 and lastly
underwent a thorough revision in April 2005. Thislatter did not include patent pools, which is thereason why the need of a regulation in thisrespect was mandated by the Japanese
government and consequently addressed by the
PP Guidelines.
2

Policy background leading to Japan’s IP
Strategic Program, including patent
pools

Following the “Intellectual Property Policy
Outline” decided in July 3 2002, setting out somekey IP issues in need to be implemented, in
December 4 of the same year the so-called“Intellectual Property Basic Act” was introduced,
identifying a number of primary IP objectives tofulfil, as well as new entities that shall be
responsible for realizing them. Since then thegovernment has been placing the protection of IP
rights near the top of its agenda and has promoted
key IP initiatives as means to transform thenational economy.
In particular, in July 8, 2003 the“Strategic Program for the Creation, Protection
and Exploitation of Intellectual Property” wassubmitted to and adopted by the IP Strategy● 57 ●IIP Bulletin 2009

Headquarters, after one and a half year of
preparation under the direct supervision of theJapanese Prime Minister Koizumi. Such program
represents a more detailed version of the broader
IP Policy Outline drafted one year earlier and isperiodically re-defined trough a meeting taking
place around May-July each year.
In this respect, patent pools were alreadydealt within a specific section of the July 2003’s
IP Strategic Program.
3

Patent pools including technology
standards

With regard to the Strategic Programs,
technical standards invest an important role for IP,
since the relevant policy may also have a direct
impact on the regulation of patent pools, at least
to the extent these consortiums do eventuallyencompass said standards.
In particular, holders of essential patents,
which are necessary for the implementation of agiven standards, shall grant access to their rights
underreasonableandnon-discriminatory(so-called RAND) terms. Conversely, if a rightholder refuses to give licences or require
excessive licensing fees for the use of thistechnical standards, such behaviour will hinder
the standardization process in place. Therefore,
the Japanese government rightly addressed theneed to regulate such phenomena, which
frequently arise in the context of patent pools,
through the PP Guidelines.
4

Fundamental precepts under the PP
Guidelines

In principle, following the PP Guidelines,
standardizationofspecifications
bycompetitors as such is not assumed to pose
problems with the AMA, unless somepre-identified restrictive conditions are found in
the agreement under consideration.
In particular, in order to have some degree oflegal certainty and predictability also in individual
assessment cases, the Guidelines attempt toprovide a general guidance on how to establish
good practices when running a patent poollicensing agreement.
It is then up to the Japanese competition
authorities to scrutinize competitive patent pools
from anticompetitive one, following theprinciples of the PP Guidelines, in compliancewith the AMA Act. In particular:
Essential patents only shall be included in

IIP Bulletin 2009

the pool, i.e. those that are strictly needed, as
being mutually complements, in the lack ofrealistic alternatives (or otherwise said,
substitute technologies) in the market, in order torealize and implement the specific technicalapplication at issue. Under a complementary
viewpoint, those are the patents that arenecessarily infringed when using the targeted
technology, also when an infringement is nottechnically, but merely practically unavoidable,
taking into account costs and convenience’s
considerations in the overall economy of thesystem.
Conversely, shall non-essential patent bealso included, flexible “patent platform” licensing
schemes are strongly recommendable in order toreduce the risks connected with antitrust
restraints. The proposed model shall allow users
to appropriately select licensing conditions forthe patents associated with the developed
specifications. This offers a welcomed alternative
to only bundled licensing packages, particularly
valuable when partly substitute technologies areincluded.
Restrictions imposed upon pool members
shall be justifiable in the light of a goodmanagement of the collective activity and shallnot unduly restrict competitions. For instance,
prohibiting participants from licensing theirpatents independently to third parties, without
going through the pool, is not generally
recognized as being necessary for the activities ofthe pool, as these are not typically going to beaffected by such practices, especially when thecontributed technologies are complements, thus
the pooled package may offer additional benefits
to licensing individual components.
Different licensing conditions to third parties
shall be objectively justifiable. In other words,
when contractual terms applying to different
licensees are not equal - because for instancediverting on the stipulated royalties or on thescope of the authorized technological or
geographical use - such differentiation shall not
be arbitrary or abusive, but based on reasonable
necessities. Coherently, for example licensing
fees may be decided on the basis of supply anddemand situations of downstream markets or on
the production volume of the licensed product,
without unduly exposing some licensees todiscriminatory treatments, eventually to cut themout of the market. Abusive practices run the risksof being classified as “private monopolization”
under the AMA.
Restrictions in concurrent R&D activities● 58 ●

by licensees on the specifications with respect tothe pool shall be avoided, as the implementationof the underlying technologies may be limited andcompetition in the product market eventuallyhindered. However, before the specifications havebeen developed, and in the specific case wheredeveloping given specifications is regarded as acore activity of a joint R&D project, restrictions
to participants on R&D (with third parties) on
subjects closely related to the joint R&D project,during the implementation phase and eventuallyalso for a reasonable period thereafter, may beconsidered necessary for preventing disputes
arising over the results of such project.
So-called “grant-back clauses”, under which
licensees commit themselves to license backimprovements they develop in relation to thepooled technologies through the pool, arepermissible if the new patent is deemed to be
essential to the specifications and licensed
under non-exclusive terms. Otherwise, theaccumulation in the pool of improvements
developed by the licensees will bear the risk ofhindering the implementation of alternativetechnologies for specifications or, even,alternative specifications.
“ Non-challenge clauses”, whereby alicensee agree not to challenge the validity oflicensor’s IP rights, represent a problem underthe AMA if accompanied by a termination
provision with effect on all patents licensed by
the pool, which may be deemed to constitute a“join refusal to deal”. Instead, a terminating
licensing agreement only for those patents
subject to the invalidation claim is regarded aspermissible, as not unduly depriving thelicensees of the opportunity to contest thevalidity of any patents included in the pool.

Ⅱ Emerging collaborative market
trends in Japan: empiricalconsiderations
1

Exploring the establishment of patentpools in JapanThe Japanese government has been
implementing the IP Strategic Program since July
2003, with the declared goal to make Japan a new
IP, knowledge-based nation, namely through theso-called “Activation of the Intellectual Creation
Cycle”, whose underlying approach has been
expressed as follows: “In order to increase
national wealth through effective use of IP, it isnecessary to promote creation of high-quality IP

in the R&D sectors and contents businesses andpromptly protect it legally, thereby maximizing
added values in industry”. Whereas the programemphasized the strategic importance of creation,
protection and exploitation of IP, this contribution
will focus on the latter, with particular attention
to the arisen collaborative market trends thathave gained ground in Japan in the last decades.
In particular, in the fast evolving
information and communication industries, which
are among the most prominent sectors in theJapanese business scene, the problem of partly
overlapping and inter-dependent technologies isparticularly critical, as the degree of complexity
and the fast pace of innovation do not easily afford
the luxury of a “play-alone” strategy. In thisrespect, both international standardization
activities and patent pools, as brought together by
the JFTC’s Guidelines, constitute valid attempts
to solve the tragedy of anti-commons throughpatent licensing, as successfully implemented by
Japanese firms.
2

Patent pools as strategic businessalliances: some major examples

Major Japanese companies have implemented
patent pools’ strategies, as effective way to foster
durable partnerships, as they both indeed build on
creating business “alliances” as a strategy for
affirming or consolidating a sound patent
exploitation in the technical field of reference.
To quote some notable current cases
involving the participation of major Japanesefirms, we shall, for instance, recall the one
established in 1997 around the MPEG-2, a videocoding standard, formed by Columbia University,
Fujitsu, General Instrument, Lucent Technologies,
Matsushita, Mitsubishi, Philips, Scientific Atlanta
and Sony. Under this mechanism, relevant patents
were pooled together through an independentagency, which was appointed to provide licensing
and royalty collection services.
Another prominent example concerns theso-called Third-generation (3G) mobile telephone
standards, on the basis of which the 3G Patent
Platform Partnership (3GPPP) was finallyestablished in 2002 as a patent pool, after finallygetting “green light” approval from the major
antitrust regulatory authorities, including the
JFTC in June 2002, and both the European
Commission and the U.S. Department of JusticeAntitrust Division in November 2002. The 3G
Patent Platform provided for a coordinated,centralized procedure for the evaluation,● 59 ●IIP Bulletin 2009

certification
andlicensingofpatents
technologically essential for the manufacture andoperation of third generation (3G) mobile
communication systems. In a preliminary phase,
essential patent declarations, submitted to the
Association of Radio Industries and Businesses(ARIB) according to a report of the Japanese
Ministry of Internal Affairs and Communications,regarding W-CDMA and CDMA 2000, the two
major specifications for 3G mobile telephony, theformer of which amounted to 117 from Japan,
followed by 102 from the U.S. and 68 from
Europe.
While the patent pool established around theMPEG standard, mentioned above, is still
regarded as one of the most lucrative consortiumof the kind, some other examples of patentpooling agreement involving major Japanesecompanies will be recalled within thiscontribution, highlighting a positive Japanesetrend towards such collaborative IP mechanisms.

Conclusions: the example set by
Japan in a wider comparative context
Nowadays, in a more and more global context,
characterizedbyclosely
succeeding
breakthroughs and a faster pace for innovations
bearing a deeper impact on the worldwide
economy, beyond individual geographical borders,the interconnected effects of national legislativeinterventions cannot be neglected and therefore
ought to be given the proper consideration.
Accordingly, this contribution is going toencompass the essential traits of both EU and US’current legislative treatment of patent poolingagreements in order to place the undergone legal
and business analysis, which was centred around
Japan, in a wider international context.
In this respect, the Japanese PP
Guidelines are representative of the most recent
trend in the antitrust assessment of suchbusiness practices, side to side with analogous
regulations, in particular as previously adopted in
the US and EU. In this respect, while Japan has
comparatively adopted the latest guidelines onpatent pools, these latter can be seen as
representative of the same general principles thathave inspired the respective preceding legislativeinterventions, first in the US and then in the EU.
1

United StatesSpecifically, in the US the relevant piece oflegislation is represented by the Department of

IIP Bulletin 2009

Justice (hereinafter DOJ) and Federal Trade
Commission (FTC)’s Antitrust Guidelines for the
Licensing of Intellectual Property (also known as“IP Guidelines”), issued in April 1995.
Such guidelines marked the beginning of anew, matured and more balanced approach
towards
technology
poolingagreements,
overcoming the past preconceived mistrust anddefiance - where patent pools were ultimately
seen as “evil” expression of “legal monopolies” in order to introduce a new evaluation procedure
based on the so called “Rule of Reason”. Indeed
the latter advocates the adoption of a contextual
and pragmatic approach in the evaluation of theoverall pro- and anti-competitive effects of apatent pooling agreement.
The US IP Guidelines are further
complemented by the DOJ and FTC joint report
dedicated to “Antitrust Enforcement andIntellectual
Property
Rights:PromotingInnovation and Competition”, released in April
2007. This is a comprehensive report, embracing
also patent pooling licensing agreements, that isbased on the cardinal assumption that preserving
the incentive for both creative efforts (troughpatent law) and competition (trough antitrust)is fundamental for the progress of society.
This approach is essentially aligned with thepreviously issued FTC’s report, dated October
2003, “To Promote Innovation: the Proper
Balance of Competition and Patent Law”,
according to which “competition and patent standout among the federal policies that influenceinnovation”, in a reciprocally complementary role,
thereby expressing a substantial continuity ofjudgement and internal consistency of the federal
antitrust agencies’ position.
2

European Union

Analogously, in the EU the relevant
legislative reference is Art. 81 of the European
Community Treaty (hereinafter EC Treaty),
which is addressed to undertakings and whose
first paragraph prohibits certain anti-competitive
agreements and concerted practices to the extent
that they may significantly affect trade between
EC member states, whereas otherwise it would
be merely an internal matter of the domestic
authorities and the competence of the European
Commission would not be in place.
The agreements that are caught by theprohibition are then deemed to be automatically
void, pursuant to paragraph 2, except if they canbe individually exempted according to the● 60 ●

prevailing criteria of paragraph 3. The latter sets
the grounds for a case-by-case long evaluationthat may eventually lead to an individual
exemption of the agreement under examination to
be granted by the European Commission, when it
can be proved that the long term pro-competitiveeffects of the agreement outweigh its firstaccused anti-competitive restraints, where theevaluation then results into an overall positivebalance.
However,
becausesuch
case-by-case
exemption entails a lengthy and consequently
very costly procedure, the European Commission
has finally issued a “Technology Transfer Block
Exemption Regulation” (hereinafter TTBER),
where all agreements falling within the so called“safe harbour” of said regulation are exempted in“block”, so altogether and automatically, thereby
overcoming the need of separate, individual
exemptions.
This regulation entered into force on the 1stof May 2004, a date coinciding with the accessionof 10 new Member States in the European Union,as part of a whole “modernization” process
designed to make European procedures in generalmore efficient. Nevertheless, the TTBER only
applies to technology transfer agreements
involving two undertakings, therefore patentpools composed of more than two parties could
not benefit from the established block exemption.
For this reason, the Commission also issued someGuidelines that complement the TTBER, where acentral section is dedicated to “Technology
Pools”, expressing the orientation of theEuropean antitrust authorities towards such
multiparty agreements.
3

Global “proximity”

the regulation of patent pools lie at the“crossroad” between IP and competition law, sothat heterogeneous, but equally valuable interests
needs to be taken into account in order to reach abalanced judgement on the merit.
In this respect, the US, EU and Japanese
legal systems the competitive appraisal of patentpools has undergone substantially the same
evolution,
overcoming
widespreadolder
preconceptions according to which all patentpools were presumed to be anti-competitive,
finally resulting into the current more balanced
approach, as expression of the reached maturityof judgement, based on pragmatism and carefulobservation of reality, rather than preconceived,
rigid principles.
Besides, in all the systems underconsideration, just as antitrust law is catching up
with the competitive assessment of patent poolsin their simplest forms, these are rapidly evolving,
becoming increasingly complex and giving rise tonew, still unexplored issues. Thus, in order tokeep pace with our fast-changing reality,
maintaining a given flexibility is paramount to see
beyond “black & white” disused patterns and to
detect “nuances” in the light of the concrete
circumstances encountered. Only the observationof the real “big picture” can provide the correctreferences for understanding whether the
implementation of such collaborative IP licensing
models works well in practice.
Indeed, nowadays the competent antitrust
authorities are facing common challenges andthey shall stay aligned in order to reachconsistent solutions in the refinement of their IP
policies, which shall prove viable beyond thenational borders and the peculiarity of individual
cases, thereby serving the supreme, common
cause of innovation on a global scale.

In perspective, the US, EU and lastly theJapanese Guidelines have all succeeded in a
relatively close temporal span and, indeed, the“proximity” is not just confined to thechronological aspect, but reach out also to theunderlying basic principles, which sustain thewhole delicate architecture on which thecompetitive assessment of patent pools is built.
In fact, at the heart of the legislative efforts
in consideration is the common attempt to strikethe right balance between patent rights, on the
one side, as conferred upon the technology
holders that contribute their technologies to thepool, and antitrust law, on the other side, as thepool’s core business is the joint licensing of thetechnology package in the market. Accordingly,● 61 ●IIP Bulletin 2009