Research Report on Enforcement of Standard-essential Patent in Major Countries

I.

Purpose of This Research
For a patent complying with a certain standard, it is comparatively easy for the patentee tomake the case for infringement based on the ground that an allegedly infringing product uses a
standard-essential patent. Consequently, a standard-essential patent can be easily exploited by aperson or entity seeking profits by acquiring and patents from others and make money by
enforcement of patents, without working the patented inventions by themselves.
In order to address issues involving standard-essential patents, various studies have been
made in relation to appropriate manners for enforcing them, including restriction of injunction
claim by a patentee; however, so far, there has been no research conducted from a comprehensive
viewpoint.
Accordingly, in the wake of more and more globalized activities of Japanese companies, it isnecessary to make a comprehensive research on foreign legal frameworks relating to theenforcement of standard-essential patents and developments in discussions in the international
sphere.
In addition, considering the situation that an early out-of-court dispute settlement is expected
as a favorable option to respond to increasing disputes, it would also be useful to conduct a
comparative study on alternative dispute resolution (ADR) system such as mediation,
reconciliation and arbitration of Japan and foreign countries.

II. Contents of This Research
1. Standardization organization and patent policy
Standards means technical specifications to ensure interchangeability and to provide
convenience to users in various technical and industrial fields. Standards are broadly divided
into two categories depending on their formation method, i.e. "de facto standard" and "de jurestandard." De facto standard is a standard which has virtually become a standard by a private
entity setting a certain standard for itself and then other entities following such standard. De
jure standard is a standard recognized by an official body such as a state or international
government, according to certain prescribed procedures. In some cases, a de facto standard canbe subsequently recognized as a de jure standard.
Standardization entities and organizations include industrial bodies and official agencies ofvarious countries, a geographically defined organization such as Europe and other international
1bodies. Such entities also include international organizations not limited to a national boundary,such as forum and consortium constituted by industry stakeholders.
One or more individuals and companies submitting proposed standards to a standard bodywill generally make patent applications for the relevant technology before the submission. Somestandardization organizations provide a policy whereby the participants are required, as acondition precedent to incorporating the proposed technology into the standard, to declare thatthey will license technologies covered by such patent application or patent, or prior-filed patentapplication or patent. If they do not make such declaration, such proposed technology would not
be incorporated into the standards.
Apart from this, standardization organizations are making efforts to avoid proposed standards
which potentially involve the risk of infringement of a third party's patent. As such, in thestandardization process, these organizations require their participant entities and third party
patentees to submit a declaration to express their policies for handling their potentiallyinfringing patents.
Such rules of standardization organizations are called "IPR policy."
An essential patent which is unavoidable for working a standardized technology is called astandard-essential patent. A standard-essential patent is divided into two categories, i.e. atechnically-essential patent which is incapable of being technically avoided, and acommercially-essential patent for which a technically replaceable patent exists but such patentcannot provide an alternative in a commercial sense. In general, a standard-essential patent isvoluntarily declared by its patentee. However, if a patent pool scheme is to be used, whereby
two or more patentees create a pool of standard-essential patents and licenses them to licensees
in an aggregated way, some organizations provide for a system to have a fair and impartial third
party evaluate whether the patent declared by the patentee is an essential patent. Such practicehas been in place because if a non-essential patent is included in the patent pool, aggregatedlicensing of such pool may involve problems under a competition point of view.

2. Issues relating to standard-essential patents
There are many reported issues relating to standard-essential patents. The author categorizes
such issues according to the following aspects: (1) standardization process, (2) patent
distribution process, (3) IPR policies of standardization organizations, and (4) issues withroyalties. The author further reorganized these issues according to developments in respective
countries and regions.
The points in dispute and discussion of respective countries and regions covered by this2

Research are summarized broadly as follows. The mark "○" in the following table denotes anitem identified as an issue in this Research, and "-" an item not identified as an issue. However,it should be noted that due to a broad scope of research topics, comprehensive research is
impossible, and further that some issues are latent rather than apparent.
【Table 2】Developments in respective countries
JPN

USA

EU

GBR

DEU

FRA

NLD

KOR

CHN

HKG

IND

SGP

－

○

○

－

－

－

－

－

－

－

○

－

○

○

○

○

○

○

○

○

－

○

○

－

IPR policy

○

○

○

○

－

○

－

－

○

－

－

－

Royalty

○

○

○

○

－

－

－

－

－

－

－

－

Standardization
process
Patentdistribution

process

3. System to promote use of patented inventions and its operation
A patent law grants to a specific right holder a right to exclusively exploit its patented
invention, entitling such holder to prohibit others from using such patented invention. On theother hand, standards are created with a view to disseminating specific technologies so as tomake people's lives more convenient. Thus, for an invention covered by a standardization patent,
due consideration should be given to ensuring that working of such invention is not insufficient
to satisfy social needs due to unsuccessful license negotiation between the patentee and a third
party and lack of sufficient capability of the patentee to work the invention.
In principle, licensing of patented invention is left to the negotiation between private entities;
however, it may be sometimes necessary to provide incentive for an exclusive right holder tolicense its patent to a third party. All countries and regions have different systems and practices
to promote licensing, including awarding compulsory license, government use, restriction of
injunction claim, restriction of abuse of right, restriction by anti-competition laws, and licenseof right (LOR).
The following is the status of different countries, including Japan, covered by this Research.
【Table 3】Status of different countries1
1"○" denotes a system provided by a statutory provision, and "－ " not provided by a statutory
provision. "－ " also represents the case where the system has been in place in accordance with thecourt precedents, without specific statutory provisions.
For China, "Others" means that a right holder is restricted from exercising its claim for injunction
according to a national standards management provisions (to be temporarily in effect) andinterpretations and precedents of the Supreme People's Court relating to patents.

3

JPN

USA

EU

GBR

DEU

FRA

NLD

KOR

CHN

HKG

IND

SGP

Compulsory license

○

○

－

○

○

○

○

○

○

○

○

○

Government use

－

○

－

○

○

○

○

○

－

○

○

○

of

－

○

－

－

－

－

－

－

－

－

〇

〇

Restriction of abuse

○

○

－

－

－

－

○

○

－

－

○

－

○

○

○

－

○

－

○

○

○

○

○

－

License of Right

－

－

－

○

○

－

－

－

－

－

－

○

Others

－

－

－

－

－

－

－

－

○

－

－

－

Restriction
injunction claim※of right

Restriction by anticompetition laws

※Limited to countries providing for restriction of injunction claim under its patent laws

4. Systems relating to ADR procedures (arbitration, reconciliation, mediation, etc.)
Alternative Dispute Resolution (ADR) is often translated " 裁 判 外 紛 争 解 決 手 段 " inJapanese.
Under the parenthesized provision of Article 1 of the Act on Promotion of Use of Alternative
Dispute Resolution ("ADR Act"), ADR is defined as procedures for resolution of a civil dispute
between parties who seek, with the involvement of a fair third party, a resolution without using
litigation. The term ADR generally complies with this definition.
Important ADR procedures can be categorized according to their respective structures asfollows: (i) "agreement type" procedures to seek parties' consensus on dispute settlement, and(ii) "awarding type" procedures whereby parties agree in advance that they will comply with theexamination and judgment of a third party. Agreement-type procedures include mediation andreconciliation, and awarding-type procedures include awarding and arbitration. This researchcovers mediation, reconciliation, arbitration and awarding as types of ADR.
The following is the summary of major laws and regulations covered by this Research relating
to ADR of different countries including Japan.
【Table 4】Major laws and regulations on ADR of different countries
CountryLaws and regulations
・Act on Promotion of Use of Alternative Dispute Resolution
Japan・Arbitration Act

4

U.S.

UK
Germany
FranceNetherlands
South Korea

China

Hong Kong
India
Singapore

・U.S. arbitration acts
・Administrative Dispute Resolution Act
・Alternative Dispute Resolution Act
・Negotiated Rulemaking Act
・Federal Arbitration Act
・State laws
・Court rules
・Arbitration Act
・Guide and other rules of the High Court of Justice, Chancery Division・Code of Civil Procedure, Section 10
・Mediation Act
・Civil Code・Intellectual Property Code・Civil Code・Code of Civil Procedure
・Civil Mediation Act
・Arbitration Act
・Arbitration Rules of Korean Commercial Arbitration Board
・People's Mediation Law
・Organic Law of the People's Courts of the People's Republic of China
・Civil Procedure Law
・Arbitration Law
・Mediation Code・Arbitration Rules
・Arbitration and Conciliation Act
・Arbitration and Conciliation Ordinance・Community Mediation Centres Act
・Arbitration Act
・International Arbitration Act

55. Findings from domestic survey
A survey was conducted for 398 entities including 332 companies (large companies andSMEs), 24 universities/TLOs, 8 non-practicing entities (NPE)/patent assertion entities (PAE),
and 34 law offices/patent attorney offices, based on information obtained from research ofdomestic and foreign public information. Respondents were selected among entities of different
sizes and businesses, so as to obtain various information and opinions. Responses were received
from 168 entities (response rate: 42.2%).
The survey was conducted for the following questions:【Table 5】Survey questions (summary)Parts
I. Introduction(Q1 through Q5)Q1
Q2 through Q4Q5Q6II. Method of patentdispute settlement(Q6 through Q19)

Q7 through Q10Q11Q12 through Q19

III. Enforcement based onstandard-essential patents(Q20 through Q31)

Q20 through Q26

OthersQ32

Q27 through Q31

Contents
Whether the respondent owns a patent
Experience of enforcement (as a patentee
or allegedly infringing party)
Abuse of rights
Experience of hesitating to institute a
litigation
Experience of licensing negotiation
Experience of using private ADR system
Experience of using ADR systemprovided by administrative agencies
Experience of enforcement based onstandard-essential patents
Policies on royalty for standard-essential
patents
Concerns and request relating to patentdisputes"I. Introduction" surveyed experience of respondents in patent enforcement, both as apatentee or alleged infringing party, revealing that, compared to large companies, fewer SMEs
have experience in patent enforcement procedures on the alleged infringer' side.
"II. Patent dispute resolution method" surveyed the respondents' experience in litigation,negotiation and ADR and the reason for their choice of countermeasures. As a result, it was
revealed that the respondents hesitated to institute a litigation due to various reasons such asdifficulty in gathering evidence, costs and personnel burden. Further, a comparatively large
number of SMEs raised lack of knowledge on litigation as a reason for hesitating to institute a
litigation. In addition, the survey revealed that ADR systems provided by private entities andadministrative agencies have not been actively used.
"III. Enforcement based on standard-essential patents" questioned circumstances specific tostandard-essential patents. As a result, the circumstances specific to standard-essential patents
6were revealed, including the precondition that the use of standard specifications necessarily
involves the use of standard-essential patents and the relationship between a FRAND declaration
and royalty rate, as well as an issue of being an "outsider" of patent pool.

6. Domestic hearing survey results
We conducted a hearing survey of 30 entities selected among the respondents of the domestic
survey and standardization organizations (i.e. the Japanese Industrial Standards Committee(JISC), the Association of Radio Industries and Businesses (ARIB) and The Telecommunication
Technology Committee (TTC)), including 20 companies (17 large companies and three SMEs),
one university/TLO, one NPE/PAE, four law offices, one patent attorney office, and the threestandardization organizations.
The survey was conducted for the following questions:【Table 6】Survey questions for companies (summary)Parts

I. Patent dispute resolution(Q1 through Q8)Q1Q2Q3 and Q4Q5 through Q7Q8

II. Standard-essential
patents(Q9 through Q15)Q9Q10 through Q13
Q14
Q15

III. NPEs(Q16 through Q18)

Q16 through Q17
Q18

Contents
Experience of patent litigation
Experience of license negotiation
Experience of use of ADR systemprovided by private businesses
Experience of use of ADR systemprovided by administrative agencies
Needs for ADR system provided byadministrative agencies
Standardization strategies
Experience of enforcement based onstandard-essential patents
Policies on royalty of standardessential patents
Needs for ADR provided byadministrative agencies
Experience of enforcement by NPE
Policies for response to NPEs

At the hearing, we consulted with the respondents to seek more specific situations andopinions on the responses to the survey, as well as challenges and requests. As a result, thehearing revealed certain needs of ADR system (including awarding) for disputes relating tostandard-essential patents. On the other hand, it was also revealed that the ADR system has pros
and cons that cause some users to hesitate to use the system, and that users have a variety ofdemands.
We conducted a hearing of standardization organizations regarding the following questions.
【Table 7】Questions to standardization organizations (summary)
7PartsContents
Cooperation with international
standardization organizations andacademic societies
Change in field of technology
Countries actively engaged in standardsetting activities
Development/revision process
Dissemination activities
Submission of patent declarations
Patents during and after the process ofstandardization
Verifying whether a patent covers
standard specifications
Non-disclosure of patent and its impact
Governing laws
FRAND declaration
Opinions and requests from members
and third parties
Involvement in conflicting rights
Issues of dispute
Noteworthy cases

Q1 through Q3
I. Trends instandardization(Q1 through Q6)

Q4 and Q5
Q6
Q7
Q8
Q9
Q10 and Q11

II. IPR policies(Q7 through Q16)

Q12
Q13
Q14
Q15
Q16

III. Disputes relating tostandards(Q17 through Q19)

Q17
Q18
Q19

The hearing revealed basic circumstances and activities of respective entities, as well as theirstatuses relating to patent declaration and their involvement in conflict of rights relating tostandards.

8