How Are Licensors And Licensees Adapting To New Scenarios?

BARCELONA, Spain — A recent industry conference panel here covered topics of changing intellectual property scenarios perceived from different angles, in particular from operating companies which manufacture products or services and patent assertion entities (PAEs).

The IPBC Global Conference 2016 was held on 5-7 June in Barcelona, Spain.

The session entitled “Peace not War” addressed new strategies adopted by IP rights holders beyond assertion-based patent licensing practices, including, notably, the role of PAEs in relation to operation companies. Google, for example, is an operating company that promotes collaborative patent programs with the goal of preventing PAE practices perceived as predatory.

Speakers also shared perspectives on the assessment of technology licensing and the Unified Patent Court (UPC) system. Gilles Cruanes, director EMEA (Europe, Middle East & Africa) at Questel, moderated the exchange. Panellists included: Ben Beune, chief licensing officer, Sisvel, Jens Bordin, CEO, Konsert Strategy & IP, Kurt Brasch, senior patent licensing manager, Google, and Eeva Hakoranta, head of patent licensing, Nokia Technologies.

Cruanes opened the discussion by saying that based on public data, legal suits brought about by patent assertion entities (PAEs, sometimes called patent trolls) have tripled action in the last two years, raising the total number of infringement suits from 29 to 62 percent in the United States alone. This is even though PAEs have recently shifted attention to other markets, notably to the upcoming UPC system.

By contrast, “infringers are less willing to sit down to negotiate prior to a suit being filed,” he said. Cruanes also mentioned the two-way model approach of patent pledges adopted by Tesla, IBM and Twitter (Twitter acquired patents from IBM after committing to a patent pledge) to illustrate collaborative initiatives.

On negotiations, Hakoranta said the art of negotiation culminates in understanding what motivates the counter-party. She believes that “finding a path to a win-win solution on the basis of trust and respect is important and that respect grows from understanding that there will be consequences for any chosen action.”

She also mentioned that “Nokia aims at being perceived as a trusted partner in the expanding world of connectivity, in which Nokia has been among the pioneering inventors.”

Concerning litigation, Hakoranta said she always prefers reaching a deal amicably, but admitted that sometimes you need to go to war in order to be seen and heard.

“In Asian markets in particular, there is an issue with ‘hold-out’,” she said, “as many companies refuse to pay any royalties, despite using the patented technologies of others, which means that there is not a level playing field for those who do respect IP and honor their responsibilities, particularly in regard to standard-essential patents.”

However, she has observed some changes in the dynamics, for instance, it seems that Chinese companies have recently increased their efforts to enforce their patents. “I hope [it] will lead to a more balanced regulatory and enforcement environment for IP owners, as patents also become recognized as valuable for local industry participants.”

Asked whether she believed that the UPC system will open the field for nuisance lawsuits in Europe, Hakoranta replied: “I did not see any major threat of negative developments, as the European litigation system has significant differences to that of the US”. She cited elements such as losing party pays, less extensive or no discovery, and no treble damages, “which should make parties less likely to use weak assets in litigation to pursue nuisance settlements and support more appropriate and ethical behavior.”

She also pointed out that patents are intellectual assets. There is a market for them in which non-practicing entities have an important role to play and that she does not believe in regulating any particular business model in the patent markets, as she believes may be happening in the United States. Rather, she believes it all depends on the assets and the behavior of the various market participants. “Legitimate assets and appropriate behavior should justify the same treatment, irrespective of whether a patent holder is [a PAE] or an operating company,” she said.

Brasch presented Google’s emerging approaches to licensing devised to counteract PAEs practices. Their focus areas comprise collaborative programs over an array of technology areas [as found at Google website]: “open source software (like Android and VP8), community licenses (including the Open Invention Network License), Open Patent Pledge, the VP8 License and License on Transfer”; as well as cross-licensing programs on the basis of strategy and engagement. Google patent programs are described at https://www.google.com/patents/licensing/.

PAEs are down but not out, said Brasch, so Google continues to identify innovative business solutions to address the issues they face from PAEs’ assertions and litigation. Brasch highlighted that patent wars do not help consumers, whereas collaboration can help improve innovation and speed technologies to market.

Beune stated that patent licensing is like any other business: it is a customer/ supplier relationship and not an act of war. He mentioned that “the unlevel playing field” is a serious issue considering the problem of free riders for which a license means nothing but “a promise not to sue,” so efficient enforcement is key.

An unlevel playing field also leads to unfair competition since wilful infringers do hold out (time is in favor of the infringer) and “do not account for royalties in the sales price of their products,” he said.

“Securing an efficient enforcement system made available to responsible licensors will also help resolve the royalty rate discussion,” said Beune. “It will go from a discussion on what a manufacturer can afford or is willing to pay to what the market can bear.”

Concerning licensing models, he said patent and technology licenses combined are feasible and global license programs mean a company is serious.

 

Image Credits: IPBC