Have Better Protection
The Beijing High People’s Court recently came out with new guidelines providing more detailed requirements for the protection of a standard-essential patent (SEP).
SEP is a patent that claims an invention that must be used to comply with a technical standard. Standards organizations, therefore, often require members disclose and grant licenses to their patents and pending patent applications that cover a standard that the organization is developing.If a standards organization fails to get licenses to all patents that are essential to complying with a standard, owners of the unlicensed patents may demand or sue for royalties from companies that adopt the standard. This happened to the GIF/TCP and JPEG standards, for example. Determining which patents are essential to a particular standard can be complex. Standardization organizations require licences of essential patents to be on fair, reasonable, and non-discriminatory (FRAND) terms.
Previously, the guidelines required that a SEP patentee should not be intentionally in breach of its obligation for licensing on FRAND terms. The guidelines, however, did not state what kind of actions violate the FRAND obligation. Moreover, the guidelines did not list the obligation of an accused party who requested FRAND patent license from the SEP patentee.
The new guidelines for patent infringement provide detailed of actions considered willfully violating the FRAND obligation. The new guidelines further require the accused party should also diligently negotiate in good faith. If there is no evidence proving that a patentee willfully violates its obligation and the accused party has no apparent fault in negotiation of a license, the court generally should refuse the patentee’s request for ceasing infringement upon receipt of a guarantee from the accused party. On the other hand, although not clearly stated in this new guidelines, we notice from a case from the Beijing IP Court (IWNCOMM VS SONY) that if the accused party has a clear fault, the court will regard it as a willful infringement and apply triple compensation.
This change in the law gives explanations regarding the protection of SEP and a more powerful protection therefor. It also provides clear rules for formulating a negotiation strategy under FRAND terms.