The incorporation of an SEP in a standard leads to a variety of hypothetical and practical problems. Some argue that SDO patent policies should derive primarily from data about actual problems and, more specifically, problems experienced by the SDO and its members. Others argue that policies should anticipate and address potential problems whether experienced or not. Some types of real or potential problems are described below. can occur when the existence of an SEP is not known during the development and approval of a standard. The concern is that after a standard has been developed and implementers have made products meeting the standard, an SEP owner might
“ambush” implementers with unexpected demands for licensees. Most SDOs have developed rules and guidance
and competition agencies have initiated cases
that encourage if not require participants in standards setting to disclose SEPs. The FTC contended in these instances
that ‘hiding’ an SEP while participating in standards setting and then seeking licenses for the SEP is d
eceptive conduct. However such problems currently rarely occur and SDO patent policies do not apply to parties that do not participate in the standards development process. Even the most rigorous procedures intended to address the possibility of patent ambush by participants in standards setting do not apply to entities that have no duty to follow SDO rules and guidelines. can occur when an SEP owner that has made an assurance to an SDO to license its SEP on RAND terms and an implementer cannot agree on terms and conditions in a specific license to the SEP. The term is used when an implementer believes
that the SEP owner is seeking “unreasonable” royalties or other terms and conditions in a license inconsistent with the SEP owner’s
RAND assurance to the SDO. However the SEP owner may view the same situation as deriving from a recalcitrant implementer who
rejects offered terms and conditions that are “clearly” RAND. This latter view is called
. Several courts have interpreted the meaning of an
SEP owner’s assurance of offering a license on RAND terms. These legal interpretations, while not
dispositive, set precedents which SEP owners and implementers will take into account in their negotiations. In 2013, the FTC also took several enforcement actions intended to address concerns with alleged patent hold up situations involving standards
where parties sought injunctions to prohibit using the SEP. Some, however, contend that the FTC goes too far.
Addressing the matter of these FTC enforcement actions preceding his appointment, FTC Commissioner Wright stated:
These complaints and consent orders, taken together, logically and necessarily depend upon the assumption that seeking injunctive relief, without more, is itself anticompetitive. There is certainly no economic evidence available to support that policy view.
or the closely rated issue of
may arise when there are many SEPs asserted to be essential to practice a standard. A 2011 European study of intellectual property (IP) issues in standards setting found that the number of patent assurances per standard varied widely from sector to sector. See Figure 2. In an often referenced paper
the authors state that a modern laptop embodies or utilizes at least 251 interoperability standards, but the actual number could be even higher.
When the matter of multiple SEPs for a standard is combined with the situation that a single product may implement many different standards, the possibility of excessive royalties to be paid to different SEP owners arises. The value of any single SEP to a final product that utilizes many patents becomes controversial and subject to dispute. A license to use a single SEP may be RAND, but the sum
of many such licenses may become “unreasonable” from the point of view of the implementer. Accurate data about the
dimension of this issue is lacking.
Figure Two Patents per standard as in Technology class