The end of 2020 saw the German Federal Supreme Court’s (BGH) final decision in Sisvel vs. Haier. To us at Sisvel, this was a monumental decision which we asserted, “radically redefined the obligations of SEP implementors in patent negotiations as well as the remedies and damages available to patent owners when implementors deploy hold-out strategies and other delaying tactics.”
Well, we weren’t the only ones who considered the decisions significant; when several IP publications summarized their key rulings for 2020, Sisvel vs. Haier was frequently mentioned.
For example, in IPWatchDog’s article, The Year in Patents: Ten Developments We’ll Remember From 2020, authors Gene Quinn and Rebecca Tapscott stated, "The German Court in Sisvel v. Haier agreed with what had become a growing body of law in lower courts across Europe, namely in the Netherlands in Philips v. Asus and in the United Kingdom in Unwired Planet v. Huawei, that there is no prohibition against an injunction simply because a patent in question is standard-essential. Furthermore, the Sisvel court held that an SEP holder can offer different rates to different licensees and also explained that the SEP holder is only required to make a FRAND offer if the SEP holder has received an adequate declaration of a willingness to license.
Subsequently, at the end of August, the much-anticipated decision of the Supreme Court of the United Kingdom in Unwired Planet v. Huawei held that it is appropriate for UK courts to set worldwide FRAND rates. Furthermore, the UK Supreme Court, in agreement with lower tribunals and the German Federal Court of Justice in Sisvel, similarly ruled that SEP holders are allowed to offer different FRAND rates to different licensees. The Unwired Planet court also explained that an SEP hold does not abuse power as long as there is a showing of a willingness to license."
In another IPWatchdog article entitled, What Mattered in 2020? Industry Experts Have Their Say on This Year’s Biggest Moments in IP, two of the contributors mentioned Sisvel vs. Haier. First, Nathan Mutter from Holland & Hart stated, “The German Federal Court of Justice (FCJ) clarified in Sisvel v. Haier that implementers of SEPs defending against an injunction should express an unconditional willingness to take a license on FRAND terms without employing negotiation delay tactics or waiting for a judgment of patent validity or infringement.”
Then Gene Quinn reiterated some comments from the Ten Developments article, stating: "Then, on the heels of Unwired Planet, the German Federal Court of Justice agreed in Sisvel v. Haier that an SEP holder can offer different rates to different licensees. The Sisvel court also explained that the SEP holder is only required to make a FRAND offer if the SEP holder has received an adequate declaration of a willingness to license. All of this together with the U.S. Department of Justice issuing Avanci a positive business review letter (BRL) regarding its proposed patent pool, and Avanci also prevailing in antitrust litigation regarding licensing of SEPs, 2020 was a big year for SEP owners."
In the article Top trends in European patent law 2020, Juve Patent Co-editor Mathieu Klos wrote, "However, it was the German Federal Court of Justice that made the first big splash of the year in European FRAND case law. In May, the court ruled that Haier is infringing an SEP of NPE Sisvel. The court also ruled that Haier is acting as an unwilling licensee in FRAND negotiations. This significantly raised the bar on FRAND rules for implementers."
Sisvel vs. Haier was also mentioned in AEONLaw’s article, Who decides what patent licensing terms are “fair”?, where author Adam Philipp wrote: "Courts in different countries may have different views on what’s “fair.” For example, in the German case of Sisvel International v. Haier Deutschland GmbH, the court held that a royalty rate offered to a licensee that was much higher than a rate previously offered to a Chinese corporation wasn’t “discriminatory” because the earlier deal was made under pressure from the Chinese government."
To summarize, the ruling in Sisvel vs. Haier established four key findings that level the playing field between infringers and patent owners.
As the expert panel discussed in this webinar, these precedents impact not only Germany but the EU and the United States as well. If you register for the webinar you can watch the archived version.
Hello and welcome to our MCP blog!
My name is David Muus and I am the program manager of the Sisvel Mobile Communication Program. As an opening post to this blog, I wanted to give you some key pointers of what Sisvel’s work in licensing patents on cellular technology includes and a brief explanation of elemental questions that you may have, in the form of an FAQ. I hope this lets you better understand our business in general and Sisvel’s Mobile Communication Program in particular.
The MCP is Sisvel’s joint licensing platform – also known as a pool – to license patents that are essential to cellular standards, such as 2G, 3G and, 4G and used by terminal devices. It is a program where multiple patent holders that own such patents come together and offer their relevant patents together under a single license agreement, managed by Sisvel.
The MCP in its current form was launched in February 2018 but its roots go further back. Specifically, it is a continuation of other separate Sisvel programs that were deployed before 2018: the LTE Patent Pool (2012), the LTE/LTE-A Patent Pool (2015), and the 3G Joint Licensing Program (2017). Now the patents in these pools have been consolidated and made available under one single program.
A standard-essential patent (or SEP) is a patent that covers technology used in a standard like 2G, 3G, and 4G. This means that when such a product uses 4G, it cannot avoid infringing a patent that is standard essential to 4G. Obtaining a license to such a patent is an obligation on the implementor before it makes or sells such a product.
The MCP licenses terminal products, or in terms of the 3GPP standards: User Equipment (UE). This includes any product ready for use by a consumer that is capable to make use of 3G and 4G networks. Typical products include smartphones, feature phones, tablets, laptops, PC’s, PCI cards, 3G/4G routers, etc. Equally relevant are professional devices, such as point of sales devices, smart meters, cars, etc, if these have been fitted to connect to the 3G and/or 4G networks.
First, a patent owner must agree to the terms of the program, which amongst others grants Sisvel the individual right to license the entire 3G and 4G essential patent portfolio of the participating patent owner.
Then the patent owner must submit its patent families to an evaluation process, which includes independent review, to confirm that the patents are essential to the relevant standard.
The MCP includes the 3G and 4G essential patent portfolios of 3G Licensing, Airbus DS, Royal KPN, Mitsubishi Electric, Orange, TNO, as well as the patents Sisvel owns itself. Sisvel prides itself in working with this concise and vibrant group of patent owners, who have a good understanding of what is necessary in the highly contentious world of licensing of cellular SEPs.
Participation to the MCP is open to any patent owner that has essential patents to the cellular standards we license. The current group of patent owners and Sisvel have found each other because of a set of firm beliefs in licensing patents in the field of telecommunication: (1) we believe in the value of our patents and the innovative toils that they represent – there is a deep understanding of the patents that we represent, supported by Sisvel’s in-house team of telecom engineers, (2) if there is willingness, there is a way. We apply 35+ years of best practices in licensing, first of all, to resolve disputes at the negotiation table, which requires a willingness of patent owners to negotiate creatively and (3) if all else fails, we have to stand by our rights and find our way to court. The terms of our agreements, as well as the way we cooperate, is founded on these three pillars.
The license offered is not limited to a particular list of patents. The program offers portfolio licenses to the essential 3G and 4G patents that the patent owners that join us may own. As such, the total portfolio of patents that are obtained under license may exceed those patents we put in our documentation. Our documentation only includes those patents that have undergone a process of evaluation, this does not mean however that these overviews are limitative, but rather should be seen as a ‘proud list’.
Consequential to offering portfolio licenses, the number of patents in the program fluctuates. New patents may get granted and evaluated essential, or patents may expire. Additionally, the portfolio may increase as new patent owners join the program or current patent owners acquire new patents that they wish to add to the program (for example, Sisvel’s subsidiary 3G Licensing acquired 18 essential patent families from LGE in 2019, which are now licensed under the pool). The program is limited to the patent owners that participate, this means that there are also patents essential to cellular standards that are not licensed under the MCP. At the moment of writing, there are 155 individual patent families in the proud list of the program, of which 84 are believed to have claims essential to 3G and for 106 patents the same applies in relation to 4G.
The patents of patent owners that are in the pool have been successfully asserted against unwilling implementors in diverse jurisdictions. Jurisdictions where the patents have been involved in legal actions the United States, China, Germany, Japan, United Kingdom, Italy, and the Netherlands, making it a highly tested and relevant portfolio.
Sisvel has a portfolio that includes standard-essential patents that are relevant to 2G, 3G, 4G and 5G that are (or in the case of 5G will be) offered under the MCP. Out of the 155 patent families, 84 are owned by Sisvel, but Sisvel’s portfolio is not static. Sisvel continues to acquire cellular essential patents over time. Sisvel acquired these patents that were filed by inventive powerhouses, like Nokia (2011), Orange (2015), Blackberry (2019), Langbo (2019), and LGE (2019). This growth is expected to continue.
By owning patents in the pool, the interest of Sisvel is perfectly aligned with the partnering patent owners and licensees: we have a strong interest in fostering practices that allow for a successful licensing program.
We can identify with the concerns on both sides of the table under our extensive experience in licensing. We are involved in negotiations as a license administrator since 1982 and as an owner of cellular SEPs since 2011. We understand that in the end, granting a license is a compromise between rights holders and implementors. In our negotiations, we often put ourselves in the shoes of patent owner and implementor alike and weigh the options each party may have and find the best solution for each case. In doing so, we must be creative in finding solutions taking both these perspectives in consideration.
Apart from a deeper understanding of the complexities patent owners must navigate, owning patents in the program enables Sisvel to be a proactive patent owner. We have no difficulty standing by our rights and protecting the position of our patents, our program, and our licensees when confronted with companies holding out on a license, or – more often than you would expect – even hold off any real negotiation. Sadly, this is a necessity in our field of work.
Sisvel is committed to transparency. On our website (link) we publish patent brochures that list all patents that are believed to be essential to the relevant sections of the cited standards, and these brochures are updated from time to time to keep up with developments in the portfolio.
These brochures also include other relevant information: which claims are considered essential, which sections of the standard are considered relevant (to the level of individual paragraphs, tables, and figures), where to find declarations of essentiality, the priority date of the filing of the patent (to determine the lifetime of the patent) and the international designations of the patents in question.
The full terms and conditions of the MCP can be found on our website (link). The standard agreement is a running royalty-bearing license with a 3G/4G multimode rate of EUR 0.88 per licensed product, a rate of EUR 0.35 for 3G-only products and a 4G-only rate of EUR 0.53. If an implementor already obtained a license to one of the portfolios of the participating patent owners, we would deduct the royalties that are assigned to such a portfolio for the time such a license is in place.
Upon request, Sisvel can also discuss settlement under license based on a lump sum royalty or any hybrid between lump sum and running royalties. Sisvel understands that different circumstances may require different solutions and is always open to discuss the terms of the offered license to make an appropriate fit between the patents and the products.
That said, we maintain our compliance to the principle to license on fair and reasonable grounds and to not discriminate between licensees. We also offer implementors the opportunity to license the individual portfolios of the patent owners on a bilateral basis.
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