Editor's Note: It is the dual nature of shareability and private right, not publicly-owned and exclusive, which cause the dilemma of licensing fees of SEPs. Moreover, it is difficult for the owner and licensee of SEPs to reach an ex-ante agreement on licensing fees by negotiation when "fair, reasonable, and non-discriminatory" (FRAND) is a loose commitment.
According to the latest news from Foss Patents, a standard essential patent (for short SEP) of NPE VoiceAge EVS, which is almost invincible in the German "battlefield", was declared invalid for the first time. The invalidation claimants included OPPO and HMD and all the invalidation requests made by OPPO have been supported. It is reported that the invalidated patent EP3132443 involves "methods, encoder and decoder for linear predictive encoding and decoding of sound signals".
Following its defeat previously in an SEP infringement lawsuit filed by Nokia against OPPO, alleging that OPPO has violated Nokia’s two SEPs related to 4G and 5G technology, which resulted in a sales ban from a regional court in the southwestern German city of Mannheim, the successful invalidation of VoiceAge EVS’s patent saves OPPO from worrying about the ban risk that EP3132443 may bring in its overseas market.
OPPO is not the only company involved in this SEP dispute case. EVS patents have also become "Powerful weapons" for VoiceAge EVS to file patent infringement lawsuits against TCL, Xiaomi, HMD and other smartphone manufacturers in Germany and the United States. Before the German Federal Patent Court's invalidation decision, VoiceAge EVS was almost undefeated in Germany. In August 2021, the District Court of Munich ruled that HMD infringed the EP2707687 patent held by VoiceAge EVS and issued an injunction prohibiting the company from selling its products in the German market. And TCL, Lenovo, Apple, Xiaomi and other manufacturers who were also defendants with HMD chose to settle with the company.
Communication companies across the globe are frequently involved in SEP disputes over patent licensing fees.
It is the dual nature of shareability and private right, not publicly-owned and exclusive, which causes the dilemma of licensing fees of SEPs. A patent brought into SEP is deemed to a public good that shares technical resources. However, when the patentee brings the patented technology into the standard, although it waives the exclusivity of the patent, it does not waive its right of ownership. Therefore, the conflict of interest caused by the partial transfer of rights is the root of the dilemma.
In addition, it is difficult for the owner and licensee of SEPs to reach an ex-ante agreement on licensing fees by negotiation when "fair, reasonable, and non-discriminatory" (FRAND) is a loose commitment. Since the FRAND principle is a loose commitment, it is difficult to restrain and guide the patent holders and the licensees. At last, the imperfect information disclosure system further increases the difficulty of determining the SEP licensing fee.
So far, the calculation of licensing fee is largely based on judicial practice and economic analysis of SEPs. But it is also necessary to take technology, market, and legal factors into consideration to get out of the dilemma. All parties should work together to build and optimize the formation mechanism of SEP licensing fee.