A recent decision of the Northern California district court in Federal Trade Commission v Qualcomm Inc is being seen as a high point for numerous cases of litigation not only in the US but across the globe. In the May 2019 decision, which is the subject of a July 2019 appeal, the California court ordered injunctions against the defendant aimed at removing anti-competitive behavior by the company concerning its standard-essential patents (SEP). The decision requires the defendant to, 1) renegotiate the SEP license terms with original equipment manufacturers (OEM), 2) make exhaustive SEP licenses available to modern chip suppliers in line with fair, reasonable and non-discriminatory terms (FRAND), and 3) cease from entering into exclusive dealing agreements, among others.
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Hammurabi & Solomon
Industry players that have invested in extensive R&D have long enjoyed patent protection – a necessity to safeguard licensing revenue. The licensing rights are seen as an essential trade off to oil the economic machine driven by innovation.
However, as a caveat, a standard-setting organization (SSO) defines the standard way of doing things in the industry to maintain harmony and inter-operability, which is essential to ensure the seamless working of the entire industrial ecosystem.
Any difficulty in accessing SEPs to accomplish the standard can restrict new players from entering the market.
Over the years, various SSOs have required SEP holders to license SEPs for royalties in accordance with FRAND terms. Subscribing to such FRAND terms could even oblige a patentee to license its patent to an immediate rival. FRAND terms differ across industry and jurisdiction.
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Manoj Kumar is the founder and managing partner at Hammurabi & Solomon and Sukrit Kapoor is a principal associate at the firm.
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