Patent holdup and holdout under the new IEEE’s IP policy: Are these breaches of competition law?

Posted by Social Science Research Network

Patent holdup and holdout under the new IEEE’s IP policy: Are these breaches of competition law?

Marco Lo Bue (BonelliErede)

Abstract:     There is a large body of legal and economic literature on standard-essential patents (SEPs) and competition law that focuses on the availability of injunctive relief and strategic behaviour of SEPs’ holders. There is much less literature on the role of standard-setting organisations (SSOs) and their IP policies.

In 2015 the Institute of Electrical and Electronics Engineers (“IEEE”), one of the most relevant SSOs active in the ICT sector, has significantly modified its IPRs policy with an effort to better clarify the “reasonable and non-discriminatory” (“RAND”) commitments that SEPs’ owners are supposed to accept through the submission of a letter of assurance (“LOA”).

SEP holders and purchasers of technology have traditionally experienced issues in agreeing on what is fair, reasonable and non-discriminatory and courts have had similar problems in developing rules on this. This has caused debate on whether SSOs can do more on making FRAND more concrete. Eventually, IEEE has done so with its new IP policy and this reform has raised tension between parties on a number of issues related to the licensing conditions of SEPs, endangering the development of new technologies and technical standards.

The purpose of this paper is to answer a number of questions arising from the adoption of IEEE’s new IP policy:

1. Are the new IEEE’s IP policies in line with EU competition law, insofar as they provide companies involved in negotiating SEPs with a definition of “reasonable royalty” which may influence decisions on price?

2. If a component maker asks for a licence to the SEP holder, would the SEP holder be obliged to grant it under the updated IEEE’s IP policy, so incurring in the exhaustion of its rights under the exhaustion doctrine and in a potential financial loss?

3. Will SEP holders that refrain from submitting a LOA be liable under competition law if they refuse to license to component manufacturers or if they restrict the scope of the licence?

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