Standard Essential Patents (SEPs) Licensing: Royalty Rate Based On Product Or Component?

RESEARCH TOPIC:

Standard Essential Patents (SEPs) Licensing disputes

RESEARCH QUESTION:

Should royalty rate of Standard Essential Patents licensing be based on the product or the component, and what are the courts’ decisions in the Europe?

Li Chen

1 vlog

Standard Essential Patents (SEPs) are patents that form essential parts of a technical standards, which aim to achieve interoperability between different products. In order for technology implementers to adopt these standards, they cannot avoid practicing these SEPs and have to get a license from the SEP owners, which gave the SEP owners bargaining power when negotiating licensing terms. The recent disputes between automaker Daimler, including its suppliers, and telecommunication giant Nokia, stem from this background, wherein Nokia insists to license its telecommunication SEPs to Daimler on the basis of the product (i.e., vehicle) price, instead of the component (i.e., chipset) price, so that Nokia can charge a higher royalty rate. Daimler then accused Nokia for anti-trust conducts, Nokia in turn initiated patent infringement lawsuits in the U.S. and Europe. The legal disputes are still ongoing, and this research vlog aims to provide some observations regarding this topic.

1. Reuters, March 31, 2020. “EU antitrust watchdogs quiz Daimler, others on failed Nokia fee talks”
2. Businesswire, January 26, 2021. “Continental Files New Suit Seeking Fair Licensing Rates from Nokia”
3. Juve patent, 26 November 2020. “BREAKING: Regional Court Düsseldorf refers Nokia vs. Daimler questions to CJEU”