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We reported some months ago on the German case concerning the relationship between patents and standards for recordable CDs.CD-R Logo.jpg In that case, the German Federal High Court decided that the so-called “FRAND defence” could apply to patents relevant to standards. In other words, it is possible for a company implementing a standard to obtain a licence as long as it sets aside a reasonable licence fee.

Court - Hague.jpgThe Dutch Court in the Hague explicitly rejected this defence and noted that its decision was different to that drawn by the German Federal High Court. The Dutch Court noted that there was no concept of “compulsory licence under cartel law”. Dutch law (like German law) has a specific provision in its patent code for the granting of compulsory licences. Such licences only come into effect when they have been granted by a court. The Dutch Court states that this is reasonable as nobody would otherwise understand the conditions under which the licence had not been granted.

There’s an implicit criticism of the defendant in the case that it had apparently never attempted earlier to take a licence to the technology from Philips. Philips Logo.jpgThe Court clearly stated the defendant should have attempted earlier (on starting sale of the goods or becoming aware of the need) to obtain a licence under FRAND conditions and, if this attempt had not been successfuly, the defendant could have asked for a compulsory licence to be granted. The Court points out that at least a preliminary licence could have been granted in summary proceedings.

The decision highlights two issues of European Patent Law.

Firstly the need for a uniform patent litigation system to harmonise the decisions of the different national courts. The different decisions in the German and Dutch courts are based on different legal traditions and codes of civil procedure (and contractual law). The Dutch have traditionally granted complusory licences more readily than the German courts and so it’s not surprising that the Court in the Hague suggested this route, whereas the German Federal High Court suggested an alternative option.

Secondly the need for clarity under which licenses to patents required to implement standards can be granted. Most Standards Setting Orgnisations have a clear policy on intellectual property – licences will be granted on Fair Reasonable and Non-Discriminatory (FRAND) conditions. There are, however, difference on how to interpret these conditions – there’s little or no case law to enable a market entrant to assess its risks and It’s clearly impractical in a single European market to have to go to multiple courts to obtain compulsory licences (as the Dutch want) or post multiple bonds (as suggested in Germany).

The case has also been discussed on the EPLawblog here

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W3C investigating Apple’s patent

by admin on 24 June 2009

There’s a rather interesting report on the UK ZDNet website about Apple’s refusal to licence royalty-free a patent for use in a proposed web standard. US Patent No 5,764,992 relates to a method for automatically updating software programs on a computer.

W3C Icon

Web standards are set up by the World Wide Web Consortium. Their website states that Apple have apparently noted that this patent applies to the Widets 1.0 specification and have exluded all claims from the royalty-free license commitment of the W3C Patent Policy. The W3C is now asking for prior art to be submitted for review by the patent advisory group for the Widgets

Clearly the W3C group is taking this issue very seriously and its call for prior art to be submitted in an effort to at least potentially invalidate the patent is the first time known to this author that such a procedure has been valid. The patent policy of W3C is, however, different than that of many other standard-making organisations. The patent policy states clearly that any licence may not be conditionable on payment of royalties, fees or other consideration (see section 5 No 3 of the patent policy). Most standard-making bodies seem to state that it is adequate to be prepared to grant licences on FRAND (fair, reasonable and non-discriminatory) terms.

So what will be the outcome? At least a highly interesting discussion – and wouldn’t we all like to be a fly on the proverbial wall during those discussions. Potentially the patent could be declared invalid – if somebody files a request for re-examination at the US Patent Office. It is also possible that companies may choose to license the patent from Apple directly (if Apple is willing to license). In the extreme, the attempts to standardise the widget updating process may fail – since W3C may chose not to adopt any standard at all, rather than a standard which requires a license.

Potentially, of course, the Europeans (or Japanese or Chinese) don’t need to worry – Apple do not seem to have filed the patent outside of the US. However, the moment those updating bytes fly into US territory they could be served with an injunction by nasty Apple bug.


The Orange Book: The relationship between patents and standards

June 11, 2009

The relationship between patent protection and standards is fraught with problems. Most standard setting organisations require participants in standards development to either renounce their rights to patent protection or, more commonly, to agree to license any intellectual property on a FRAND basis (fair, reasonable and non-discriminatory) basis. But what happens when a company produces a […]

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