Sunday, February 18, 2018

Japanese government publishes the draft of user’s guide for HANTEI on SEP

As mentioned before, the Japan Patent Office (JPO) is going to provide the following two measures to promote the dispute resolution on standard essential patents (SEPs).

・Guidelines on SEP licensing negations
It will cover trend of legal precedent on SEP disputes worldwide and also show elements to consider in determining reasonable royalty rate to improve predictability. It will be published next month or so.

It is an expansion of existing JPO’s advisory opinion service (HANTEI) to indicate whether or not a particular patent is a standard essential patent. The existing HANTEI service provides advisory opinion, which is non-binding, on whether or not a particular patent covers a particular product or service. The decision is available to the public. For more information on existing HANTEI service, please see here.

On February 16 2018, JPO published the draft of user’s guide for "HANTEI on SEP" to invite public opinion until March 11. Then, JPO will start the operation of the new service from April this year. The English translation of the user’s guide is regrettably not available at this moment. However, foreign companies also should know this service as a tool, since they may have a dispute on SEP in Japan. In fact, Apple had such a dispute with Samsung in Japan before

The requirements for "HANTEI on SEP" are as follows.

  1. Existence of dispute about standard essentiality of a patent between the parties is required.
  2. A demander is required to identify a virtual subject matter in dispute consisting only of integral components specified in a document developed by a standards body or the like.
  3. The demander is only permitted to claim that the virtual subject matter in dispute is within the technical scope of the patent, but not permitted to claim that it is out of the technical scope.  
The demander needs to make an element-by-element comparison between the patent and the virtual subject matter in dispute to prove that it is within the technical scope of the patent, while the demandee is allowed to make a counter argument. Then, when the demander successfully proves that the virtual subject matter in dispute is within the technical scope of the patent, the patent is deemed to be a standard essential patent. As described above, the virtual subject matter in dispute is identified by the demander. Therefore, it should be noted that there could be a lot of virtual subject matter in dispute which depends on how the demander identifies, and it could arrive at a different judgement.

Monday, February 12, 2018

Fuji Xerox rolls out patent licensing business to SMEs

On February 7 2018, Fuji Xerox announced that it will roll out the patent licensing business to SMEs.

In Japan, a business model for large companies to license their unused patents to SMEs to help such SMEs develop new products or create new business is getting a lot attention lately. Fuji Xerox has been participating in intellectual property business matching between SMEs and large companies since 2016 which is a local government project. Now it has signed a patent license agreement with a company in Yokohama, and made this announcement. This is the first success case in the IP business matching for Fuji Xerox.

This business model brings the following advantage:
• Large companies can monetize their unused patents.
• Large companies can expect advertising effect by contributing to SMEs and regional community.
• SMEs can gain the chance of development of new products.

Especially for large companies, since they provide their unused and non-core technologies, it is unlikely to affect their business and it would be easily approved in the company. Also, the litigation risk is probably not high, because there is a big gap between large companies and SMEs in internal resources (e.g. IP staff, financing) and maybe few SMEs will challenge the patents of large companies or try to use the ideas without infringing the patents. On the other hand, the license revenue depends on future success of the new products implementing the patented ideas. It is unpredictable and maybe cannot expect huge revenue.

Therefore, it is a low-risk, low-return business for large companies. Fuji Xerox clearly states in the announcement that it will promote this type of licensing business. However, it should consider the cost of matching with SMEs, in addition to unpredictable revenues. If an SME is looking for a specific technology and it approaches to a large company which has such a patented technology through its own effort, that’s fine for the large company. However, it would be challenging for large companies to identify their unused patents which potentially contribute to the business of a SME and make a proposal for it, considering the cost. Currently, a local government is playing the important role as an middleman in the  transactions. It should be watched whether Fuji Xerox can grow this licensing business successfully.