IEEE Power Electronics Magazine - September 2015 - 10

Patent Reviews

by Art MacCord

Standard Essential Patents-
The IEEE Approach

http://standards.ieee.org/develop/projatents on technologies necect/powerelectronics.html.
essary to comply with stanHistorically, the participants in
dards set by organizations
a standard-setting body agree to
like the IEEE can be valuable
license any patents that are necesbecause manufacturers conforming
sary to meet the standard on fair,
to the standard must use and pay for
reasonable, and nondiscriminatory
the patented technology. Patents
(FRAND) terms. That all sounds well
essential to a particular standard
and good, except that "FRAND" is in
raise the possibility for abusive conthe eye of the beholder.
duct. The risk is that a participant in
The IEEE set
a standard-setting
out to fix that by
body who has patadopting revisions
ent rights might
to the rules governpersuade the stanStandards are
ing bodies, defining
dard setters to
specifications that
what participants
define the standard
the players in
i n t he s t a nd a r d to require infringesetting process can
ment of his patent,
the marketplace
do. Participants who
which then forces
adopt to assure
have patent rights
the industry to pay
interoperability
can submit a letter
exorbitant royalties
of devices.
of assurance (LOA).
once manufacturers
Submission of an
have made substanLOA is optional, and
tial capital investthe LOA can say any
ments to meet the
of several different things. It can ofstandard. This is particularly troufer free licenses to an unrestricted
blesome when the patent owner has
number of applicants to implement
lured the other participants into the
the standard. It can offer that the
trap. The IEEE has adopted rules to
patent owner will not enforce its patreduce the possibility of such an
ent against anyone complying with
abuse.
the standard. The LOA can claim
Standards are specifications that
that the patent owner will offer a
the players in the marketplace adopt
FRAND-term license. The LOA can
to assure interoperability of devices.
also indicate that the patent owner is
The IEEE Power Electronics Society
not willing to undertake any of those
has several standards spelled out at
limitations on its enforcement rights.
The recent update to the rules
Digital Object Identifier 10.1109/MPEL.2015.2448173
refined
the definition of what conDate of publication: 4 September 2015

IEEE POWER ELECTRONICS MAGAZINE

 September 2015

stitutes a FRAND-term license offer.
Here are the new provisions for a
FRAND license offer in an LOA.
1) In the negotiation process for a
FRAND license, the patent owner
agrees not to seek an injunction or
other prohibition on the use of the
technology unless the potential
licensee refuses or unreasonably
delays negotiations.
2) The meaning of a reasonable royalty rate is defined as appropriate
compensation that excludes the
value resulting from including the
patented technology in the IEEE
standard. The fact that the patented technology is essential for
implementation of the standard
should not factor into determining
what a reasonable rate is.
3) Also, the reasonable rate should
consider the value and the functionality that the claimed invention contributes to the smallest
saleable standard-compliant implementation that practices the
patented invention. In addition, if
several patents cover the standard
(even if owned by several separate
companies), that fact should be
taken under consideration in determining what the royalty is for
any one of the patents.
4) The royalties of any pre-existing
licenses can be considered in determining a reasonable rate.
5) The LOA can also require that other
participants agree to grant licenses
to their patents that are necessary

http://standards.ieee.org/develop/proj

Table of Contents for the Digital Edition of IEEE Power Electronics Magazine - September 2015