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ITU Patent Roundtable

Geneva, Switzerland, 10 October 2012

Closing Address

I hope you agree that today’s roundtable has helped to clarify the positions of the various stakeholders concerning the effectiveness of RAND commitments and the impact of litigation involving standard-essential patents (“SEPs”). I would like to thank you all for your active participation and hope you found it a worthwhile and enjoyable day.

Based on what we have heard today, these are some of the points I have noted and my views on how to take this discussion forward.

The relationship between SEPs and IPR policies remains a difficult issue. Indeed, the opinions we have heard today were diverse, and sometimes conflicting, but also I noticed some common ground.

It seems to me that there are two crucial issues:

(1) the availability of injunctive relief in a RAND context,

And (2) the meaning of “reasonable” in RAND,

With regard to the availability of injunctive relief, the discussion focused on whether injunctive relief should be allowed for SEP owners who have committed to make their technology available on RAND terms.

Based on the premise that SEP owners can leverage the threat of injunctive relief in bilateral licensing negotiations, to the disadvantage of SEP licensees, it has been stated today that committing to license SEPs on RAND terms should be interpreted as a limitation of a SEP owner’s right to seek injunctive relief.

Under certain circumstances allowing injunctive relief for SEPs could permit SEP owners to use such leverage to demand royalties in excess of the actual value of the patent.

Those in favour of maintaining injunctive relief for SEP owners, have noted that imposing limitations on the right of these companies to enforce their intellectual property rights, would or could, deter them from participating in the standardisation process.

With regard to the second issue on the meaning of reasonable in RAND, it is true that the patent policy of ITU, and I believe other SDOs, does not provide explicit guidance on what constitutes “reasonable”. In my view, this because it is very difficult to determine in advance what is reasonable, particularly since the commercial conditions under which each SEP is licensed merits individual consideration. In this context, RAND terms, and in particular the determination of a reasonable royalty rate, is left solely to the bilateral negotiations between the SEP owner and the licensee. However, after some failed negotiations have resulted in SEP-related litigation, some are beginning to request more transparency and consistency on how RAND terms should be interpreted across the ICT industry.

The other two main issues we have discussed: the meaning of reciprocity in a RAND environment; and the transferability or assignability of RAND commitments; have already been addressed in ITU. We have successfully managed to reach an agreement among our membership on how to approach these two issues.

However, injunctive reliefs as well as the determination of what is reasonable in the context of RAND licensing remain, in my view, very difficult subjects.

Despite the heated debate, I believe that the following understandings have emerged with respect to RAND commitments: (i) that they play a crucial role in the development of the ICT industry and innovation, and (ii) that, although from a legal perspective they are not equivalent to a license grant, they are not devoid of legal importance and consequence.

There is already a trend across courts and regulators in multiple jurisdictions that RAND commitments do bear legal consequences, and that injunctive relief for SEPs cannot be left completely unchecked.

Although some participants in today’s event argued that the current SEP litigation is not necessarily indicative of a harm to the standards ecosystems, others share a concern that, through SEP litigation, intellectual property can be used as a tool to reduce innovation.

In this context, I believe that providing market players with clear, transparent, effective and up-to-date patent policies works for the benefit of the industry as a whole.

In my view, providing further clarification to the meaning of RAND commitments would be beneficial. I am not suggesting that ITU should interfere with bilateral negotiations. This is already clearly stated in our patent policy and associated guidelines. However, taking into account the concerns voiced by a significant number of participants today regarding the effectiveness of current RAND commitments and the impact of SEP litigation on the standards ecosystem, I believe clarification in this regard could be a significant contribution from the ITU in addressing the current difficulties.

As the Secretary-General stated in the opening, ITU has a determination to take a leading role in the development of effective RAND based policies in the ICT sector. And, as a UN agency with a global reach and a diverse membership, ITU is in a unique position to act as a neutral international forum to facilitate these discussions amongst the various stakeholders. I would like to point out that in ITU all Member States have equal rights, and all Sector Members have equal rights.

I will therefore request the TSB Director’s Ad Hoc Group on Intellectual Property Rights, which will meet tomorrow, to begin work on a recommendation aimed at providing high level principles clarifying the meaning of reasonable, and the issue of injunctive relief, in the RAND context.

ITU has a long history of finding solutions to global problems; take for example the shared use of the radio spectrum.

And we have proved today that we can get everyone to sit around the same table. Let’s view this valuable dialogue as the start of a process, which will bring some clarity and put confidence back into the system.

Ladies and Gentlemen, I would like to thank you again for joining us from all over the world to participate in today’s patent roundtable and for your contribution to this lively debate.

It gives me great pleasure to now invite you to a cocktail reception where you can have a relaxing reflection on today’s discussions. Once again, thank you very much for your participation and for those of you who will not be attending the IPR Ad hoc group meeting tomorrow, I wish you a safe trip home. Thank you.