Intellectual Property Office
1. Standard Essential Patent Licensing
Intellectual Property, like any property, can be bought, sold or licensed by its owner.A licence is a contractual agreement between someone owning intellectual property (also known as a rightsholder) and another party. An IP licence is an agreement under which the owner of an IP right grants consent to the licensee to engage in acts which would, but for that consent, constitute an infringement of the IP right. If something requires the consent of the IP owner to be lawful and is done without the consent of the IP owner, that would be an infringement of the IP owners rights. For example, a person infringes a patent for an invention if they do any of the things in relation to the invention which the patent owner has the exclusive right to do, such as (where the invention is a product) making, selling or using the invention.
A licence may include terms requiring the payment of a fee, from the licensee to licensor, in respect of the activities of the licensee which require the consent of the licensor to be lawful. A licence may also include provisions concerning the scope of the licence, such as the field of use in which the licensee has the licensors consent to operate, the territories to which the licence extends, and the period for which the licence is granted, amongst other agreed terms.
More information on licensing of IP can be found in the IP BASICS video:
More information on licensing of IP can be found in theIP BASICS: Should I license or franchise my Intellectual Property? YouTube video.
Patent licensing can incentivise investment into R&D as it can help the inventor to obtain a return on the investment in the development of that patented technology and facilitates the adoption of that technology. It can also enable re-investment into the next generation of technologies. For standard essential patents, licensing can be a way to obtain licensing revenue based on the value of the patented technology.
The IPO has guidance on what an example of an IP licence looks like, which can be found on the Skeleton Licence webpage.
A Standard Essential Patent is A patent which protects technology which is essential to implementing a standard is known as a standard essential patent.
For more detail on standardisation and SEPs see SEP guidance part 1 on Technical Standards and Standard Development Organisations.
This guidance is primarily aimed at UK businesses who require information on the licensing of SEPs, including when a licence may be required. It provides basic information on what to expect from a SEP holder and from a potential licensee. UK companies involved in SEP licensing are currently mostly SEPs implementers. SEP holders operating in the UK are mainly global in their operations, and are often US, EU or Chinese companies.
In some sectors or technologies that rely on standards, implementers of standards for which SEPs have been disclosed may not need a direct licence from SEP holders. For example, in some industries, the seller of the component to a product manufacturer will already have a SEP licence for the sale and use of that component by the product manufacturer, and therefore a further licence will not be necessary (value chain licensing is discussed in more detail in section 3).
Where a licence has not been concluded before standardised technology is incorporated in a product thats on the market, the licensor will generally notify the potential licensee of its patents and licence offering. The focus of this guidance is on technologies where a licence is requested by a SEP holder.
1.1 Legal frameworks
SEPs are subject to the same legal and licensing framework as ordinary patents in the UK. There is no legislation in place to regulate the licensing of SEPs specifically. An overview of aspects of the legal framework that, combined, are relevant to SEPs is outlined briefly.
Intellectual property law:
There are various pieces of legislation such as the Patents Act 1977, that provide the legal framework for patent protection and enforcement in the UK.Interpretation of the legislation is addressed in a large body of case law.
Contract Law:
Contract law applies to licensing of SEPs, as it applies to all licence agreements executed under UK law and also comprises a mix of legislation and case law. Additionally, SEP holders will often have given licensing commitments to organisations which develop standards, which may be relevant to how SEPs should be licensed.
Competition law:
One of the main sources of UK competition law is the Competition Act 1998, which prohibits anti-competitive agreements as well as abuse of a dominant market position. Competition law is important to SEPs because it helps to provide a level playing field for businesses, to ensure that no business anti-competitively dominates a market, and it prevents businesses with substantial market power from using anti-competitive means to try to stop or hinder new companies from entering the market.
The Competition and Markets Authority (CMA) is the primary competition law enforcement authority in the UK.
The CMA has issued guidance to provide clarification on competition law matters, including for SMEs.
In Chapter 9 of its Guidance on Horizontal Agreements, the CMA covers standardisation agreements specifically, and the licensing and competition concerns that might arise in this area.For more detail, please see the Guidance on horizontal agreements webpage.
Case Law (court decisions):
The UK is a common law jurisdiction, which means that court decisions create a body of law, that other courts will follow. Recent cases in the UK involving SEPs have addressed issues such as FRAND licensing commitments (which includes assessment of a willingness by parties to engage in good faith negotiations), when injunctions could be applied preventing sales, and the calculation of reasonable royalty rates, including the methodologies for their calculation. The SEPs Resource Hub provides an up-to-date list of material UK SEP cases for information and awareness purposes.
In addition, some case law from the Court of Justice of the European Union remains relevant. The case of Huawei Technologies Co. Ltd v ZTE Corp (2015) is commonly referred to in the context of the parties behaviour in SEP licensing negotiations and available remedies.
1.2 The FRAND commitment
Owning a patent that is necessary to implement a technical standard can confer substantial market power, as implementers may ha