|
In order to secure competition advantages, all of high-tech companies invest great R&D resources and aim to create killer products ahead of their competitors. However, since more often than not the developed technologies cannot be commercialized successfully, companies in these industries sometimes combine their resources to handle R&D tasks to decrease risks. Furthermore, in competition environment, which is characterized with intensive technologies, a single end product usually contains hundreds of patents. Hence, patent licenses are frequently granted to product manufacturers through Patent Pools to have them effectively make license agreements with numerous patent owners.
|
| |
|
Patent Pool is a facility with which multiple patent owners contribute essential patents for manufacturing of certain products and grant an all-in-one license. Since this transaction model can help both patent owners and licensees to save costs, it is widely utilized in various industries. For example, MPEG LA and VIA Corporation are both famous companies of Patent Pool management, and MPEG LA currently even manages 8 different Patent Pools.
|
| |
|
However, the Fair Trade Commission (FTC), the competent authority of competition in Taiwan, didn't adopt an open attitude toward Patent Pools and their practices from the very beginning. As early as in 2001, the FTC imposed an administrative sanction on a Patent Pool of CD-R patents established by Philips, Sony, and Taiyo Yuden for it believed that the facility violated Article 14 (concerted action) and Article 10 (illegal monopoly) of Fair Trade Act. In nearly one decade, this case, to certain extent, represents the basic attitude of authority in Taiwan toward Patent Pools, i.e. in general the authority is prone to disapprove them.
|
| |
|
However, when the FTC handled a Patent Pool related to Blu-ray Disc products in April 2012, this trend was changed. Six companies, i.e. Hitachi, Panasonic, Philips, Samsung, Sony, and CyberLink, applied to the FTC for the establishment of a Patent Pool called One Blue for required essential patents for manufacturing Blu-ray Disc products in Taiwan. The FTC adopted a positive attitude and allowed the Patent Pool One Blue to operate. In addition, after Philips, Pioneer, Sony, and LG applied to the FTC for the establishment of a Patent Pool called One Red for required essential patents for handling DVD products in Taiwan at the end of 2012, the FTC promptly made its decision in January 2013 and allowed the Patent Pool One Red to operate in Taiwan.
|
| |
|
Based on the two newly approved cases of Patent Pools, we have induced and analyzed relevant examination standards adopted by the FTC for the handle of applications of related Patent Pools.
|
| |
|
1.
|
The patents licensed shall be essential patents and their essentiality shall be determined through an independent expert review mechanism.
|
| |
|
|
The FTC believes that the licensed patents covered by a Patent Pool must be essential patents. However, on the licensed patent list of a Patent Pool, there are frequently hundreds or thousands of items; furthermore, along with the development and evolution of technologies, these hundreds or thousands of patents may be changed and replaced at any time, where old or obsolete patents will be removed and new patents will be included anytime. Hence, who should, based on what process or mechanism and at what time, evaluate whether these ever changing licensed patents are essential patents then becomes an important issue, particularly, when the FTC examines an application of Patent Pool, should it step in the evaluation process of essential patents? If the competent administrative authority needs to review them by itself, should it review every patent of the thousands of patents? Or should it review through sampling? If sampling should be conducted, then how should it choose the samples? How to determine the sampling ratio? Furthermore, when new patents emerge and it is necessary to include them into the Patent Pool, should the Patent Pool already approved by the competent authority apply to the competent authority for reexamination due to the emerging new patents? If this is the case, will the Patent Pool always operate in an unstable status and consequently affect the efficiency of Patent Pool and obstruct the way to the original goal of its establishment?
|
| |
|
|
From the issues mentioned above, it is apparently that if we require the licensed patents to be essential patents, issues of related administrative reviews will surface. Fortunately, in the cases of the two Patent Pools, the FTC referred to the systems of the United States and Germany, and considered that it's not necessary for the competent administrative authority to review the essentiality of patents included in a Patent Pool by itself and it only needs to examine the internal review mechanism used by the Patent Pool for the selection of essential patents. By changing the to-be-examined object from each "patent" to the internal review "mechanism" of Patent Pool, the examination efficiency of the FTC is indeed greatly improved, and this also gives a Patent Pool the vitality and flexibility it should have. This may be regarded as an important progress in our country’s opinions toward practices of Patent Pool. As for specific cases, how does the FTC determine the review mechanism of essential patents? The experience we grained from the aforementioned two cases can be important references. The FTC considered that, if the reviewers are independent experts, the independent experts' opinions have status higher than decisions of company operators, independent experts charge by the time they spend and the receipt of their compensations is not related to the conclusions they make, then the FTC will take positive attitude to the internal review mechanism of the Patent Pool.
|
| |
|
2.
|
The Patent Pool should be an open pool rather than a closed pool
|
| |
|
|
To avoid the doubt of restricting competition, a Patent Pool should be open to any and all patent owners possessing essential patents rather than limited to certain patent owners. Hence, the related internal contracts of a Patent Pool must maintain an open pool design.
|
| |
|
3.
|
Obsolete patents or patents that have been deemed invalid should be deleted from the licensed patents periodically.
|
| |
|
|
The Patent Pool should periodically review and clean the list of licensed patents, and delete obsolete patents or patents that have been deemed invalid to maintain the legitimacy of collecting royalties.
|
| |
|
4.
|
Confidential information shall not be exchanged between licensors in a Patent Pool
|
| |
|
|
In respect of the market and patent licensing business, different licensors may possess confidential information at different degrees. To avoid any doubt of restricting competition, licensors may not exchange confidential information as a result of their participation in a Patent Pool.
|
| |
|
In summary, by handling the aforementioned two cases of Patent Pool, the FTC has established objective and predictable procedures and standards of examination. It's symbolic and inspiring to the operations of Patent Pool in Taiwan. However, the applicants of the aforementioned two cases had legal obligation to file application of combination, and hence these cases could be submitted to the FTC in the form of combination application and have the Commission to examine the Patent Pool business to be operated by the participating enterprises. As for the handle of Patent Pools not related to filing threshold of combination, it needs to be clarified by the FTC with other cases in the future.
|
