IPRs and Standards - Balancing Interests of Licensors and Licensees Claudia Tapia Research In Motion 14. October 2009

 TRYING TO ENTER GSM STANDARD THREAT OF INJUNCTION  DILEMMA LICENSEE NEW ENTRANT Potential Licensee reasonable = 1% Licensor reasonable = 3% To avoid injunction Pay more than 1% Hope court finds abuse of dominant position and rejects injunction (Art. 82 EC, 19 GWB) Not to pay

Ref.: German Federal Supreme Court, BGH, Orange Book Standard 05 May 2009, KZR 39/06  COMPULSORY LICENSE DEFENSE under cartel law against the patent owner’s request for injunctive relief is POSSIBLE  PREREQUISITES: BGH – Orange Book Standard case make an unconditional offer to license under reasonable terms which could not be rejected by the proprietor of the patent without committing an abusive conduct under cartel law, and pay the reasonable royalty to the patentee or deposit it into an escrow account for the time the potential licensee uses or has used the technology covered by the patent without a license

 Licensee may make unconditional offer of concrete percentage  Licensee thinks 1% is ‚reasonable‘  DILEMMA  COURT allows Licensee: unconditional offer to conclude a license agreement  the patentee determines the amount of royalties according to his own reasonable discretion BGH – Orange Book Standard case He offers 1% Court says ‚reasonable‘ is 1,5% No compulsory license He offers 1,5%Licensor accepts itLicensee bounded

 Ideally Licensee pays the amount calculated by licensor  COURT: payment or deposit of a ‘sufficient royalty’  What is ‘sufficient’? Sufficient = ‘reasonable’? BGH – Orange Book Standard case But, What if the licensor asks for unreasonable rates according to Y, e.g. 10%? Deposit, waiving the right of withdrawal, if: 1. Patentee is not willing to accept the offered payment or 2. Patentee willing to accept it but not to license

Deposit 1,5% Court determines ‚reasonable‘ rate, e.g. 1% Possible to get some money (e.g. 0,5%) back Licensee ask court examine if licensor has determined rate at his reasonably exercised discretion (Sec. 315 CC) BGH – Orange Book Standard case SUGGESTION Assuming Y thinks 10% is not reasonable If comparable cases Deposit comparable amount If no comparable cases Deposit slighly higher amount WAIVING RIGHT OF WITHDRAWAL

BGH – Orange Book Standard case CONSEQUENCES IN THE LEGAL PROCEEDINGS IF WELL-FOUNDED COMPULSORY LICENSE 1. A claim of injunctive relief  rejected by the court 2. Claim compensation for damages After receiving the adequate offer  ‘reasonable license fee’ to be paid in the future Before receving adequate offer  damages for the use of the patent infringed during this time 3. ‘Financial accounting’: Licensee must: Account for the use on a regular basis Pay the royalties resulting from his accounts to the patent owner