SEP Monetization and Enforcement – Episode 8
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Guest:
- Pio Suh, IPCom
Since July 2018 Pio Suh is assigned as the Managing Director of IPCom based in Munich, Germany. He is an attorney and member of the German Bar since 2006. Pio has over a decade experience in SEP licensing and patent litigation in the field of communication technologies. He has worked in-house for several multinational Fortune 500 companies – including Qualcomm, Oracle and Philips – to implement patent licensing, enforcement and litigation strategies on a global scale.
When IPCom was founded 15 years ago everything started with licensing the GSM and UMTS SEP portfolio acquired from Bosch. Today Pio explains that IPCom is not only acquiring SEPs from other patent holder, but as a company acts as an active contributor to the 3GPP standard development. Indeed, the IPlytics contribution data confirms over a hundred contributions submitted to the 3GPP since 2016 for specifications related top 4G and 5G technologies.
Pio talks about how the legal environment changed from his time at Philips, where the licensing team back then was able to get injunctions on SEPs much easier, compared to today where in Europe it became very difficult to get injunctions for SEPs. In his perspective, with the missing threat of an injunction, a situation where the licensee delays the process is inevitable. Why would a licensee promptly pay and accept an offer if there are no costs for delay?
Pio says that: “for a SEP licensee it is always cheaper to delay the process.”
If the licensee has not inventive to speed up the process, they will prolong the negotiation. Here China for some cases at least, has proven to be more efficient in granting preliminary injunctions.
Pio goes on to talk about the different perspectives on what is a fair reward for providing access to patented standardized technology. And for understanding what’s FRAND in his view it also depends on the unit that must be considered. In his opinion a telecommunications carrier should pay royalty for SEPs depending on the number of network subscribers. In other words, the users of the network. Carriers argue however that one must use the net selling price of a base station as the basis to determine FRAND. Therefore, carriers do not want to pay royalties but point the finger at the base station manufacturer such as Ericsson, Huawei or Samsung. However, in Pio’s view, base stations are not the accurate unit to represent the value the patented technology brings to the users. This general misalignment about what the basis for FRAND determination should be and who should pay in the value chain makes it difficult to negotiate.
IPCom owns SEP portfolios in the cellular telecommunication space. Here the handset manufacturer market is quite easy to identify. Pio explains that the barrier to get a product on the handset market is quite high and needs significant investments in R&D, know how, manufacturing facilities supplier networks and so on. This is very different for example to printing and pressing a DVD – where Pio targeted licensees during his time at Philips – and here the licensee market looks very different. For handsets consequently, only larger corporations such as Apple, Samsung, Huawei, HTC but also new player such as Xiomi, OPPO or Vivo are on the market, who are the licensees that IPCom approaches. While easy to identify and big pockets guaranteed, these companies are very experienced in defending themselves and that makes licensing quite challenging.
Pio stresses in his final remarks that for him it often goes back to the fundamentals of intellectual property rights. Imagine someone wants to use the house you own and live in .Yes you can rent out your house but you can still decide who is allowed to rent it and for what price. For intellectual property you have the same rights and the legal system must ensure that you are able to enforce your rights and that you will receive a fair compensation for the use of your rights.