Analyzing the Standard Essential Patents licensing environment in Japan

The Interim Report (the report) of the Ministry of Economy, Trade and Industry (METI) Study Group on Licensing Environment of Standard Essential Patents (SEPs) was published on July 26, 2021. The following is a summary of the outline.

The study Group’s objectives

The study band was established based on the following SEP aspects:

The significance of SEPs

Because of the rising complexity of technologies and widespread usage of standards, the number of SEP declarations has risen dramatically in recent years. Licenses between different industries have been occurring as the internet of things (IoT) has developed beyond the limitations of the electronics industry.

Issues about SEP licensing

Issues relating to SEP licensing include those relating to implementers (hold-up) as well as those relating to SEP holders (hold-out). In either scenario, innovation may be suppressed, minimizing the advantages that might otherwise be available to consumers. SEP licensing conflicts have arose globally as a result of these concerns, and policy-making authorities in different nations have produced policy statements or the like to handle to these circumstances.

The study’s conclusions

The following is the future direction for each consideration as an outcome of the discussion.

Increasing SEP licensing disputes across various industries, as well as the position of Japanese firms

Disputes over SEP licensing across varied sectors are expected to increase in the coming years, and numerous industries in Japan are at danger of being affected. In addition to supporting research and development, the Japanese government will examine methods to resolve conflicts from the perspective of Japanese industry growth and externally communicate the findings of the consideration.

Setting standards for SEP license negotiation procedures, such as rules for sharing information between parties involved in the negotiation, is essential

In order to achieve an appropriate licensing environment through improved transparency and predictability of SEP licensing negotiation processes, the Japanese government will consider and externally disseminate rules on good faith negotiations that should be followed by both SEP holders and implementers, taking into account international discussions.

Patent pools

As the number of SEPs grows, patent pools will be used as one method of licensing patents. Taking such a situation into consideration, the Japanese government will consider measures to encourage good faith talks by guaranteeing transparency of license terms and so on.

Multiple implementers are involved in joint license negotiations

The Japanese government will consider measures to undertake horizontal joint negotiations that are not in violation of competition law.

Licensing burdens within the supply chain

Licensing requirements throughout the supply chain, such as patent indemnification, differ significantly based on particular circumstances, making it impossible to establish unified regulations. It is critical for the Japanese government to consider a wider perspective (such as the distribution of responsibilities across the whole commercial distribution chain, from semiconductor supply to service provision) and to gather information.