Author: John Jurata Jr. and David B. Smith
Published: October 1, 2013
Publication: Competition Policy International
This article, which is based on an empirical study of the success record of SEPs asserted in litigation by Interdigital, Motorola, and Samsung, concludes that most asserted SEPs have been found to be invalid or not infringed. The article found that out of 58 SEPs asserted in litigation globally by these SEP holders, only 7 were found valid and infringed, while 18 were found invalid, 17 were found not infringed, and 16 were withdrawn or dismissed.
The article also discusses the development of the law regarding the invocation of injunctive relief with respect to FRAND-encumbered SEPs. The authors point out that “Court rulings, enforcement actions, and government policy statements over the past year  suggest an emerging consensus on what this FRAND promise means: SEP owners cannot tie the licensing of their SEPs to the licensing of non-SEPs; the threat of injunctions leads to royalty rates in excess of FRAND; and, thus, injunctions for SEPs should be rare.” Those rare instances would be limited to “(1) when there is no ability to obtain jurisdiction over an infringing product for monetary damages; or (2) when a company that infringes a SEP refuses to pay a FRAND royalty.” The authors disagree with the suggestion of some SEP owners that a putative licensee is an “unwilling” licensee if it does not agree to pay a FRAND royalty after binding arbitration that lacks certain procedural defenses—such as meaningful discovery, transparent and reasoned adjudication of all of the underlying issues, and appellate review. They assert that “the threat of vaguely-defined arbitration can be leveraged by SEP owners almost to the same extent as the threat of injunction. For these reasons, a simpler option with less potential for gamesmanship and harm to competition is to permit injunctive relief only when a putative licensee: (1) does not submit to jurisdiction of a court that can award monetary damages for that SEP; or (2) refuses to pay a royalty proven by the SEP owner to comply with FRAND, determined after a SEP is deemed to be valid, infringed, and enforceable under traditional burdens of proof in an adjudication with adequate procedural protections and appellate review.”