Department of Law Spring Term 2020 Master Programme in Intellectual Property Law Master Thesis 30 ECTS Patent Pools: An ‘Industry Solution’ to SEP disputes in 5G and Internet of Things A quest for a successful Digital Single Market Author: Satyoki Koundinya Supervisor: Kacper Szkalej Master Thesis Satyoki Koundinya Master Programme in Intellectual Property Law ACKNOWLEDGEMENT I would like to express my gratitude to Via Licensing Corporation for allowing me to be a part of the esteemed London office, the learnings whereof have culminated into this thesis. I am fortunate to have interacted with and learnt so much from some of the top-notch IP professionals in the world, for which I will be forever indebted. I would like to use this opportunity to convey my deepest regards and gratefulness to Mr. Joseph Siino, President, Via Licensing Corp., who took out his time despite his extraordinary work schedule, to patiently hear my preliminary thoughts and give his very valuable insights and provide a starting point of my research of patent pools being an ‘industry solution’. I am extremely thankful to Ms. Helene Jay, Director, Sales & Licensing Programs, Via Licensing Corp. for giving me this opportunity of internship, facilitating an easy and comfortable transition thereinto, taking timely updates and helping me course correct at every stage. My heartfelt gratitude to her generosity and kindness. I shall forever be indebted to Mr. Sharaz Gill, Sr. Licensing Counsel, Dr. Deepal Naidu, Sr. Patent Attorney and Ms. Liz Weber, Sr. Public Relations Manager at Via Licensing Corp., my most wonderful guides and persons I have ever met, who gave me the space to improve my understanding, who patiently heard me and took my questions, despite their busy schedules and motivated me to apply the principles of law and technology into this emerging field. Every discussion I had with them, helped me understand the context of my topic in the real world, outside the academia and without their precious practical knowledge, it would have been impossible to write this Master Thesis. I want to thank Prof. Kacper Szkalej, my academic supervisor and the most wonderful professor and person I could interact with during the course, who introduced me to the concept of a Digital Single Market, encouraged me and guided me to incorporate and apply the tools of EU competition law in my thesis. I shall remain deeply indebted to him for his motivating suggestions and encouragement, which helped me finish my Master Thesis in time. I am also extremely thankful to various notable and distinguished Professors and Experts, who visited and gave interesting lectures during our term at University of Uppsala, who helped me shape my thesis to great extent. Last, but not the least, I would also like to thank my lovely wife and my parents for their constant support and motivation and all my friends and colleagues, both from the LLM program and outside, for their valuable support in form of healthy discussions and valid criticisms that helped me successfully completing this Master Thesis. - 2 - Master Thesis Satyoki Koundinya Master Programme in Intellectual Property Law SUMMARY Patent pools are a source of collaborative efficiencies when they comprise of patents essential to a standard thereby facilitating access to useful technologies. Despite that, in the context of telecommunication standards, attempts to create patent pools have seemingly not been successful, for example in 2G, 3G and 4G standards, owing to a lack of participation by SEP holders, who have mostly engaged in bilateral negotiations. This had led to significant litigation. Bilateral negotiations are hard to foresee in the 5G and IoT context, where the number of downstream innovators and implementations are large. Essentiality understandings have mostly been evaluated from a SSO policy perspective and a lack of consistency therein has led to further confusion. In that context, patent pools may be an industry solution to facilitate access to technology and avoid costly and time-consuming litigations and therefore, pose an attractive alternative. Patent pools have however evolved, have infamously resorted to assertions and aggressive licensing approaches. The European Commission has recognized reliance on patent pool mechanisms, as a means, to achieve a Digital Single Market. However, to be able to do so, pools must be properly designed and managed. Against that background, the purpose of the thesis is to discuss the strengths and weaknesses of patent pools, the regulatory framework under which they operate, the essentiality policy weaknesses of ETSI in the development of telecommunication standards, the transformation of pools into assertion entities and concludes with certain suggestions in which they should operate to provide an attractive alternative to bilateral licensing in the emerging 5G and IoT era. Keywords: Pools, SEP, 5G, IoT, European Commission, Digital Single Market - 3 - Master Thesis Satyoki Koundinya Master Programme in Intellectual Property Law GLOSSARY OF TERMS 1G, 2G, 3G, 4G, First generation, Second generation, Third generation, Fourth generation, 5G Fifth generation telecommunication network – generations in telecommunication standards 3GPP Third Generation Partnership Project is an umbrella for development of protocols for mobile communications in 3G CDMA/W- Code Division Multiple Access, Wideband – CDMA is a mobile CDMA communication protocol used in 2G and 3G standards CEN/CENELEC European Committee for Standardization, is an association that brings together the National Standardization Bodies of 34 European countries CJEU Court of Justice of the European Union DAB Digital Audio Broadcasting is digital radio standard for broadcast of digital audio radio signals DECT Digital enhanced cordless telecommunications is a standard for cordless telecommunications DOJ United States Department of Justice DVD Digital versatile Disc is a video format standard. Also a joint licensing group for licensing of DVD standard EC European Commission EDGE Enhanced Data Rates for GSM Evolution is a mobile communication standard for enhancing data rates in 2G standard. EPO European Patent Office ETSI European Telecommunications Standards Institute EU European Union FRAND/RAND Fair Reasonable and Non-Discriminatory. These are the standards licensing terms must pertain to, to be offered by a SEP holder to a potential licensor. GPRS General Packet Radio Services is a mobile data standard applicable on 2G and 3G cellular communication network GSM Global System for mobile communication developed for 2G mobile communication standard - 4 - Master Thesis Satyoki Koundinya Master Programme in Intellectual Property Law ICT Information and Communication Technology refers to integration of communication with devices GDP Gross Domestic Product provides an estimation of size of economy and rate of growth of a country H.264/H.265 Video compression technology, or codec, that was jointly developed by the International Telecommunications Union (ITU) Hold-up SEP holders block licensing of SEPs by demanding exorbitant royalties from implementers. HSPA/HSPA+ High speed packet access is a 3G mobile communication technology for fast data transfers IEEE Institute of Electrical and Electronics Engineers. SSO known for creating the IEEE 802.11 Wi-Fi standard IOT Internet of Things allows devices to communicate with each other JRC Joint Research Center for the European Commission LPWAN/MIOTY Low Power Wide Area Network is a long range communication protocol allowing communication between devices at a low bit-rate LTE Long Term Evolution is a standard developed for drastically increasing capacity and speed and is a part of 4G telecommunication standard Mbps Megabits per second as a unit of cellular transmission MPEG/MPEG- Moving Picture Experts Group is an SSO (and a patent pool) formed to set LA standards for audio and video compression and transmission. NPE Non-practicing entity owns a patent but has no intention of using it PAE Patent Assertion Entity enforces patents but does not utilise the technology for use Patent Pool/pool Licensing instrument offering a single license to complementary patents owned by several patent holders. Patent pools typically do not own the patents included in the pool license, and typically do not assert the patents against infringers. PE Practicing Entity owns and practices the patent RFID Radio Frequency Identification is a standard for identification and tracking of devices using radio frequency - 5 - Master Thesis Satyoki Koundinya Master Programme in Intellectual Property Law SSO/SDO Standard Setting/development organization TDMA Time Division Multiple Access is a telecommunication standard developed for 2G UMTS Universal Mobile Telecommunications System is a 3G standard developed for packet based transmission of voice and data USB Universal Serial Bus standard establishes communication, power and interfacing specifications for cables and connectors VITA VMEbus International Trade Association – SSO in open system architectures WiMax Worldwide Interoperability for Microwave Access is a broadband communication standard developed over the IEEE 802.11 - 6 - Master Thesis Satyoki Koundinya Master Programme in Intellectual Property Law TABLE OF CONTENTS INTRODUCTION ...................................................................................................................................... - 10 - A. BACKGROUND ..........................................................................................................................