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Normative Recommendation

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Mechanisms to Enable Follow-On Innovation

Part of the book series: Munich Studies on Innovation and Competition ((MSIC,volume 15))

Abstract

The liability rules currently present in patent and competition law are too narrow and ineffective to address the patent system’s imbalances that hinder follow-on innovation. Also, open innovation models fail at resolving these market failures. The author argues that follow-on innovation can be best sustained by a compulsory liability rule designed to foster voluntary licensing through its indirect effect. The normative recommendation features three instruments. The first is a government-initiated clearing house that facilitates ex-ante licensing by offering patent clearance services to follow-on innovators. The second is a “reverse license of right,” a novel mechanism where a follow-on innovator commits to take licenses for patents that they failed to clear. Finally, these two instruments would be complemented by a compulsory license against the suppression of follow-on innovation that targets deliberate, abusive exercise of patents. Although vested in patent law, the instrument would qualify as a compulsory license against anti-competitive practices (Art. 31 (k) TRIPS), and benefit from the exception from the requirement of prior effort to obtain a license. This way, it could address a broader range of market failures, including hold-up problems.

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Notes

  1. 1.

    Hilty, “Legal Remedies,” 393.

  2. 2.

    Anderman, “Competition Law Perspective II,” 139.

  3. 3.

    For a more detailed discussion, see Sect. 8.5.7.3 and Sect. 8.6.2.

  4. 4.

    See Sect. 7.5.

  5. 5.

    For a more detailed discussion, see Sect. 9.4.3.2. Cf. European Commission, “EU approach to SEPs,” para 3.2.

  6. 6.

    Ullrich, “Mandatory Licensing under Patent Law and Competition Law,” 333–335, 369, 371–372.

  7. 7.

    For a more detailed discussion, see Sect. 8.8.1.2.

  8. 8.

    Anderman, “Competition Law Perspective II,” 143.

  9. 9.

    Früh, Immaterialgüterrechte und der relevante Markt, 455–456, 459, 471.

  10. 10.

    See Sect. 8.8.1.3, on the lack of legal certainty surrounding the application of compulsory liability rules in competition law.

  11. 11.

    See Sect. 8.7.3.1, discussing the Huawei decision’s impact on competition law’s possibilities to address hold-ups involving non-SEPs.

  12. 12.

    Anderman, “Competition Law Perspective II,” 143.

  13. 13.

    Ibid.

  14. 14.

    Ibid.

  15. 15.

    Rahnasto, Intellectual Property Rights, External Effects and Anti-Trust Law, at 7.17.

  16. 16.

    In addition, compulsory licenses for semi-conductor technology for public non-commercial use are exempted from the requirement of prior use (Art. 31 (b) and (c) TRIPS).

  17. 17.

    For findings confirming the ineffectiveness of private ordering to resolve overprotection problems, see Sect. 3.4.1. For summary of findings on compulsory liability rules, see Sect. 9.1.

  18. 18.

    For a more detailed discussion on the indirect effect, see Sect. 4.3.6.

  19. 19.

    See Alfonso Gambardella, Paola Giuri and Alessandra Luzzi, “The Market for Patents in Europe” Research Policy 36, no. 8 (2007): 1180.

  20. 20.

    See Coase, “Problem of Social Cost,” 2, 5–6, 8, 12, 15.

  21. 21.

    The choice of licensing agreement or other, diverse contractual constellations that allows participation in OAI is determined by the competitive context companies operate in. Ullrich, “Open Innovation, the Patent Exclusivity and Knowhow Secrecy,” 307.

  22. 22.

    The most well known example of an ex post liability rule is a denial of a permanent injunction on the basis of equity. See eBay, 126 S. Ct. 1837, 1839–1841.

  23. 23.

    See 35 U.S. Code § 284. For a more detailed discussion see Sect. 7.3.3.

  24. 24.

    For a more detailed discussion on this type of OAI, see Sect. 3.1.2.1, on OI model, and Sects. 3.2.33.2.4. on restricted use and semi-open access.

  25. 25.

    See Sect. 3.4.1 and Krauspenhaar, Liability Rules in Patent Law, 172.

  26. 26.

    For an example from MCM literature, see Barnett, “Anti-Commons Revisited,” 130, 141; for an example from OI litarature, see Chesbrough and Ghafele, “Open Innovation and Intellectual Property,” 201–204; Roijakkers, Zynga, and Bishop, “Getting Help from Innomediaries,” 242–254.

  27. 27.

    See Mattioli, “Communities of Innovation,” 120–133, 151.

  28. 28.

    See Ghafele and O’Brien, “Open Innovation for Sustainability,” 6–9.

  29. 29.

    For a description of the types of clearing houses, see van Zimmeren et al., “Clearing House for Diagnostic Testing,” 353–355.

  30. 30.

    See van Zimmeren, “Clearinghouse Mechanisms in Genetic Diagnostics,” 71. For a description of the types of clearing houses, see van Zimmeren et al., “Clearing House for Diagnostic Testing,” 353–355.

  31. 31.

    In Europe, the instrument could be administered in association with the EPO or UPC.

  32. 32.

    See also van Zimmeren et al., “Clearing House for Diagnostic Testing,” 355 disucssing the benefit of establishing a “global checkpoint” for gene patents.

  33. 33.

    For a more detailed discussion on hold-up problems, see Sect. 2.3.2.7.

  34. 34.

    Under § 24 (1) no 1 PatG and Art. 31 (b) TRIPS, it suffices that a follow-on innovator expresses “its willingness in principle to [offer an appropriate remuneration]. It is not necessary that it specif[ies] the exact or appropriate amount”. Polyferon, IIC 1997, 242, 244.

  35. 35.

    The standardised security could be determined, for example, on the basis of the type of the follow-on innovation and industry sector.

  36. 36.

    On mediation services offered by clearing houses, see Graff and Zilberman, “Clearinghouse for Agricultural Biotechnology,” 6; On dispute resolution services offered by clearing houses, see van Zimmeren et al., “Clearing House for Diagnostic Testing,” 353–354; van Zimmeren, “Clearinghouse Mechanisms in Genetic Diagnostics,” 80; van Zimmeren, “IP Coordination Models,” 139.

  37. 37.

    See Case C-170/13, Huawei, 5 C.M.L.R. 14 (2015), para 59.

  38. 38.

    The clearing house could therefore support the licensing negotiations in accordance to the Huawei framework. See Case C-170/13, Huawei, 5 C.M.L.R. 14 (2015), para 77.

  39. 39.

    Many larger companies may have internal capacities that allow them to clear patents ex ante without the assistance of a clearing house.

  40. 40.

    Directive 2012/28/EU of the European Parliament and of the Council of 25 October 2012 on Certain Permitted Uses of Orphan Works. 2012, O.J. (L 299) 5 [hereinafter OWD]. The OWD sought to overcome the problem of obtaining prior consent from the copyright holders of orphan works for the purposes of digitization and making them available to the public (Rec. 6 OWD) Pursuant to the OWD, certain organizations, such as public libraries and museums (Art. 1 OWD), can obtain an entitlement to use orphan copyrighted works (Art. 6 OWD). Works are considered to be orphans if their right holders cannot be identified and located following a “diligent search” (Art. 2 and Art. 3 OWD). Right holders who put an end to the orphan status of their works (Art. 5 OWD) are entitled to fair remuneration (Art. 6 (5) OWD).

  41. 41.

    The proposed solution cannot be equated with that of the OWD for a number of reasons: First, the OWD concerns the rights to reproduce and to make available; hence, it targets imitative use (Art. 6 OWD). In contrast to the OWD, the reverse license of right specifically targets innovations that build upon pre-existing patents. Second, the main sources of transaction costs in copyright law are very different from those under the patent system. In patent law, a right holder can be relatively easy to find because patent protection is conditional on application. However, it can be much more difficult to identify which patents a follow-on innovation infringes and which parts of them may potentially be invalid. In contrast, the identification of pre-existing works for an adaptation or collective work is not usually difficult. However, it can be considerably more burdensome to identify the right holders and to determine whether the copyright protection of an individual work has lapsed. Third, the proposed instrument represents a private ordering-based solution for a patent holder to obtain licensing fees to compensate for infringing use. However, it does not preclude a patent holder from exercising his exclusive rights. Fourth, whereas the OWD establishes an exception to copyright protection in favour of the public interest, the proposed instrument relies on private ordering, with the objective of fostering the functional efficiency of the patent system and enhancing dynamic competition.

  42. 42.

    The requirement of a diligent search balances legal certainty with the burden of research. Simone Schroff, Marcella Favale, and Aura Bertoni, “Impossible Quest - Problems with Diligent Search for Orphan Works," IIC - International Review of Intellectual Property and Competition Law 48, no. 3 (2017): 288.

  43. 43.

    For a more detailed discussion on the market failure of excessive transaction costs see Sect. 2.3.2.3.

  44. 44.

    Schroff, Favale, and Bertoni, “Impossible Quest,” 289.

  45. 45.

    Cf. Art. 31 (1) OWD.

  46. 46.

    See van Zimmeren et al., “Clearing House for Diagnostic Testing,” 355. Provided that the market failure of royalty-stacking is empirically verifiable. For a critical discussion, see Sect. 2.3.2.8.

  47. 47.

    See van Zimmeren et al., “Clearing House for Diagnostic Testing,” 355–356. This royalty cap should be determined case-specifically, on the basis of estimates of the patents incorporated in a follow-on innovation and data on the licensing rates within the relevant sectors.

  48. 48.

    See Aoki and Schiff, “Promoting Access to Intellectual Property,” 199–200.

  49. 49.

    See Graff and Zilberman, “Clearinghouse for Agricultural Biotechnology,” 6 on mediation services offered by clearing houses.

  50. 50.

    For a more detailed discussion on the dynamic incentive theory, see Sects. 2.1.62.1.7.

  51. 51.

    For a more detailed discussion on dynamic incentive theory as a normative basis for justifying a compulsory liability rule, see Sects. 2.1.6 and 4.3.2.

  52. 52.

    Keßler, “Preamble,” 67. It is even possible to consider the Preamble’s term “impediment” as covering “trade restrictions by private restrictive practices” ibid.

  53. 53.

    Yusuf, “TRIPS,” 12.

  54. 54.

    Rodrigues Jr, The General Exception Clauses of the TRIPS Agreement, 43.

  55. 55.

    Keßler, “Article 7,” 181.

  56. 56.

    Yusuf, “TRIPS,” 13.

  57. 57.

    Keßler, “Article 7,” 182.

  58. 58.

    Article 7 TRIPS states that “the protection and enforcement of intellectual property rights should contribute […] to the transfer and dissemination of technology”.

  59. 59.

    Keßler, “Article 7”, 182–183. In addition, the passage also covers the objective of international technology transfer. Ibid, 182–183.

  60. 60.

    Käseberg appears to consider the term “dissemination” alone as sufficing to acknowledge cumulative innovation. Käseberg, Intellectual Property, 255, fn 234.

  61. 61.

    See Hilty, “Economic, Legal and Social Impacts of Counterfeiting.” 16. See also Sect. 1.1.

  62. 62.

    The words “to a balance of rights and obligations” have been viewed as representing the codification of an “intellectual property bargain”. Yusuf, “TRIPS,” 13.

  63. 63.

    See also Correa, who considers that the “mutual advantage”, “social and economic welfare”, and “balance of rights and obligations” of Art. 7 TRIPS “mean that the recognition and enforcement of intellectual property rights are subject to higher social values and, in particular, that a balance needs to be found with the users of technological knowledge.” Carlos M. Correa, “Patent Rights 2008,” 246. From a more competition-driven perspective, Ricolfi considers “users of technological knowledge” as referring both to “current users and future innovators”, arguing that their interests would need to be balanced with those of “incumbent’ IP holders” in “a manner conducive of social and economic welfare”. Marco Ricolfi, “Is There an Antitrust Antidote Againts IP Overprotection within TRIPS?,” Marquette The Intellectual Property Law Review 10, no. 2 (2006): 324, 326–328.

  64. 64.

    Ricolfi, “Is There an Antitrust Antidote Againts IP Overprotection within TRIPS,” 324, 326–328. Such a view also exceeds and expands traditional accounts of the developmental interests of developing countries under TRIPS, which typically addresses only the transfer of technology, and not the general “competitive openness in downstream innovation markets”. Ibid, 327–328.

  65. 65.

    For a detailed discussion on dynamic incentive theory, see Sects. 2.1.62.1.7.

  66. 66.

    See Lamping et al., “Declaration on Patent Protection,” 688.

  67. 67.

    Article 5 A (2) PC justifies the enactment of compulsory licenses “to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent”.

  68. 68.

    Bakhoum and Conde Gallego, “TRIPS and Competition Rules,” 548.

  69. 69.

    Ibid, 551.

  70. 70.

    Keßler, “Preamble,” 67.

  71. 71.

    Ibid.

  72. 72.

    Gervais, TRIPS Agreement, 2.125. According to Yusuf, Art. 8 (2) TRIPS refers to a wider range of abuses than those considered anti-competitive, including failure to work. Yusuf, “TRIPS,” 15. Cf. Jerome H. Reichman, “Universal Minimum Standards of Intellectual Property Protection under the TRIPS Component of the WTO Agreement,” 34, who emphasizes that, in the US, the concept of abuse is traditionally understood to concern only antitrust issues.

  73. 73.

    Heinemann, “Antitrust Law of Intellectual Property,” 243; Bakhoum and Conde Gallego, “TRIPS and Competition Rules,” 553.

  74. 74.

    Andrés Moncayo von Hase, “Application and Interpretation of the Agreement on Trade-Related Aspects of Intellectual Property Rights,” in Intellectual Property and International Trade: The TRIPS Agreement, ed. Carlos M. Correa and Abdulqawi A. Yusuf (Alphen aan den Rijn: Kluwer Law International, 2008), 117, 119.

  75. 75.

    Lamping et al., “Declaration on Patent Protection,” 683. Cf. Canada Pharmaceuticals, para 6.93. However, even when following a wider interpretation of Art. 27 (1) TRIPS, a general compulsory license against suppression of innovation that does not target any specific technological field does not contradict the principle of non-discrimination.

  76. 76.

    For a more detailed discussion on the topic, see Sect. 6.4.5.

  77. 77.

    See Areeda and Hovenkamp, Antitrust Law, X, at 1782g and fn 204, discussing the problem of applying a misuse defence to royalty stacking. While royalty stacking, as a phenomenon, may fall into the category of a practice that unreasonably restrains trade (Art. 8 (2) TRIPS), the threshold for meeting the qualification of unreasonableness is rather high when taking into account that the empirical evidence for the phenomenon of royalty-stacking is controversial. For more detailed discussion on the empirical inconclusiveness of royalty-stacking, see Sect. 2.3.2.8.

  78. 78.

    For example, member states may seek to resolve problems of underuse or royalty stacking by means of compulsory licensing or an imposition of an exception in order to promote the public interest in sectors that are of vital importance to their technological development (Art. 8 (1) TRIPS).

  79. 79.

    For a more detailed discussion on hold-up problems, see Sect. 2.3.2.7.

  80. 80.

    Picht, “From Transfer of Technology,” 517.

  81. 81.

    Art. 31 (l) TRIPS seeks to limit compulsory licenses for dependent patents with overlapping claims to situations in which the second patent represents an important technical advance that is of considerable economic significance. The provision is motivated a desire to preclude compulsory licenses for purely imitative use in the one-patent-per-product context, not to bar compulsory liability rules for follow-on innovations, which, by default, are not imitative.

  82. 82.

    In principle, Art. 40 TRIPS may also allow member states to employ a compulsory liability rule against refusals to license. See Correa, “Patent Rights 2016,” 317; UNCTAD-ICTSD, Resource Book on TRIPS and Development, 556. Cf. de Carvalho, TRIPS Regime of Antitrust and Undisclosed Information, 162; de Carvalho TRIPS Regime of Patent Rights, 436; Beatriz Conde Gallego, “Intellectual Property Rights and Competition Policy,” in Research Handbook on the Protection of Intellectual Property under WTO Rules, ed. Carlos M. Correa (Cheltenham: Edward Elgar Publishing, 2010), 240–241. Furthermore, Picht observes that Art. 28 (1) TRIPS can potentially be interpreted as serving as grounds for access to FRAND-encumbered SEPs. Picht, “From Transfer of Technology,” 525.

  83. 83.

    See Ohly, “Three Principles of European IP Enforcement Law,” 258, 266; Walz, “Patentverletzungsklagen im Lichte des Kartellrechts,” 727–728, 731; Hilty, “Legal Remedies,” 391; European Commission, “EU approach to SEPs,” para 3.2.

  84. 84.

    Ohly, “Three Principles of European IP Enforcement Law,” 258, 266; European Commission, “EU approach to SEPs,” para 3.2. On the principle of proportionality in the interpretation of UPCA, see Marfé et al., “Power of National Courts and the Unified Patent Court to Grant Injunctions,” 187–188.

  85. 85.

    See Marfé et al., “Power of National Courts and the Unified Patent Court to Grant Injunctions,” 181; Hilty, Role of Enforcement in Delineating the Scope of IP Rights, 17.

  86. 86.

    See Marfé et al., “Power of National Courts and the Unified Patent Court to Grant Injunctions,” 188; see Sect. 7.5.5.

  87. 87.

    See Hilty, “Legal Remedies,” 388; Marfé et al., “Power of National Courts and the Unified Patent Court to Grant Injunctions,” 181.

  88. 88.

    See Smith Kline and French Laboratories Ltd v. The Netherlands (dec.), no. 12633/87, (4 October 1990); Helfer, “New Innovation Frontier?,” 73–74 and fn 219.

  89. 89.

    Case C-275/06, Productores de Música de España (Promusicae) v. Telefónica de España SAU, 2008 E.C.R. I-271, paras 62-68; Case C-70/10, Scarlet Extended SA v. Société belge des auteurs, compositeurs et éditeurs SCRL (SABAM), 2011 E.C.R. I-11959, paras 43–46.

  90. 90.

    Mylly considers CJEU’s case law to be significantly more expansive with respect to the protection of IP as a fundamental right than the ECHR’s line of interpretation, because it “fill[s] in gaps in European IP law […] secure[s] the primacy of supranational IP norms in the legal order of member in question. [… ] It also purports to secure the primacy of its substantive IP interpretations at the Member State level”, Mylly, “Constitutionalization of the European Legal Order,” 119–120. Griffiths considers the CJEU’s readiness to refer to Art. 17(2) CFR in copyright cases as reflecting a desire for further harmonization, rather than an interest in securing fundamental rights. Jonathan Griffiths, “Constitutionalising or Harmonizing? The Court of Justice, the Right to Property and European Copyright Law,” European Law Review 38, no. 1 (2013), 65, 75–78.

  91. 91.

    Case C-170/13, Huawei, 5 C.M.L.R. 14 (2015), para 57.

  92. 92.

    Ibid, paras 58–59.

  93. 93.

    See Case T-111/96, ITT Promedia NV v. Commission, 1998 E.C.R, II-2937, paras 55, 60; Case T-199/09, Protégé International Ltd v. Commission, 2012 O.J. (C319) 6, paras 48–49; Henningsson, “Injunctions for Standard Essential Patents under FRAND Commitment,” 441–442.

  94. 94.

    See Anheuser-Busch Inc. v. Portugal [GC], no. 73049/01 (11 January 2007), para 83; Helfer, ‘New Innovation Frontier?,” 61, 84.

  95. 95.

    The CJEU has stressed the primacy of primary and secondary legislation on IP over the flexibilities of international law, see Case C-277/10, Luksan v. Petrus Van Der Let, 2012 O.J. (C80) 4, paras 62-64. For criticism of this approach, see Henning Grosse Ruse-Khan, “Overlaps and Conflict Norms in Human Rights Law : Approaches of European Courts to Address Intersections with Intellectual Property Rights,” in Research Handbook on Human Rights and Intellectual Property, ed. Christophe Geiger (Cheltenham: Edward Elgar Publishing, 2015), 76–78, 88.

  96. 96.

    For a more detailed discussion on the implications of the CJEU’s interpretation see Sects. 8.7.3.18.7.3.2.

  97. 97.

    See Art. 13 TRIPS. However, trademarks cannot be subject to compulsory licenses in the first place (Art. 21 TRIPS).

  98. 98.

    See TTBER Guidelines (2014), para 8; Guidance on the Commission’s Enforcement Priorities in Applying Article 82 of the EC Treaty, para 75.

  99. 99.

    Mylly, “Constitutionalization of the European Legal Order,” 126–130.

  100. 100.

    See Jonathan Griffiths, “Enforcement of Intellectual Property Rights and the Right to a Fair Trial,” Research Handbook on Human Rights and Intellectual Property, ed. Christophe Geiger (Cheltenham: Edward Elgar Publishing, 2015), 454.

  101. 101.

    Tuomas Mylly, “Constitutionalization of the European Legal Order,” 126–130.

  102. 102.

    Case C-70/10, Scarlet Extended, 2011 E.C.R. I-11959, para 43.

  103. 103.

    See Smith Kline and French Laboratories Ltd v. The Netherlands (dec.), no. 12633/87, (4 October 1990).

  104. 104.

    Case C-275/06, Promusicae, 2008 E.C.R. I-271, para 70.

  105. 105.

    See Mylly, “Constitutionalization of the European Legal Order,” 104, 128.

  106. 106.

    In the context of IP law, the human rights to property and the right to conduct business are not isolated sources of justice that enlighten economic analysis of the law but legal instruments, which may create overprotection problems in the same manner as subordinate norms. See Sect. 1.5 on methodology for further discussion.

  107. 107.

    See Art. 12 Biotechnology Directive; Regulation 816/2006; rec. 10 Regulation 1257/2012.

  108. 108.

    de Carvalho, TRIPS Regime of Antitrust and Undisclosed Information, 110.

  109. 109.

    Ullrich, “Mandatory Licensing under Patent Law and Competition Law,” 371–372.

  110. 110.

    de Carvalho, TRIPS Regime of Antitrust and Undisclosed Information, 110.

  111. 111.

    See Ricolfi, “Is There an Antitrust Antidote Againts IP Overprotection within TRIPS?” 324, 326–328 337-340; Bakhoum and Conde Gallego, “TRIPS and Competition Rules,” 530, 537–539, 547–552, 556.

  112. 112.

    See Peter Picht, “From Transfer of Technology to Innovation through Access,” 518.

  113. 113.

    Hilty, Role of Enforcement in Delineating the Scope of IP Rights, 10.

  114. 114.

    See Sect. 9.1.3.

  115. 115.

    See Hilty, “Legal Remedies,” 381; Hilty, “Economic, Legal and Social Impacts of Counterfeiting,” 15.

  116. 116.

    The quality of a competitive relationship is addressed in the context of finding of irreparable harm, the first criterion of eBay. Takenaka et al., Patent Enforcement in the US, Germany and Japan, 13.08; Chisum, Chisum on Patents, 7, § 20.04[2][c][iv][A]. The standard essentiality of a patent is relevant in the finding of disproportionality of hardships, the third criterion of eBay, see Hynix v. Rambus, 609 F.Supp.2d 951, 984–985.

  117. 117.

    Drexl, “Immaterialgüterrechte,” 49–50.

  118. 118.

    See Sect. 8.8.1.4.

  119. 119.

    Kur and Schovsbo, Expropriation or Fair Game for All?, 6.

  120. 120.

    Lin, “Prior Negotiation and Remuneration for Patent Compulsory Licensing,” 178.

  121. 121.

    Lamping et al., “Declaration on Patent Protection” 689. Lin has identified the Patent Law of Israel as an example of legislation in which an anti-competitive practice was defined on the basis of patent law. Lin, “Prior Negotiation and Remuneration for Patent Compulsory Licensing,” 178–179, discussing Art. 119 of the Patent Law of Israel prior to its amendment in 1999. Article 119 of the Patents Law of Israel, which regulates compulsory licenses, combines the language of antirust with the concept of abusiveness nested in patent law. See Patents Law 5727-1967 Art 119, as consolidated 2014. (Isr.). https://www.wipo.int/edocs/lexdocs/laws/en/il/il040en.pdf; Lin, “Prior Negotiation and Remuneration for Patent Compulsory Licensing,” 179.

  122. 122.

    By enacting a compulsory license under patent law, the EU member states may also escape the CJEU’s restrictive interpretation on the possibilities to interfere with a patent holders right to IP (Art. 17 (2) CFR) and right to effective remedy and fair trial (Art. 47 CFR) on the grounds of competition law, see Sect. 9.4.3.2.

  123. 123.

    Lamping et al., “Declaration on Patent Protection,” 689.

  124. 124.

    However, legislators may also choose to enact the instrument in a manner that excludes FRAND-encumbered SEPs, provided that they are subject to a distinct compulsory liability rule such as Huawei’s negotiation framework. Upon taking such decision, the legislators, however, should take into consideration the legal uncertainty faced by a follow-on innovator, who may have to rely on several compulsory liability rules if she faces multiple overprotection problems. For a more detailed discussion see Sects. 8.8.1.3 and 9.1.2.

  125. 125.

    See Strandburg, “Users as Innovators,” 505–540; Lukaszewicz, “Patent Use Exception for User-Generated Inventions,” 214–217.

  126. 126.

    For a more detailed discussion on different types of follow-on innovations, see Sect. 2.2.4.

  127. 127.

    However, in situations in which a follow-on innovator’s own patent claims overlap with those of the patent holder’s patent, the appropriate instrument would be the compulsory license for dependent patents (Art. 31 (l) TRIPS). See also Ullrich, “Mandatory Licensing under Patent Law and Competition Law,” 339, 341–342.

  128. 128.

    See also Lamping et al., “Declaration on Patent Protection,” 683.

  129. 129.

    A patent holder may, for example, seek to enter the market for the follow-on innovation with the benefit of the patent. In such situations, the awarding of a compulsory license would amount to an underprotection problem.

  130. 130.

    For a more detailed discussion on offensive practices, see Sect. 2.3.1.1.

  131. 131.

    See Sect. 2.3.2.5.

  132. 132.

    See for example: Farrell et al., “Standard Setting, Patents, and Hold-Up,” 615.

  133. 133.

    The synergies of the instruments could be further enhanced via more systematic collection of anonymised data on licensing rates across different industries. The experience of personnel, in combination with clearing house data on voluntarily agreed-upon licenses and potential future machine-learning applications, would allow for increasingly precise determination of licensing rates, with decreased risk of both under- and overcompensation. The availability of points of comparison through analysis of licensing data would be particularly helpful for the purposes of determining FRAND rates for de jure SEPs. It is important that commercially valuable information, such as business secrets concerning innovations that are still under development and licensing rates, is protected during proceedings as confidential information. The level and quality of the protection of confidential information should foster parties’ trust in the instrument.

  134. 134.

    Kung-Chung Liu, “Need and Justification for a General Competition-Oriented Compulsory Licensing Regime,” IIC - International Review of Intellectual Property and Competition Law 43, no. 6 (2012): 699.

  135. 135.

    See Rochelle Cooper Dreyfuss, “Federal Circuit : Case Study in Specialized Courts,” New York University Law Review 64, no. 1 (1989), 26–30.

  136. 136.

    Or other patent holders which are empirically proved to be vulnerable to hold-outs.

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Wernick, A. (2021). Normative Recommendation. In: Mechanisms to Enable Follow-On Innovation. Munich Studies on Innovation and Competition, vol 15. Springer, Cham. https://doi.org/10.1007/978-3-030-72257-9_9

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