“SEP dedication is advanced and too usually topic to systematic bias…. Cleaned and curated patent declaration knowledge can function one reference level amongst others… [but] such proof should be completely evaluated to make correct assumptions concerning the essentiality, worth and market share of a given SEP portfolio.”
When licensing commonplace important patents (SEPs), the SEP licensor and the usual implementer (also called the SEP licensee), undergo two phases of negotiation. The primary section is the technical section, adopted by the second section, the industrial dialogue. Within the technical section, the SEP licensor should present proof that a minimum of one patent of its portfolio is legitimate and commonplace important. That is finished by offering rigorously performed declare charts that map claims towards the usual’s sections, offering proof that every one declare parts learn on the technical commonplace specification. Sometimes, only some declare charts are wanted on this first technical section, since just one patent should be legitimate and important to make the case that the usual implementing social gathering is infringing.
The second section, the industrial dialogue, is rather more advanced. Right here, the SEP proprietor should present proof of the worth of its SEP portfolio for a given commonplace supporting why the proposed royalty charge is FRAND (truthful cheap and non- discriminatory). SEPs are usually not licensed individually, and license agreements sometimes by no means checklist all patents lined by the SEP license. As an alternative, SEP proprietor draft contracts that assure entry to all patents legitimate and important for a given commonplace, together with patents but pending and together with patents filed sooner or later till the expiration of the SEP license settlement. For bigger SEP portfolios, SEP house owners will due to this fact not present declare charts for each patent.
Self-Declared Patent Databases
ETSI gives in depth databases encompassing patents associated to 3G, 4G, or 5G applied sciences, serving as a complete repository of doubtless important patents. Nevertheless, the patents listed in ETSI’s declared patents checklist are all self-declared. In different phrases, neither the SEP proprietor nor ETSI, nor any third social gathering, conducts an evaluation to confirm whether or not the listed patents are commonplace important and legitimate. Consequently, there are not any declare charts obtainable within the database. A number of research evaluating 3G and 4G patents (e.g. Goodman and Myers, 2006), Fairfield Resources, 2007) have concluded that solely about 20-30% of the declared patents within the ETSI database are important and the essentiality charge for 5G is predicted to be 44as low as 10-15% (e.g. M Noble, J Mutimear, R Vary, 2019) or T Pohlmann, M Buggenhagen and M Richter, 2023). Figuring out the essentiality of declared patent portfolios requires assessing each the SEP proprietor’s portfolio (numerator) and the general variety of SEPs (denominator), as illustrated in Determine 1 for the instance of 5G. Nevertheless, contemplating there are round 45,000 declared and granted patent households solely for 5G, it turns into unfeasible to worth and decide the essentiality of all declared patents.
In different phrases, creating declare charts for all patents to find out their essentiality for the denominator is economically unfeasible for many requirements like 4G, 5G, Wi-Fi or HEVC/VVC. Rigorous declare charts are too costly and time consuming to supply.
How Costly are Rigorous Declare Charts?
In a lately printed examine (Economic impact assessment on Standard Essential Patents, EU Commission, 2023) the authors interviewed subject material specialists from the US, Europe and India about the price and time wanted for various rigorous ranges of SEP declare charting. The recognized specialists supplied common time and price estimates.
Earlier than massive budgets are spent on rigorous declare charting, some firms might also make use of specialists to do a primary “mild” SEP dedication. Throughout this preliminary analysis, specialists solely have a mean of half-hour to find out if a patent’s claims are doubtlessly mappable to a requirements part.
The examine’s authors outlined totally different ranges of rigor for declare charting and supplied common time and price estimates for every degree, as reported by the interviewed specialists. The specialists assumed that rigorous declare charting begins on the degree D (see desk 1 and a couple of). As to this definition, rigorous declare charting ranges begin from a mean price of 4,159€ going as excessive as 7,860€ (from degree D to degree G) for only one single patent, which is commonly only a consultant of a globally filed patent household. Contemplating the 45,000 5G declared patent households which can be lively and granted in a minimum of one worldwide jurisdiction, the price to assert chart all of them can be round 187 and 358 million Euros, which is equal to USD 200-378 million. That is the finances wanted to determine the denominator for under 5G patents (determine 1).
Desk 1: Common hourly charges x averages hours wanted (Desk 2) for various declare charting rigorous ranges (Economic impact assessment on Standard Essential Patents, EU Commission, 2023)
Not solely are the prices for declare charting excessive, however the hours of professional work wanted are extraordinary. If we have a look at Desk 2 and contemplate rigorous degree D to G, we assume for one patent we would wish one professional to spend sooner or later for degree D and as much as 2 days for rigorous degree G. 1-2 days per patent can be 45,000 days to 90,000 days for all granted and lively 5G patents which is 123 to 246 years. To say chart all these patents inside a 12 months we would wish a bunch of 123 to 246 specialists. Discovering impartial specialists with out vested pursuits is a key problem in FRAND dedication instances for negotiating events and native courts.
Desk 2: Common wanted for various declare charting rigorous ranges (Economic impact assessment on Standard Essential Patents, EU Commission, 2023)
SEP Declare Chart Sampling
Declare charting each patent is economically not possible. Financial analysis gives proof that consultant samples of declare charts representing a fraction of all patents are as correct as declare charting each patent. Nevertheless, the problem is that the pattern measurement should be sufficiently big.
Sampling just isn’t concerning the share however concerning the precise quantity of pattern knowledge. There are some easy mathematical guidelines to begin with. Most statisticians agree that the minimal pattern measurement to get any type of significant result’s 100 (Fisher, Ronald Aylmer. “Theory of statistical estimation.”, 2008). In different phrases, for the essentiality dedication of declared patents, portfolios of patents smaller than 100 patent households will want declare charts for every single patent and sampling just isn’t attainable.
A ample most pattern measurement is round 10% of the inhabitants, so long as this doesn’t exceed 1,000. For instance, in a inhabitants of 5,000, 10% can be 500. In a inhabitants of 200,000, 10% can be 20,000. This exceeds 1,000, so for 200,000, a pattern of 1,000 is ample. In different phrases, the utmost pattern measurement for figuring out the essentiality of a patent portfolio or an entire SEP panorama should not be bigger than 1,000 (Schönbrodt, D., M. Perugini. “At what sample size do correlations stabilize?”, 2013).
In a extra detailed and granular evaluation, the pattern measurement of declare charts wanted for a given declared patent portfolio exhibits that the pattern measurement additionally depends upon the essentiality charge (Mallinson, Keith, Essentiality Checks Might Foster SEP Licensing, 2022). To simplify the instance, right here we follow the straightforward rule of a minimal pattern of 100 and a pattern of a minimum of 10% till a most pattern of 1,000. Let’s use the state of affairs of firms with 5G patent portfolios the place we observe about 45,000 declared lively and granted patent households (primarily based on the INPADOC household definition with households granted in a minimum of one worldwide jurisdiction). Right here the highest 13 5G patent house owners have declared greater than 1,000 patent households (granted in a minimum of one worldwide jurisdiction) and for these portfolios, we would wish to assert chart 10% randomly chosen patents to have a sufficiently big pattern measurement which leads to about 4,000 patents. These firms characterize about 35,000 declared patent households. For the remaining SEP portfolios nevertheless, we should declare chart at all times a minimum of 100 patents, as a result of the portfolios are under 1,000 patent households. Following this rule, the info exhibits we might want to chart one other 8,700 patents to cowl smaller portfolios contemplating solely the highest 100 5G patent proprietor.
In abstract, we would wish declare charts for 4,000 (massive portfolios) + 8,700 (small portfolios) = 12,700 patent households representing 28,2% of all declared lively and granted 5G patent households, assuming we at all times declare chart just one household consultant. Whereas knowledge sampling is statistically confirmed to be an correct consultant of a bigger inhabitants, following the mathematical guidelines of sampling exhibits that figuring out samples for the 5G portfolios of the highest 100 would nearly require declare charting of 1/4 of all of the declared patent households. Prices and time wanted would nonetheless be very excessive. To rule out any systematic bias when sampling declare charts, the patent choice should be actually random. Additionally, a pattern is just a consultant of the inhabitants on the time when the evaluation was performed. For the reason that knowledge on patent declarations is consistently altering, samples must be up to date and maintained which is once more expensive and time consuming.
Systematic Bias of Charting Errors
Declare charts differ in high quality and accuracy. As described in tables 1 and a couple of, most specialists would solely contemplate rigorous degree D to G to characterize precise declare charts. However declare mapping or precise charting just isn’t solely about accuracy, it’s additionally a few systematic bias.
Allow us to assume that the subject material professional who conducts the declare chart is impartial with no prior data of the patent proprietor, and assuming that the charting of any patent is completed in a double-blind course of involving two specialists with totally different backgrounds and work experiences. In such an instance, we will rule out the human bias (to a sure extent). Nevertheless, if declare charts are usually not rigorous (not a minimum of degree D and even increased as to desk 1 and a couple of), declare mapping outcomes of a “mild” SEP dedication of solely 20 minutes have proven that patent mapping sometimes over-identifies essentiality. In different phrases, the variety of false positives (patents that aren’t important however wrongly recognized as important) is bigger than the variety of false negatives (patents which can be important however wrongly recognized as not important).
In TCL v. Ericsson, a random pattern of 3G and 4G declared patents was mapped by specialists who spent on common solely about 20 minutes per patent. Afterwards, a second professional checked out a few of the mapped patents in a extra rigorous strategy. The outcomes confirmed that the variety of false positives was a lot increased than the variety of false negatives.
The 2020 printed EU examine (Pilot study for essentiality assessment of Standard Essential Patents, 2020) investigated the technical and institutional feasibility of a system that ensures higher essentiality scrutiny for SEPs. Right here, a technical feasibility was assessed in a pilot experiment, wherein quite a lot of assessors (amongst others patent examiners from the patent workplaces) evaluated patents for his or her precise essentiality. Additionally, on this examine the variety of false positives was bigger than the variety of false negatives. To a topic professional, these outcomes are usually not shocking. Lacking a patent that’s important, even when solely checked out for a couple of minutes, just isn’t tough and errors are much less possible. Nevertheless, figuring out actually important patents the place all declare parts could be mapped to requirements part and thus confirming a patent as actually important for any implementation is rather more advanced and nearly not possible when solely mapping declare in 20 minutes.
However what’s the drawback with false positives? Even when the entire declare charting course of is impartial, a excessive variety of false optimistic errors in declare charting, whether or not that be samples or declare charting all patents, will at all times profit firms with decrease essentiality charges in comparison with firms with increased essentiality charges. The acute instance is an organization that solely declares important patents, in comparison with an organization that declares patents which can be important at a charge of 5%. Whereas the corporate that solely declares important patents just isn’t influenced by false positives, the corporate with solely 5% will enhance its essentiality charge with false positives. The instance additionally works when the essentiality charge just isn’t at 100% however simply increased in comparison with one other declared portfolio. The one option to cut back this systematic declare charting bias is to make sure rigorous declare charting, in order that, to a sure extent, false positives are as possible as false negatives.
A Advanced Course of
SEP dedication is advanced and too usually topic to systematic bias. When utilizing declared patents, rankings of declared patents or some type of essentiality dedication, it is very important concentrate on the bias and knowledge limitations when figuring out the worth and share of an SEP proprietor’s portfolios available in the market. SEP licensing includes advanced negotiations. Cleaned and curated patent declaration knowledge can function one reference level amongst others, together with particulars on declare charts, previous contracts, comparable license agreements, subject material professional testimony and extra. Such proof should be completely evaluated to make correct assumptions concerning the essentiality, worth and market share of a given SEP portfolio.
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