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Interview with Josef Drexl: "Standard setting organizations and processes: Challenges and opportunities for competition and innovation"

Concurrences Review

Monday, June 15, 2015 from 8:30 AM to 7:00 PM (CEST)

Interview with Josef Drexl: "Standard setting...

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New Frontiers of Antitrust 2015



Standard setting organisations and process:

Challenges and opportunities for competition and innovation


Interview with Josef Drexl

The New Frontiers of antitrust conference will be held on June 15, 2015 at Ministry of Economics, Paris. Jorge Padilla — Economist, Senior Managing Director, Compass Lexecon — has interviewed Josef Drexl — Professor, Max Planck Institute — who will participate in the panel discussion: "Standard setting organizations and processes: Challenges and opportunities for competition and innovation". Other panel speakers include: Sangwoo KIM – Samsung – and James Killick – White & Case.


Read the full interview below and register for the conference here.

Jorge Padilla:  What is the meaning of Frand in your opinion?

Josef Drexl:  The commitment of holders of standard-essential patents (SEPs) to FRAND (fair-reasonable and non-discriminatory) licensing terms is designed to enhance the implementation of a technological standard fixed by a standard-setting organization (SSO) by controlling the royalty rates charged by the patent holders. However, SSOs that require SEP holders to commit to FRAND terms usually refrain from bringing more precision to what FRAND actually means. Hence, the licensing parties still have to negotiate the royalty rates for the individual case. Whether SSOs could bring more precision to the concept of FRAND still needs to be debated. But it is also clear that SSOs cannot foresee all the products in which the technology may be implemented in the future. Hence, the parties are in need of flexibility, and, therefore, the policy question rather is how the law can positively influence the bargaining situation to create appropriate incentives for the parties both to enhance access to the standard and guarantee fair remuneration to the SEP holder.

Jorge Padilla:  Do you believe antitrust authorities should involve themselves in Frand licensing disputes? To what extent?

Josef Drexl: Competition law may not be the only field of law that can be applied to FRAND disputes. In the US, patent law itself makes it possible to deny injunctive relief to the patent holder where such relief conflicts with the public interest. Also contract law and unfair competition law can offer remedies. In contrast, in the EU, national patent laws still coexist and are only partially harmonized. Contract law and unfair competition law in B2B relationships is not harmonized at all to the extent that the conduct of SEP owners is concerned. Hence, EU competition law as a unitary legal regime constitutes the only EU-wide legal instrument for creating a regulatory framework for standard-setting and control of hold-up situations in which SEP holders try to generate excessive royalty rates. Yet it is another question whether competition law authorities themselves should set appropriate royalty rates. What is more important is that competition law provides a procedural framework both for the standard-setting process and the negotiations of the parties to facilitate FRAND licensing.    

Jorge Padilla:  Is there any reason to believe that patent trolls are undermining the development of the smartphone industry?

Josef Drexl:
The phenomenon of “patent trolls” is more of an immediate concern in the US than in the EU, at least for the time being. Also, the term of “patent trolls” is not very well defined and should better be avoided. Other terms that are nowadays used in this context are “non-practicing entities” or “patent assertion entities”. What is more important than the terminology is to understand the incentives of SEP holders to charge non-FRAND compliant royalty rates. In the telecommunication sector, disputes have mostly arisen so far between close competitors in the smartphone market (e.g., between Samsung and Apple) or producers of mobile phone infrastructure devices (e.g., between Huawei and ZTE). Hence, in most of the FRAND cases, the plaintiff was also active in the downstream market as manufacturers of goods in which the standard was implemented, and can therefore not be understood as “non-practicing entities”. Hence, the debate on FRAND licensing only overlaps to a certain extent with that of patent trolls, but the two issues should not be confused with each other.

Jorge Padilla:   Could trolls help small developers to monetise their inventions?

Josef Drexl:
Also in this context, the term of “trolls” is not very helpful. What is true, however, there are nowadays many entities that act as intermediaries between firms that have developed new technologies and those that seek access to technologies. Such intermediaries, from an economic perspective, play a very useful role as agents, patent aggregation entities, etc. Quite frequently, smaller research entities are very good in developing new technology, but they may not be very good in implementing that technology in new products and in marketing such products. Hence, it is important that they can sell their patents to other entities in order to monetize their inventions. Again, the problem here is to distinguish between economically efficient use of patents by intermediaries on the one hand and anti-competitive use of patents on the other. In this regard, the term of “trolls” is only a label which can hardly guide the application the law against anti-competitive use of patents by intermediaries.


Jorge Padilla:   Do you believe patent hold out is a problem? If so, aren't recent decisions limiting the right to seek injunctions likely to exacerbate it?

Josef Drexl: 
The most recent debate concentrates on patent hold-up and not patent hold-out. There is a potential threat that also patent hold-out occurs, namely, namely in the sense that firms simply use SEPs without even requesting a license. In this regard, however, firms would take major risk, since such conduct would require major investment in the production of products (e.g., sunk costs), that could go lost if they later on have to face injunctions from the patent holders. The question of whether there is more a risk of a patent hold-up or a patent hold-out can only be answered against the backdrop of the specific jurisdiction. In Germany, for instance, patent infringement courts more recently have not fully understood the hold-up problem in FRAND cases, and made it too difficult for the petitioners for a SEP licence to get access to the use of the patent. It is therefore hoped that in the Huawei referral case, which is currently pending before the CJEU, the Court will reach a better balance between the two challenges. What should however be required from the petitioner of the licence is to approach the SEP holder on his or her own initiative and show his or her willingness to negotiate a licence.

For the complete agenda of the conference and the list of the keynote speakers, visit:

Have questions about Interview with Josef Drexl: "Standard setting organizations and processes: Challenges and opportunities for competition and innovation"? Contact Concurrences Review

When & Where

Ministry of Economics
139 rue de Bercy, Paris | M° Bercy
75012 Paris

Monday, June 15, 2015 from 8:30 AM to 7:00 PM (CEST)

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Concurrences Review

The Paris “New Frontiers of Antitrust” conference is a unique occasion to network with some of today’s most influential global leaders in competition law. This conference, held each year in Paris since 2009, now ranks first among the European antitrust independent events in terms of venue, press reports and audience. The 2019 Steering Committee, headed by Frédéric Jenny, includes Prof. Laurence Idot, Prof. Nicolas Petit and Nicolas Charbit.

All tariffs include breakfast, coffee, lunch and cocktail reception. Conference credited for the Paris Bar continuing legal education. Governmental agencies and academics registrations must be sent with valid proof. Languages: English - French (translation). Limited places available due to the conference venue. Payment must be received prior to the conference. There will be no refund after 29 April 2019. Cancellations must be received in writing; cancellations received in writing up to 2 weeks before the conference will receive a refund less 15 %. Substitute delegates are welcome at any time. Photos will be taken at the event; attendees agree for the organizer to use these photos, unless otherwise required in writing. This event is organised by Concurrences Review and is co-sponsored by legal, economic and media partners.

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