Standard Essential Patents (SEPs)

What are Standard Essential Patents?

Standard Essential Patents (SEPs) are issued patents that protect an invention that has been declared essential for the implementation of a technical standard in specific industries. SEPs set standards aimed to ensure the safety, interoperability, and compatibility of different products and services offered by various businesses in the same or a similar industry. Interoperability standards allow the seamless connectivity of every day actions such as connecting to Wifi in a cafe, plugging a charger into an outlet, or making a call on a mobile phone.

Essential patents cover inventions and innovations that are imperative to a technical standard. For a patent to be considered essential, it must be impossible to comply with the standard without the use of the patented technology. Design patents are typically not standard essential patents as alternative styles can be created that do not infringe on the patented design.

The concept of essential patents emerged as industries particularly driven by advancement in innovation began to develop standardized technologies. Administrations, referred to as Standard-Setting Organizations (SSOs), were established to develop, promote, and enforce industry standards nationally and internationally. SSOs play a pivotal role in determining the essentiality of a patent. It is common for these SSOs to require applicants to disclose the patents considered essential to a standard during the development process.

Licensing and Enforcement

The licensing and enforcement of standard essential patents involve complex legal and business considerations.

FRAND Terms

The Fair, Reasonable, and Non-Discriminatory (FRAND) principles were created to serve as guidelines for the licensing of standard essential patents to ensure that patent holders do not abuse their market power by imposing excessive or unfair licensing terms. FRAND principles are crucial for licensing essential patents as they warrant patent holders receive fair compensation while allowing other companies to access the patented technology on reasonable terms. FRAND commitments are typically required of patent holders by SSOs as a condition for including a patent in a technical standard (making it an essential patent).

1. Fair: Licensing terms must be equitable and just, without placing unreasonable demands on the licensee.
2. Reasonable: Licensing terms should reflect the economic value of the technology, considering factors such as the contribution of the patent to the standard and the prevailing market conditions.
3. Non-Discriminatory: The patent holder must offer equivalent terms to all licensees without favoritism or bias, ensuring a level playing field.

In 2013, a U.S. court provided one of the first detailed interpretations of the FRAND principle of “Reasonable.” The ruling of the Microsoft Corp. v. Motorola, Inc. case highlighted the necessity of licensing standard essential patents in a manner that reflects the value of the patented technology in the context of the entire standard to constitute a reasonable royalty rate. Microsoft Corp. v. Motorola set a legal precedent for how FRAND royalty rates are determined and interpreted.

Patent Pools

Patent pools are collaborative agreements between two or more patent holders to license their patents to one another or to third parties as a package. Patent pools involving standard essential patents typically consist of a collection of SEPs related to a specific technology standard. Pools are managed by an independent entity that handles the licensing of the pooled essential patents to companies, effectively streamlining the licensing process. The independent entity serving as the pool administrator is not only responsible for granting licenses to third parties, but also collecting royalties and distributing them among the patent holders according to pre-agreed terms.

Litigation and Disputes

Legal disputes over essential patents often revolve around licensing terms, specifically the enforcement of FRAND commitments. When parties disagree over what constitutes fair and reasonable licensing terms, litigation is often necessary. A landmark case involving essential patents was Qualcomm V. Broadcom (2008) in which the company Broadcom sued another company Qualcomm for breaching FRAND terms related to patents essential to various wireless communication standards. The court ruled in favor of Broadcom, highlighting the legal enforceability of FRAND obligations and the importance of fair licensing practices.

Other legal disputes involving essential patents may arise if strategies referred to as a “patent hold-up” or a “patent hold-out” are being implemented. A patent hold-up occurs when patent holders exploit their market position by demanding excessive royalties after a standard has been widely adopted. This move leaves licensees little choice but to agree to the terms anyway because switching to a different technology would be too expensive. A patent hold-out occurs when a potential licensee delays negotiations or refuses to pay licensing fees, challenging the patent’s validity or the reasonableness of the royalty demands, likely leading to patent litigation.

Litigation and disputes involving essential patents often have to do with injunctions and exclusion orders against alleged infringers. An injunction is a court order that prevents the sale of the infringing products while an exclusion order blocks the importation of the infringing products. These two court orders are a contentious issue when it comes to essential patents, as some argue that their allowance can lead to an abuse of market power which is incompatible with FRAND obligations.

The 2015 ruling of the Huawei v. ZTE case provided crucial guidance on the conditions under which an injunction could be sought against an alleged infringer. This dispute centered on whether the company Huawei’s attempt to seek an injunction against the company ZTE for infringing its standard essential patents was compatible with its FRAND commitments. The European Court of Justice (ECJ) ruled that essential patent holders must follow defined steps before proceeding to seek an injunction. This would include making a clear and detailed licensing offer on FRAND terms and engaging in good faith negotiations. This ruling provided key guidance on the negotiation process for FRAND licenses.

Types of Technologies Covered by SEPs with Examples

SEPs embody a broad spectrum of technologies across numerous industries, crucial in sectors such as telecommunications, pharmaceuticals, and information technology, where standardization is necessary for widespread adoption and use.

Telecommunications

Standard essential patents in the sector of telecommunications ensure that devices and networks from different manufacturers can communicate seamlessly. This interoperability is vital for global telecommunication systems, which allows users to connect and interact from any device or service provider. For example, interoperability in telecommunication enables someone with the cell phone provider of Verizon to flawlessly communicate with someone with the cell phone provider of AT&T or someone on a tablet in Europe to flawlessly communicate with someone on a laptop in South America. Telecommunication SEPs predominantly focus on:

Examples of Telecommunications Standard Essential Patents

Qualcomm’s Patents on 3G, 4G, and 5G Technologies

The American company Qualcomm holds a vast patent portfolio of essential patents related to wireless communication standards such as CDMA (Code Division Multiple Access), LTE (Long-Term Evolution), and 5G NR (New Radio). These patents cover key technologies that are critical for mobile devices to connect to cellular networks. Qualcomm’s SEP on spread-spectrum communication used in CDMA (U.S. Patent No. 5103459) and power control in CDMA systems (U.S. Patent No. 5490165) were significant to the global adoption of 3G networks.

Qualcomm played a central role in the development of LTE, notably in the domain of OFDMA (Orthogonal Frequency-Division Multiple Access) and MIMO (Multiple Input Multiple Output) technologies. The company’s SEP on OFDMA technology (U.S. Patent No. 7509842) enhanced the efficiency of LTE networks while their SEP on MIMO technology (U.S. Patent No. 8380654) increased the capacity and reliability of LTE networks. They even hold a patent on their handover process in LTE networks (U.S. Patent No. 7949367) that enables the seamless interoperability of mobile devices between different networks.

The company continued with their technological advancement to birth the latest generation of mobile network technology: 5G. Qualcomm’s key SEPs involving 5G development focus on beamforming techniques (U.S. Patent No. 10015306), millimeter-wave (mmWave) communication (U.S. Patent No. 10254420), and network slicing (U.S. Patent No. 10414098).

Ericsson’s Patents on Fiber Optics

The Swedish company Ericsson holds an extensive patent portfolio of standard essential patents related to fixed-line communication technologies such as Digital Subscriber Lines (DSL) and fiber optics. These patents cover key technologies that are critical for high speed data transmission. Some of Ericsson’s key SEPs on fiber optic technology involve Wavelength Division Multiplexing (WDM) (U.S. Patent No. 5963329), Erbium-Doped Fiber Amplifiers (EDFAs) (U.S. Patent No. 6031650), and Optical Network Units (ONUs) (U.S. Patent No. 7263107). These technologies are essential in fixed-line communication as WDM maximizes the capacity of fiber optic networks, EDFAs are vital to maintain signal strength over long distance networks, and ONUs enable high-speed internet and data services over fiber optic networks.

Pharmaceuticals

Standard essential patents in the pharmaceutical industry ensure that vital drugs and medical treatments uphold global standards, allowing for consistent and effective healthcare across different regions of the world. This standardization is vital for the global health system, ensuring that patients can access reliable and proven treatments regardless of where they are or which manufacturer produces the drug. For example, standardization in pharmaceuticals ensures that a medication produced by a company in the United States meets the same safety and efficacy standards as a similar medication produced by a company in Europe or Asia. This harmonization is crucial for maintaining public health and safety internationally. Pharmaceutical SEPs primarily focus on:

Examples of Pharmaceutical Standard Essential Patents

Gilead’s Patents on HIV/AIDS Medications

The American company Gilead holds essential patents for several groundbreaking HIV medications, including Truvada and Biktarvy. Truvada is a combination of two antiretroviral drugs, tenofovir disoproxil fumarate (TDF) and emtricitabine (FTC), both are which patent protected (U.S. Patent No. 6642245 and U.S. Patent No. 6703396). Biktarvy is a combination of the three antiretroviral drugs, bictegravir, emtricitabine (FTC), and tenofovir alafenamide (TAF), all of which are also patent protected (U.S. Patent No. 9296769, U.S. Patent No. 8592397, and U.S. Patent No. 8754065). Their SEP patent portfolio is vital as many of them protect the active pharmaceutical ingredients (APIs) and the specific methods of treatment that have been developed by Gilead.

Roche’s Patents on Biologics and Monoclonal Antibodies

Roche is a Swiss company with an extensive patent portfolio of essential patents on various biologic drugs. These SEPs cover a range of innovations essential for the development, manufacturing, and application of biologics and monoclonal antibody therapies.

Monoclonal antibodies are engineered to target specific antigens to treat various diseases. Some of Roche’s noteworthy protected inventions on monoclonal antibodies include the production method of chimeric antibodies to reduce immunogenicity in patients (U.S. Patent No. 6054297) and production method of monoclonal antibodies to enhance immune system engagement (U.S. Patent No. 880869). Biologics are products and drugs that are produced from living organisms or contain components of living organisms. Their key patented inventions on biologics include the purification method of monoclonal antibodies using Protein A affinity chromatography (U.S. Patent No. 7361485) and the stabilization formulations for the storage and transport of biologics (U.S. Patent No. 7700304).

Information Technology and Software

Standard essential patents in the field of information technology and software ensure that applications, platforms, and systems from different developers can integrate and operate cohesively. This interoperability is crucial for enabling a seamless interaction between diverse software solutions, devices, and services to ensure that users can interact with and access services regardless of the software or hardware they are using. Information technology and software SEPs principally focus on:

Examples of Software Standard Essential Patents

Microsoft’s Patents on Operating Systems and File Systems

The American company Microsoft has an influential portfolio of SEPs covering a broad range of technologies essential for the functioning, efficiency, and security of operating systems and the management of data. 

Microsoft’s significant patents of operating system architecture cover fundamental aspects such as the kernel, process management, memory management, and user interfaces. Notable innovations include their task management method in a multitasking operating system (U.S. Patent No. 5671412) and the methods and systems for fundamental kernel-level operations (U.S. Patent No. 6826762). Their SEPs on file systems capture the storage, retrieval, organization, and security of data on disk drives. Protected innovations include their NTFS features (U.S. Patent No. 5768575) and their methods for file recovery and journaling in NTFS (U.S. Patent No. 6185678).

Google’s Patents on Web Search Algorithms and Ad Technologies

The American company Google also holds an influential patent portfolio of SEPS related to search engine functionality and online advertising. Their web search algorithm patents are foundational to how the search engine indexes, ranks, and retrieves web pages based on user queries. Notable protected innovations in this sector include their PageRank algorithm (U.S. Patent No. 6285999), predictive search feature (U.S. Patent No. 7668823), and methods for personalizing search results based on the user’s search history, preferences, and location (U.S. Patent No. 8112352).

Ad technologies relate to online advertising, including ad placement, targeting, auction systems, and performance tracking. Google’s momentous protected ad technology innovations cover the placement of ads based on keywords and search queries (U.S. Patent No. 7136875) and their method of targeting ads based on user data, including browsing history, demographics, and previous interactions (U.S. Patent No. 7996328).

Biotechnology

Standard essential patents in the field of biotechnology ensure that various biotechnological products, tools, and processes developed by different companies can integrate and function together effectively. This interoperability is critical for the global biotech industry, enabling the seamless exchange of biological data, materials, and methodologies across different platforms and laboratories. The standardization in biotechnology allows different diagnostic devices, genetic analysis tools, or lab automation systems to work together, facilitating collaborative research, accelerated discoveries, and enhanced efficiency in healthcare and life sciences. For example, the use of standardized blood collection tubes in medical diagnostics to ensure consistent processing for blood samples collected globally. Biotechnology SEPs primarily focus on:

Examples of Biotechnology Standard Essential Patents

Editas Medicine’s Patents on CRISPR Gene Editing

The American company Editas Medicine’s developments in CRISPR (clustered regularly interspaced short palindromic repeats) gene editing enabled precise and targeted alterations to be made to genetic material, which is critical for innovative therapies and treatments. CRISPR gene editing is a genetic engineering technique in molecular biology by which the genomes of living organisms may be modified in vivo very precisely, cheaply, and easily. Foundational patents associated with Editas Medicine’s CRISPR technology include the methods for utilizing CRISPR systems for gene modification (U.S. Patent No. 8697359) and the techniques for enhancing the specificity and efficiency of CRISPR-based gene editing (U.S. Patent No. 8847058).

Amgen’s Patents on Recombinant DNA Technology

The American company Amgen keeps a patent portfolio full of successful advancements in the biologics parameters of recombinant DNA technology, which involves combining DNA from different sources to create genetically modified organisms (GMOs) or cells that can produce therapeutic proteins. One of Amgen’s most significant achievements in recombinant DNA technology is the development of erythropoietin (EPO), a hormone that stimulates red blood cell production. Amgen’s key inventions involving EPO encompass the processes and methods used for the large-scale production of EPO (U.S. Patent No. 5547933), the DNA sequences that code for erythropoietin and production methods EPO in host cells (U.S. Patent No. 4703008), and the formulation of erythropoietin into pharmaceutical compositions suitable for therapeutic use (U.S. Patent No. 5621080).

Consumer Electronics

Standard essential patents in the field of consumer electronics ensure that devices and systems from different manufacturers can operate together smoothly. This interoperability is crucial for the enablement of the seamless connectivity and communication between various devices, such as smartphones, smart home systems, and wearable technology consumers use every day. For example, interoperability in consumer electronics allows users to pair their wireless headphones with any brand of smartphone, control smart home gadgets from different manufacturers through a single app, and easily transfer data between devices. Consumer electronic SEPs primarily focus on:

Examples of Electronic Standard Essential Patents

Apple’s Patents on Multi-Touch Technology

The American company Apple set new standards for touch interfaces across the industry with their multi-touch gestures and capacitive touchscreens used in Apple products and other touchscreen devices manufactured by various companies. Foundational Apple innovations that became SEPs include their method of detecting multiple simultaneous touch inputs on a touchscreen device and determining commands based on the analysis of these touches (U.S. Patent No. 7479949) and their signature “slide to unlock” feature (U.S. Patent No. 8046721).

Samsung’s Patents on OLED Display Technology

The South Korean company Samsung is a global leader in display technology, particularly in the development of OLED (Organic Light Emitting Diode) displays, which allows deeper blacks, higher contrast ratios, faster response times, and more vibrant colors of display devices compared to traditional LCDs. Samsung’s foundational inventions that are now SEPs covers the manufacturing methods of OLED displays (U.S. Patent No. 7285635) and the optimization methods of the efficiency and brightness in OLED displays (U.S. Patent No. 7714754).

Automotive

Automotive standard essential patents ensure that various vehicle systems and components from different manufacturers or across different vehicle models and brands can work together seamlessly as needed for the safety of drivers and pedestrians. This interoperability is essential for the global automotive industry, enabling the integration of diverse technologies, such as sensors, infotainment systems, and driving softwares. For example, the automotive industry standardization of fuel nozzles and gas tank openings allows drivers to refuel their vehicles at gas stations worldwide, regardless of the car manufacturer or location. Automotive SEPs fundamentally focus on:

Examples of Automotive Standard Essential Patents

Toyota’s Patents on Hybrid Vehicle Technology

The Japanese company Toyota is a global leader in hybrid vehicle technology, particularly in the development of systems that combine internal combustion engines with electric motors to enhance fuel efficiency and reduce emissions. Toyota’s groundbreaking essential innovations cover the basic design and control systems of hybrid powertrains (U.S. Patent No. 5343970), the integration of regenerative braking systems with traditional hydraulic braking systems (U.S. Patent No. 5932945), and the management of power distribution and energy recovery within hybrid systems (U.S. Patent No. 6374122).

Tesla’s Patents on Electric Vehicle (EV) Technology

The American company Tesla is a frontrunner in electric vehicle (EV) technology, distinctly in the evolution of battery-powered vehicles, which offer longer ranges, quicker acceleration, reduced emissions, and superior energy efficiency in comparison to traditional internal combustion engine vehicles. Tesla’s key innovations, now standard essential patents (SEPs), include the methods for manufacturing battery packs (U.S. Patent No. 7860578) and the techniques for optimizing energy efficiency and vehicle performance in electric vehicles (U.S. Patent No. 8324517).

Electronics and Computing

Standard essential patents in the domain of electronics and computing ensure that hardware, software, and systems from different manufacturers can work together perfectly. This interoperability is crucial for the global electronics and computing industries, enabling devices, components, and software platforms to communicate and function cohesively. For example, standardization in electronics and computing allows the global use of USB ports and connectors with different devices (keyboards, computer mice, smartphones, external drives, etc.) to connect and communicate with computers and other devices worldwide, regardless of the manufacturer. Electronics and computing SEPs primarily focus on:

Examples of Electronics and Computing Standard Essential Patents

ARM Holdings’ Patents on RISC Architecture

The British company ARM Holdings’ transformative innovations in microprocessor design enabled efficient high-performance processing with lower power consumption. Their RISC (Reduced Instruction Set Computing) architecture was particularly vital in the evolution of modern mobile devices and embedded systems. Foundational patents related to ARM’s RISC architecture, now recognized as SEPs, include the methods for implementing RISC-based processing in microprocessors (U.S. Patent No. 5613112) and the techniques for optimizing the performance and energy efficiency of RISC processors (U.S. Patent No. 5745903).

Intel’s Patents on Microprocessor Technology

The American company Intel holds a vast patent portfolio for their groundbreaking advancements in microprocessor technology, particularly in the enhancement of processing power, efficiency, and scalability. Intel’s fundamental patents related to microprocessor innovations, now considered standards in the industry, include the methods for designing and manufacturing high-performance microprocessors (U.S. Patent No. 4530077) and the strategies for optimizing the speed and energy efficiency of microprocessor operations (U.S. Patent No. 4809230).