Efficient infringement and the undervaluation of standard-essential patents

By Michael T Renaud, James M Wodarski and Sandra J Badin

Faced with the growing problem of efficient infringement and the difficulty of obtaining adequate protection from the courts, US owners of standard-essential patents need to develop creative strategies to protect the value of their rights

As many commentators and industry insiders have observed, would-be patent licensees appear increasingly reluctant to come to the negotiating table. While the issue is affecting rights holders across the board, it appears particularly acute in the area of standard-essential patents (SEPs), where there is a broad perception that the worst that can happen to an unwilling licensee which is found to infringe a valid SEP is that it pay the same fair, reasonable and non-discriminatory (FRAND) rate it would have had to pay if it had agreed to take a licence in the first instance. Given the not-insignificant possibility that the would-be licensee might be able to invalidate the SEP if it gets sued, there is an increasingly prevalent belief that it is good strategy to hold out on taking a licence, and force the patent owner to litigate. This strategy has become known as ‘efficient infringement’.

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Issue 88