Let's continue the discussion on “Introduction to Intellectual Property and Understanding Intellectual Property”. Among them, today we will look at “Patent pool and standardization”.
1. What is a patent pool?
A patent pool is an agreement between multiple patent rights holders to entrust a licensing agency to manage the patent rights of assets as a group, and it is easy to think of it as a collection of individual patents. From the point of view of the patent right user, the right to use all the patents in the patent pool is acquired through a single collective contract instead of individual licensing. In particular, in the IT field, which is overflowing with new technologies, each company often infringes on the patents of other companies, so strategic alliances using the patent pool are becoming more frequent. In 1856, the first patent pool was created in the United States, and at that time, the anti-competition law was enacted due to the strong collusive nature of avoiding competition. Recently, strategic alliances through patent pools are increasing not only in beds, projectors, aircraft, etc., but also in computer video protocols.
2. Patent pool and standardization
Standardization of products has the advantage of reducing production costs by allowing different manufacturers to use interchangeable parts in exchange. In particular, in the field of information and communication technology where technology compatibility is required, the need for technology standardization such as protocol standardization is increasing.
While standardization promotes technology sharing, patents grant exclusive rights to a technology, so the patent system and standardization often contradict each other. Most standardization organizations such as the International Telecommunication Union (ITU) and the International Organization for Standardization (ISO) recognize the standardization of patents.
3. FRAND (Fair, reasonable, and non-discriminatory)
FRAND is a reasonable, fair and non-discriminatory practice of intellectual property rights (Fair, reasonable, and non-discriminatory license). It refers to the agreement that a third party should consult fairly and reasonably so that the patent can be used by a third party. Standardization organizations such as the ITU prohibit patent holders from gaining huge commercial profits through the FRAND protocol. In a standard patent lawsuit filed by Samsung Electronics against Apple recently, Apple used the FRAND protocol to refute Samsung's claims.
The standardization institutes set in advance the maximum royalty and maximum limit conditions for patent rights in the process of standardization of a technology. This limits potential future FRAND violations by patent holders. If it is adopted as a technical standard through the FRAND protocol, the revenue through licensing increases instead of giving up the exclusive right of the patent. The patent applicant will have to evaluate the profit and loss of both sides carefully in advance when participating in the standardization process of his/her technology.
4. Recent Trends on Standardization
The importance of standard patents is increasing in fields with high standardization requirements, such as networks, video equipment, and communications. In addition, new legal issues such as the antitrust law were raised as the standard patent holders controlled the person who issued the standard patent, resulting in an imbalance. As a result, countries such as the United States, Korea, Europe, and Japan recommend and stipulate that standardization organizations, patent pools, and standard patent owners do not control the market through monopoly.
Today, we learned about “Patent Pool and Standardization”. Next, we will discuss “trademark trends”.
*I am a student learning IP, not an IP expert. Translation is also a translator and my short English skills. I hope it will be helpful for those who do not have the relevant knowledge or who want to learn about IP.
*The above is what I learned from a book compiled by the Korean Intellectual Property Office and Korea Invention Promotion Association (published by Pakmungak) entitled “Introduction to Intellectual Property, Understanding Intellectual Property”.
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