Decades of standard-essential patent (SEP) licensing abuse led a cross-section of technology standards participants and their representatives, including the ACT | The App Association, to draft the CEN/CENLEC 95000 Workshop Agreement: Core Principles and Approaches for Licensing of Standard Essential Patents (CWA 95000). This detailed guide is a foundational document for policymakers to establish a healthy SEP licensing ecosystem at the outset or ameliorate the stifling of their standardized innovation landscape.

The Purpose: Technology Standards

Technology standards provide an alternative to developing a product from scratch. The standardization process requires industry participants to work together to develop the specifications of a standard and voluntarily contribute patented technologies to enable its use. The result: interoperability and efficiency across various market sectors.

The Issue: SEP Licensing Abuse

Patent holders that contribute their patent to the standard, or standard-essential patent (SEP) holders, do so under a voluntary commitment to license their SEP on fair, reasonable, and non-discriminatory (FRAND) terms. The FRAND mechanism is key to ensuring that SEP holders receive reasonable royalties for their innovation. It does not disrupt standards participants from developing new inventions that standards are established to support. After years of experience, it was quickly recognized that the system was not working because the elusive FRAND definition allowed some larger corporations to manipulate its meaning in negotiations and litigation. At the same time, smaller companies agreed to unreasonable licenses to avoid the threat of getting sued in court and excluded from critical markets.

The Solution: Industry-Defined Principles and Approaches to Equitable SEP Licensing

The CWA 95000 is a response to the growing problem of SEP licensing abuses, which are now infecting standards that contribute to a range of sectors and market segments from healthcare to automotive. Importantly, this agreement:

  • Provides educational and contextual information regarding SEP licensing and the application of FRAND;
  • Identifies and illustrates some of the questions that negotiating parties may encounter;
  • Lists agreed-upon core principles and recognized harms that should be addressed in patent policies for technical standards and
  • Sets forth some key behaviors and “best practices” that parties might choose to adopt to resolve any SEP licensing issues amicably and in compliance with the FRAND obligation.

Our Mission: Inform and Educate Standards Users and Policymakers

Throughout our decades of experience, the App Association’s mission has been to inform and educate standards users and policymakers on navigating and regulating the SEP licensing landscape. As these abuses become more prevalent globally, policymakers are evaluating how to sustain an innovation ecosystem that works for existing and future innovators. We believe the CWA 95000 is best positioned to assist both experienced and inexperienced SEP negotiators and inform policymakers on how to provide mechanisms and tools for their stakeholders to reach fair SEP licensing agreements more effectively and to better promote the goals and interests of industry, standardization, and, ultimately, consumers.

In support of our mission, we continue to translate the CWA 95000 in multiple languages:

Conclusion

The CWA 95000 is an important instrument for SEP licensing and policymaking decisions in the standards ecosystem. Standardized technology has modernized the innovation landscape in which App Association members operate today. Policymakers and industry participants must unite against opportunistic SEP licensing practices that damage a healthy and competitive standardization process.