AIPJ_25.4_June2015_hoad&polites

Swim at your own risk: Patent pools in
Australia
Richard Hoad and Deborah Polites*
The use of common industry standards, and resulting aggregation of essential
patented technology into “patent pools”, is a well-established worldwide
practice, most notably in the fields of electronics, computing and telecommuni-
cations. Typically, these patent pools operate on the basis that the pooled
technology will be offered to third parties on “fair, reasonable and non-
discriminatory” terms. Although such arrangements have many benefits,
developments in the United States and Europe have illustrated the importance
of continuing scrutiny of their establishment and operation. This article
considers recent developments in relation to patent pools and the possible
implications for Australia, where clear direction from courts and regulators has
yet to evolve.
INTRODUCTION
Standard essential patents (SEPs) are patents covering technology that must be used by every business
that wants to manufacture a product in compliance with an industry standard.1
Standards are an
important tool in the implementation of new technologies to provide a level of uniformity and
interoperability between different companies’ products that allows the technology to work (for
example, to ensure that child car seats can be securely attached to anchor points in different makes of
cars, or to ensure that mobile phones can connect with all carrier networks).
Standards in technology industries commonly include the use of technological features protected
by patents owned by one or more parties. Archetypal examples of such industries are electronics,
computing2
and telecommunications, where patented technology is incorporated in industry standards
to ensure interoperability and compatibility.3
Recent consideration of the competition implications of
SEPs overseas has taken place mostly in this context.
Typically, industry standards are developed by industry participants at the forefront of
technological developments coming together, developing an agreed standard, and agreeing to
cross-license their SEPs to one another to enable them to supply products in compliance with the
standard. These arrangements frequently involve an agreement to make licences to these SEPs
available to third parties en masse via what is commonly referred to as a “patent pool”. The
arrangements clearly have pro-competitive elements: the first aspect (setting a single standard) permits
*
Richard Hoad: BA (Hons), LLB (Hons), LLM, Partner, Clayton Utz. Deborah Polites: BA, LLB (Hons), Grad Dip (IP Law),
Special Counsel, Clayton Utz.
1
Standards Australia describes a standard as follows: “Standards are published documents setting out specifications and
procedures designed to ensure products, services and systems are safe, reliable and consistently perform the way they were
intended to. They establish a common language which defines quality and safety criteria”, http://www.standards.org.au/
standardsdevelopment/what_is_a_standard/pages/default.aspx.
2
A recent study calculated that the modern laptop utilises at least 251 interoperability standards: Biddle B, White A and
Woods S, How Many Standards in a Laptop? (and Other Empirical Questions), http://standardslaw.org/how_many_standards.pdf.
3
For example, 23,500 patents have been declared essential to the 2G and 3G mobile communication network standards
developed by the European Telecommunications Standards Institute (ETSI): see ETSI database at http://ipr.etsi.org, quoted in
European Commission, Competition Policy Brief: Standards Essential Patents, Issue 8 (2014).
(2015) 25 AIPJ 220220
© 2015 Thomson Reuters (Professional) Australia Limited
for further information visit www.thomsonreuters.com.au
or send an email to LTA.service@thomsonreuters.com
Please note that this article is being
provided for research purposes and is not
to be reproduced in any way. If you refer to
the article, please ensure you acknowl-
edge both the publication and publisher
appropriately. The citation for the journal is
available in the footline of each page.
Should you wish to reproduce this article,
either in part or in its entirety, in any medium,
please ensure you seek permission from our
permissions officer.
Please email any queries to
LTA.permissions@thomsonreuters.com

interoperability and compatibility and avoids the inefficiencies which would be involved if different
manufacturers adopted different standards;4
while the second aspect (patent pool licensing) allows the
standard to be widely adopted.
A third party licensee under a patent pool arrangement is typically able to obtain convenient
access to a large number of patents required in order to comply with a particular standard, using a
single agreement, and at a known royalty rate. As such, the licensee avoids the need to negotiate
separately with each of the licensors participating in the patent pool. At least in theory, the royalty rate
is also likely to be lower than the royalties that would be charged under separate licence agreements
entered into with each licensor. From the point of view of licensors, participation in a patent pool
increases the opportunity to license their patents and simplifies the licensing and royalty collection
procedures (since patent pools are generally centrally operated, either by a nominated member of the
pool or a purpose-dedicated third party entity).
However, patent pools may also give rise to the potential for anti-competitive conduct.5
Patent
pools generally include patents from different licensors operating in the same industry and therefore,
by definition, involve a degree of co-operation between competitors or potential competitors. This can
lead to the risk of collusion and also has the potential to foreclose technological innovation.
The challenge for legal systems when dealing with the patent pool licensing model is to facilitate
access to intellectual property while protecting and promoting competition, thus balancing the
differing policy objectives of intellectual property and competition law. Specific approaches to the
regulation of SEPs and patent pools have been developing in recent years in Europe and the United
States; however, the position in Australia has not yet been established.
THE DEVELOPMENT OF THE (F)RAND LICENSING MODEL
Scrutiny of patent pools in Europe
Although they are arrangements between competitors, standard-setting agreements are generally
permissible under European competition law.6
However, many standard-setting organisations (or
SSOs) place specific requirements on holders of SEPs to alleviate competition concerns. Generally, an
SEP holder is required (either by the rules of the SSO, or as a prerequisite to obtaining relevant
approvals from competition authorities) to make the patented technology available to potential
licensees on terms that are variously described as “reasonable and non-discriminatory” (RAND) or
“fair, reasonable and non-discriminatory” (FRAND).
Two recent decisions in Europe have focused particularly on the competition implications of
granting injunctive relief to enforce SEPs where the infringer is a “willing licensee”. The question as
to what constitutes a “willing licensee” is likely to remain a source of dispute whenever a licence is
sought on terms the patentee is unwilling to offer. However, a clear indication of preparedness to pay
a licence fee, provided that the fee is calculated on FRAND terms, is likely to be sufficient.7
4
Classic examples of standards or format wars include the videotape wars (JVC VHS vs Sony Betamax) and the high definition
DVD wars (Sony Blu-ray vs Toshiba HD DVD). Sony lost the first battle, but emerged the victor on the second occasion. On
each occasion, product manufacturers that backed the wrong format faced significant losses – and consumers who bought
products from these manufacturers were left with tapes/discs, and players, that very quickly became obsolete.
5
United States Department of Justice and Federal Trade Commission, Antitrust Enforcement and Intellectual Property Rights:
Promoting Innovation and Competition (April 2007), Ch 3, s III B, http://www.justice.gov/atr/public/hearings/ip/222655.htm;
European Commission, n 3, p 3; World Intellectual Property Organization, Patent Pools and Antitrust – A Comparative Analysis
(March 2014), p 3, http://www.wipo.int/export/sites/www/ip-competition/en/studies/patent_pools_report.pdf.
6
Treaty on the Functioning of the European Union, opened for signature 7 February 1992, [2009] OJ c 115/199. Art 101(3)
provides exceptions to the prohibition of agreements between competitors in prescribed circumstances where the agreement
benefits consumers and the economy; European Commission, n 3.
7
In the Samsung case, the European Commission accepted that Apple was a “willing licensee” because Apple had indicated it
would abide by the ruling of a German court as to the appropriate FRAND royalty: Case AT39939 – Samsung – Enforcement of
UMTS standard essential patents (29 April 2014). A similar position applies in the United States. A 2013 consent determination
by the United States Federal Trade Commission regarding Google’s assertion of SEPs adopted the approach that a party would
be regarded as a willing licensee if it indicated, in a letter of request or by commencing a royalty setting arbitration, that it
Swim at your own risk: Patent pools in Australia
(2015) 25 AIPJ 220 221

In the Motorola case, the European Commission considered Motorola’s action seeking an
injunction against Apple, a willing licensee, for infringement of certain SEPs. The European
Commission held that Motorola’s use of the threat of an injunction, in circumstances where Apple had
indicated it would pay FRAND royalties, amounted to abuse of a dominant market position.8
In the Samsung case, after an investigation by the European Commission in which Samsung was
impugned for seeking injunctions against a willing licensee (Apple again), Samsung agreed not to
seek injunctions for infringement of certain SEPs except in very limited circumstances. The European
Commission noted that Samsung had given a clear commitment to license the relevant patents on
FRAND terms, and that Apple had declared a willingness to accept a licence on FRAND terms (which
Apple suggested be determined by a court). In those circumstances, the European Commission
considered that it would be anti-competitive for Samsung to have had recourse to an injunction
application.9
In resolving the matter, Samsung agreed that it would not seek an injunction for
infringement of the relevant SEPs unless the alleged infringer had refused to accept a specified
licensing framework (involving an opportunity to negotiate licence terms, in default of which the
terms would be determined through arbitration or court adjudication).
The decisions in the Motorola and Samsung cases appear to reflect recognition of the potential
implications for competition if prospective licensees are required either to accept standard pool licence
terms for SEPs, or risk an injunction keeping their products out of the market.
Scrutiny of patent pools in the United States
In the United States, the Department of Justice (DOJ) has scrutinised and given informal approval to
a number of patent pool arrangements in a process somewhat akin to an Australian Competition and
Consumer Commission (ACCC) authorisation. Among other things, DOJ business review letters have
focused on the need for independent verification of patent validity and “essentiality” (to the standard),
in order to “reduce the likelihood that Licensors might act concertedly to keep invalid or non-essential
patents in the portfolio”.10
Depending on the circumstances, the inclusion of invalid or non-essential
patents could have various undesirable effects, such as extending the term of a patent pool licence or
increasing the licence fees payable. The DOJ has also drawn attention to the importance of offering
potential licensees the alternative of taking licences to individual patents on FRAND terms.11
While
the DOJ clearly acknowledges the potential pro-competitive effects of patent pools and has approved
their establishment, the reviews and published business review letters serve as a measure of scrutiny of
the competition implications.
In 2013, in a landmark decision, a United States District Court determined a RAND royalty rate
for SEPs relating to video codec and Wi-Fi standards.12
The court held that, in determining a RAND
royalty rate, the proper approach is for the court to simulate a “hypothetical bilateral negotiation under
the RAND obligation”; that is, the court can determine a RAND rate by reference to the rate that the
parties would have agreed on had they engaged in a negotiation, appropriately taking into account all
relevant factors. In considering what those relevant factors would be, the court had reference to
existing authority about factors to be taken into account in the context of determining damages in a
patent infringement case based on a “reasonable royalty”.13
The court considered that the 15 relevant
factors identified in the prior decision needed to be adjusted to reflect the fact that the owner of an
would be prepared to pay a FRAND licence fee: United States Federal Trade Commission Determination 1210120, Re
Motorola Motility LLC and Google (24 July 2013), http://www.ftc.gov/sites/default/files/documents/cases/2013/07/130724
googlemotorolado.pdf.
8
Case AT39985 – Motorola – Enforcement of GPRS Standards Essential Patents (29 April 2014) at [492].
9
Case AT39939 – Samsung – Enforcement of UMTS Standards Essential Patents (29 April 2014).
10
Department of Justice Business Review Letter, MPEG-2 Patent Pool (26 June 1997).
11
See, for example, Department of Justice Business Review Letter, DVD-ROM and DVD-Video Patent Pool (10 June 1999).
12
Microsoft Corp v Motorola Inc et al 871 F Supp 2d 1089 (2012). The Ninth Circuit began hearing arguments in an appeal
from aspects of this decision in April 2015.
13
Georgia Pacific Corp v Unites States Plywood Corp 318 F Supp 116 (SDNY, 1970).
Hoad and Polites
(2015) 25 AIPJ 220222

SEP is under an obligation to license the patent on RAND terms, in contrast to the usual position of a
patentee who has an absolute monopoly and may generally withhold licensing entirely.14
The court set out in detail the manner in which each factor is to be applied to the RAND
scenario.15
Notably, in determining a reasonable royalty in the hypothetical bilateral negotiation, the
court may take into account past royalty rates if they were arrangements in which a RAND obligation
was acknowledged. Other relevant considerations taken into account by the court were:
• the utility and advantage of the patented technology when compared to alternatives that could
have been written into the standard;
• the portion of realisable profit that should be credited to the invention compared to non-patented
elements; and
• the contribution of the patented technology (apart from its value by virtue of its incorporation into
the standard).
The emphasis on the actual value of the patents to the implementer, as opposed to the value
derived merely from their status as “standards essential”, is of particular interest. The court noted that:
because an “essential” patent is one that is necessary to implement either an optional or a mandatory
provision of a standard, a specific SEP may contribute greatly to an optional portion of a given standard,
but if that portion is not used by the implementer, the specific SEP may have little value to the
implementer.16
In applying the reasoning it had set out to the two specific patent portfolios under consideration,
the court ultimately determined royalty rates that were considerably lower than the patentee had
argued ought to be payable. Contributing to this outcome was the court’s consideration of royalty rates
payable under what it considered to be comparable patent pool arrangements,17
as well as the fact that
Motorola had not adduced substantive expert evidence to support the claim of essentiality by reference
to the actual contribution of specific patents to the standard.18
Interestingly, in an earlier part of the
proceedings, the court had already prevented enforcement of an injunction that had been obtained in
Germany against the prospective licensee for infringement of the SEPs.19
It is almost certain that the operation of patent pools will continue to be a focus of attention for
competition regulators in Europe and the United States. Indeed, in April 2015, Renata Hesse, a senior
official in the Antitrust Division of the DOJ, stated that the rise in litigation surrounding FRAND
royalties showed that the FRAND licensing system is “not working very well”.20
DO PATENT POOLS HAVE THE POTENTIAL TO BE ANTI-COMPETITIVE IN AUSTRALIA?
For companies whose business is confined to Australia, the benefit conferred by a “worldwide” patent
licence is, by definition, limited. As a practical matter, the small size of the Australian market may
mean that Australian companies that do not sell into overseas markets may be unable to achieve the
economies of scale in manufacture and marketing that would enable them to obtain real value from the
14
Microsoft Corp v Motorola Inc 871 F Supp 2d 1089 (2012) at [92].
15
Microsoft Corp v Motorola Inc 871 F Supp 2d 1089 (2012) at [99]-[113].
16
Microsoft Corp v Motorola Inc 871 F Supp 2d 1089 (2012) at [111].
17
In particular, the MPEG-LA H.264 patent pool was regarded as an appropriate benchmark in respect of the Motorola H 265
SEP portfolio: Microsoft Corp v Motorola Inc 871 F Supp 2d 1089 (2012) at [518]-[537].
18
Microsoft Corp v Motorola Inc 871 F Supp 2d 1089 (2012) at [339]-[391].
19
Microsoft Corp v Motorola Inc 871 F Supp 2d 1089 (2012). The decision on this aspect of the Microsoft and Motorola
dispute was upheld on appeal to the United States Court of Appeals for the Ninth Circuit: Microsoft Corp v Motorola Inc 696
F 3d 872 (2012). In the subsequent jury trial, the jury found that Motorola’s actions in seeking injunctive relief violated its duty
of good faith and fair dealing. However, despite the appeal finding, the District Court trial judge’s instructions to the jury were
not to the effect that Motorola had waived its right to seek injunctive relief: Microsoft Corp v Motorola Inc 109 USPQ 2d 1637
(2013). See further Maldonato K, “Breaching RAND and Reaching for Reasonable: Microsoft v Motorola and Standard-
Essential Patent Litigation” (2014) 29 Berkley LJ 418 at 438.
20
Hoover J, FRAND Regime “Not Working Very Well”, DOJ Offıcial Says (April 2015), http://www.law360.com/ip/articles/
643285?nl_pk=2528a6aa-464f-434f-8bf2-4700228d1782&utm_source=newsletter&utm_medium=email&utm_campaign=ip.
(2015) 25 AIPJ 220 223

cost of patent pool licences. Further, because Australia is a smaller market, there are likely to be fewer
Australian patents in global patent pools than there are (for example) United States, Japanese or
European patents. Indeed, there may be technology included in the pool that is not protected by
Australian patents at all. As a result, Australian licensees paying for access to worldwide patents may
actually be paying for “rights” that are simply not needed in order to operate in Australia.
Consideration by Australian courts
To date, Australian courts have not held that there is a positive requirement to license SEPs on
(F)RAND terms. As a result, there has been no consideration of whether the licence rates offered for
access to worldwide patents under patent pool arrangements are reasonable for Australia.
There have, however, been two recent cases in which the issue of SEPs has been raised for
consideration by the Federal Court of Australia. One such case was the Australian arm of the global
patent dispute between Apple and Samsung. Having been sued for infringement of Samsung SEPs
relevant to 3G wireless communication, Apple reportedly argued that Samsung misused its market
power in breach of Australian competition law by failing to license the patents on FRAND terms, as
required by the European Telecommunications Standards Institute, the administrator of the 2G
(GSM/GPRS), 3G (UMTS) and 4G (LTE) standards.21
The judgment in this case was keenly
anticipated. However, following a commercial settlement between the parties affecting all countries
outside the United States, the Australian patent infringement case was settled in August 2014, before
judgment was delivered.22
In another recent case, a patent pool licensor, MPEG LA, commenced legal proceedings in the
Federal Court of Australia against an Australian manufacturer, Regency Media Pty Ltd, seeking
payment of royalties under a licence to the MPEG-2 patent pool, relating to DVD technology.23
As at
2014, only 40% of the 1,048 patents in the MPEG-2 pool were current, and United States
commentators had noted that the decrease in valid patents has not been met with a decrease in royalty
rates.24
Regency Media had entered into the licence in 2005, but argued that it was entitled to
terminate the licence by operation of s 145 of the Patents Act 1990 (Cth). Section 145(1) provides:
A contract relating to the lease of, or a licence to exploit, a patented invention may be terminated by
either party, on giving 3 months’ notice in writing to the other party, at any time after the patent, or all
the patents, by which the invention was protected at the time the contract was made, have ceased to be
in force.
In the MPEG LA case, the Federal Court had to consider whether all of the patents in the pool had
to expire before the right to termination would be enlivened, or whether the right to terminate could be
triggered by the expiry of only one patent, or (alternatively) one group of patents within the pool
covering a particular aspect of the technology. The key issue was the identiﬁcation of “the patented
invention”, referred to in s 145, when the licence in question is a patent pool licence.25
Regency
Media contended that each of the patents claimed separate inventions, and that only one of the patents
had to expire in order to enliven s 145.26
In contrast, MPEG LA pointed to the fact that the patent
21
See Findlay B and Payne K, Smartphone Wars – Apple/Samsung IPR Infringement Dispute Heating up Down Under (January
2013), http://www.ashurst.com/publication-item.aspx?id_content=8664. Ashurst were Samsung’s lawyers in the Australian
litigation. See also Schneider J, “Samsung Loses New Evidence Bid in Australia Apple Dispute” The Sydney Morning Herald
(15 November 2013), http://www.smh.com.au/it-pro/business-it/samsung-loses-new-evidence-bid-in-australia-apple-dispute-
20131115-hv3fm.html.
22
Wakabayashi D, “Apple, Samsung Call Patent Truce Outside US” Wall Street Journal (August 2014),
http://online.wsj.com/articles/apple-samsung-call-patent-truce-outside-u-s-1407291456.
23
MPEG LA, LLC v Regency Media Pty Ltd (2014) 105 IPR 202. The authors represented Regency Media Pty Ltd in the
proceedings at ﬁrst instance.
24
Balto D, Barriers to Competition on the Innovation Superhighway: How the Lack of Antitrust Scrutiny of Patent Pools Deters
Competition (May 2013) at p 18, http://dcantitrustlaw.com/patent%20pools%20-5%209%20pdf.pdf.
25
MPEG LA, LLC v Regency Media Pty Ltd (2014) 105 IPR 202 at 211.
26
Hoad and Polites
(2015) 25 AIPJ 220224

licence itself referred to three patented inventions – described as MPEG-2 decoding products,
MPEG-2 encoding products and MPEG-2 packaged media – and argued that s 145 should be
construed in light of these characterisations.27
Flick J acknowledged that both sides of the argument had merit.28
Ultimately, however, his
Honour concluded that the patent pool licence in question could not be terminated under s 145 until
“all of the patents in respect to each of the three ‘patented inventions’ identified in cll 2.1, 2.2 and 2.3
[of the licence] have ceased to be in force”.29
(As such, the operation of s 145 fell to be determined by
reference to the drafting of the patent licence, which appeared to be an unusual result.) Flick J held
that courts “should be slow to prefer a construction which would permit the termination of an
agreement in respect to patents which have not ceased to be in force and which would deny to a patent
holder the benefit of the payment of royalties in amounts that have been the subject of agreement”.30
His Honour also observed that s 145 “confers no broad ranging discretionary power upon a court to
permit the termination of an agreement where it is considered – in the opinion of the court – to be
desirable or fair or reasonable to do so”.31
Regency appealed to the Full Federal Court. The Full Court did not accept MPEG LA’s
submission that the meaning of “patented invention” in s 145(1) could be determined by reference to
a definition in the individual contract under consideration (as indeed Flick J had held).32
However, the
Full Court held that the words “a patented invention” in s 145(1) should be read to include the plural
– ie “a patented invention or inventions” – so that the licence could not be terminated under s 145(1)
until all of the Australian patents for all the inventions the subject of the licence have expired.33
The effective result is that a patent pool licensee will not be able to rely upon s 145 as protection
where licence terms are or have become unreasonable owing to the expiry of some of the licensed
Australian patents. It would appear, however, that s 145 would be enlivened if there were some
overseas patents remaining in force, provided that all of the Australian patents had expired. The Full
Court considered that the commercial and competitive disadvantages that flow to a licensee in those
circumstances (for example, continuing to pay the same licence fees for a smaller portfolio of patents
as applied at the outset when the pool of licensed patents was much smaller) are “vastly outweighed”
by the commercial and competitive disadvantages that would flow from the parties having the ability
to terminate a pool licence on the expiry of a single patent (for example, lack of certainty).34
In light of this decision, there is a strong argument that s 145 requires legislative review. Indeed,
Flick J at trial had queried whether s 145 pre-dated the practice of pooling patents and, as such,
suggested that the provision may need legislative attention.35
The Full Court noted that, while SEPs of
the type under consideration would not have been in contemplation at the time of drafting s 145, it
was “not unreasonable to assume that products or processes the subject of multiple patents were
known”.36
Nonetheless, whether s 145 adequately protects the interests of licensees in a patent pool
scenario certainly warrants further consideration from a policy perspective. This is particularly so
27
MPEG LA, LLC v Regency Media Pty Ltd (2014) 105 IPR 202 at 213, cll 2.1-2.3.
28
29
30
31
32
Regency Media Pty Ltd v MPEG LA, LLC (2014) 110 IPR 234 at 238.
33
34
The Full Court describes these consequences in Regency Media Pty Ltd v MPEG LA, LLC (2014) 110 IPR 234 at 240.
35
MPEG LA, LLC v Regency Media Pty Ltd (2014) 105 IPR 202 at 214. This is not entirely correct as patent pools have existed
since the 19th century. However, it is certainly the case that rapid technological developments in the late 20th century
(particularly in areas such as electronics, communications and computing) have seen the patent pool take a much more
prominent role in commerce over the past few decades.
36
(2015) 25 AIPJ 220 225

given that patent pool licensees are typically presented with a “take it or leave it” standard form
licence, often (as in the MPEG LA example) non-terminable by the licensee for many years.
Given the practice of many patent pools to add new patents to the pool as technology continues to
develop and be refined, this decision has the effect of substantially neutering the rights granted under
s 145 in relation to a patent pool licence. In other words, patent pool participants will be able to
continue to add new patents to the pool, which may reflect very marginal technological developments,
and thereby avoid licensees from terminating the agreement under s 145 for many years after the
initial pool patents have expired. This is particularly problematic for patent pool licensees because
such licences typically have limited, if any, grounds on which a licensee may terminate the licence.
In theory, a prospective licensee could take action under the compulsory licence provisions of the
Patents Act, seeking access to a licence on reasonable terms to one or more patents in a pool (for
example, the licensee could seek a licence to the Australian patents alone, at a royalty rate lower than
the pool rate, in recognition of the narrower scope of the licensed technology). Among other
requirements, the prospective licensee would need to establish one of two things:
1. That the reasonable requirements of the public are not being met in relation to the invention.37
This is, by definition, unlikely to be the position in relation to most standards essential
technology, as the pool participants will typically enter the market early with their own products.
2. Alternatively, the prospective licensee needs to establish that the patentee is contravening
Australia’s competition laws in respect of the patent.38
This basis for obtaining a compulsory
licence was added to the Patents Act in 2006, but there has not been a compulsory licence granted
under this provision as yet. This is perhaps unsurprising, given the high hurdle that an applicant
needs to clear, and the cost and complexity involved in such litigation. In particular, the
requirement to establish anti-competitive conduct by the patentee is a considerable hurdle for a
prospective licensee, particularly since the patentee may have the benefit of the “intellectual
property exception” in respect of many of the possible allegations.39
Of course, an application for a compulsory licence would not be available to an existing patent
pool licensee (for example, Regency Media in the MPEG LA case), which is aggrieved by the fact that
royalty rates have remained high even though the number of licensed patents has substantially
declined. Absent legislative reconsideration of s 145, it would appear that such a licensee’s only
potential redress at present would be action under s 46 of the Competition and Consumer Act 2010
(Cth), a possibility that would be available only in very limited circumstances and would involve
complex and costly litigation which may be beyond the resources of many licensees.
Consideration by the ACCC
There are close similarities between patent pools and the collecting societies which operate in the
sphere of copyright law: like patent pools, copyright collecting societies create efficiencies in
facilitating access to intellectual property for the benefit of prospective licensees, but also have the
potential to raise competition concerns relating both to collaboration between competitors and the
lessening of competition. There is a long history in Australia of collecting societies being granted
authorisation by the ACCC.40
However, the authors are not aware of any authorisations having been
granted in Australia in relation to the operation of patent pools.
37
Patents Act 1990 (Cth), s 133(2)(a). In addition to the reasonable requirements of the public not being met in respect of the
invention, the prospective licensee must have attempted, but been unable, to obtain a licence on reasonable terms, and the
patentee must have given no satisfactory reason for failing to exploit the invention.
38
Patents Act 1990 (Cth), ss 133(2)(b). The prospective licensee must establish that the patentee has contravened, or is
contravening, Pt IV of the Competition and Consumer Act 2010 (Cth) or an application law (as defined in s 150A) in respect of
the patent for which a licence is sought.
39
Competition and Consumer Act 2010 (Cth), s 51(3). See further Hoad R, “Brave New World or Much Ado About Nothing?
Practical Effect of Proposed Changes to Trade Practices Act, s 51(3)” (2007) 18 AIPJ 201.
40
Willett E, Copyright Collecting Societies, the Copyright Tribunal and the ACCC – A New Dynamic (24 May 2007),
http://www.accc.gov.au/system/files/copyright%20collecting%20societies,%20the%20copyright%20tribunal%20and%20the%20
accc.pdf.
Hoad and Polites
(2015) 25 AIPJ 220226

Indeed, there are limited examples in which the ACCC has had cause to consider the interaction
between patent pools and Australian competition law. However, one recent example was that, in its
informal review of Google’s acquisition of Motorola, the ACCC noted that it had considered
Motorola’s position as a patentee of SEPs. Specifically, the ACCC observed that the proposed
acquisition “represents a conglomerate merger insofar as Motorola’s ownership of telecommunications
standard essential patents for Mobile Devices may complement Google’s supply of an internet search
tool and internet advertising services for Mobile Devices”.41
The acquisition was not opposed by the
ACCC, in part due to what it saw as “the innovative and dynamic nature of these technology
markets”.
CONCLUSION
The importance of technology standards, and the convenience of the patent pool approach to accessing
SEPs, is undoubted. This business model is well-established and can be argued to have served
consumers well in enabling the introduction of new technologies.
However, it is becoming clear that ongoing scrutiny of the arrangements by courts and regulators
also has an important role to play, and this may be particularly so for Australia. Many patent pool
licences are applicable worldwide, so Australian licensees typically take a licence to a worldwide pool
of patents. Economies of scale and specific market conditions in Australia may mean the terms of such
a licence are especially onerous on Australian licensees, particularly if the licensee’s business is
confined to Australia alone.
The developing overseas jurisprudence in relation to SEPs and FRAND licence terms provides a
useful backdrop against which to consider this Australian position. In an appropriate case, concerns
identified by courts and authorities overseas may eventually prove to be equally, if not more,
applicable in the Australian context. As such, it is likely that overseas jurisprudence will be given
significant weight when it comes time for the ACCC and the Australian courts to adjudicate on the
competition issues created by patent pools in an Australian context.
41
ACCC, Google Inc Proposed Acquisition of Motorola Mobility Holdings Inc, ACCC Informal Review 47636 (21 February
2012), http://registers.accc.gov.au/content/index.phtml/itemid/1034364/fromitemid/751043.
(2015) 25 AIPJ 220 227

AIPJ_25.4_June2015_hoad&polites

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Was ist angesagt?

Was ist angesagt? (12)

Andere mochten auch

Andere mochten auch (14)

Ähnlich wie AIPJ_25.4_June2015_hoad&polites

Ähnlich wie AIPJ_25.4_June2015_hoad&polites (20)

AIPJ_25.4_June2015_hoad&polites