#11 Johanna Dwyer | How to make SEPs the core asset of your business?

03/28/22 • 40 min

“We would see much more deals and less friction with SEPs and FRAND if people were to do things with more rigorousness and transparency!”

Johanna Dwyer is the founder and CEO of QipWorks, a global IP consultancy business that partners with companies, innovators and investors to build, manage and utilize IP portfolios. Before QipWorks Johanna spent 12 years at BlackBerry, originally designing radios as a cellular wireless engineer and later participating and then leading a global radio standards team active among others, in 3GPP and the IEEE. She worked closely with licensing teams developing processes for identifying, evaluating, managing, validating, and monetizing investments in intellectual property.

Johanna and her QipWorks team provide extensive expertise in IP strategy and patent portfolio development and management as well as litigation support and standardization advice. Johanna realized that many small and medium-sized businesses yet do not treat patents as their core assets. Such assets must be explainable and have a purpose for the business. QipWorks helps with developing patent portfolios and here in particular for companies that conduct research and development close to the development of standards such as 4G/5G or Wi-Fi technologies.

Johanna was part of the team that developed the BlackBerry patent portfolio that was just in January 2022 sold for $600M to Catapult IP Innovations Inc.. The BlackBerry patent portfolio includes many SEPs for standards such as 2G, 3G, 4G, 5G, Wi-Fi, AVC/HEVC/VVC and others.

Patents that read on a standard are of high value as SEPs can be used to join or create SEP licensing programs or as bargaining chips in FRAND cross-licensing negotiations. In any case, owning SEPs ensures the owner a seat at the table when the next generation of connectivity is developed. But filing patents that later become standard-essential is a challenging process. R&D teams, IP patent boards, and prosecution teams must closely work together. Here claims must be compared to the current standard versions early on, which is challenging as standards evolve and claims change in the prosecution process before they are granted. Johanna and her team make sure that such patents are not only essential but also valid and enforceable. Johanna says: “With SEPs a near miss is worthless. If your patent claims miss the final standard you may as well abandon those patents as they have no value”. Standards development and being able to contribute to technology is much more time and budget-consuming as many people think. An engineer that goes to standards meetings must prepare for the meeting, must be active at meetings but also be able to take the learnings from the meetings to again prepare the next one. That is a full-time job with the focus on submitting high-quality standard contributions that others agree and accept in the process. That engineer has no time to sit with patent attorneys. At Research in Motion (Blackberry) Johanna explains, they had so-called standards coaches whose job it was to “own” the patent in the prosecution process, aligning patent filing and standard development strategy. All that is very labor-intensive, and experts need to know both the technology and at the same time must have knowledge of the patent prosecution process.

But owning SEPs is just the beginning, one must also have the right strategy in place to sell, license, or further develop SEP portfolios in the market. Johanna believes that such a process can only be installed in companies that realize that patents are core assets and that patents must have value for the shareholder. Patent strategy therefore should be introduced and play a core role for board room decisions.

“We would see much more deals and less friction with SEPs and FRAND if people were to do things with more rigorousness and transparency!”

Previous Episode

#10 Mark Cohen | SEPs and the law in China

“China is a much more complex and a much less transparent environment than many think it is. If you do not have a governments relation person on your team and if you can’t mine the docket data you can’t win a Chinese SEP litigation.” -Mark Cohen on this episode.
Mark Cohen(柯恒} is a Distinguished Senior Fellow and Director of the Berkeley Center for Law and Technology at the University of California, Berkeley. He has served as the Senior Counsel, China for the USPTO. Formerly, he was Director of International Intellectual Property Policy at Microsoft Corporation. Prior to that time, he was Of Counsel to Jones Day's Beijing office. Before then, he served as Senior Intellectual Property Attaché at the U.S. Embassy in Beijing and as Attorney-Advisor in the Office of International Relations at USPTO. In total, he has nearly 30 private, public sector, in-house and academic experience on IPR issues in China.

Mark has over the years conducted several empirical analyses of the Chinese legal system and SEP litigation cases have drastically increased. SEPs are of the highest importance in China and very often relevant and on the agenda of board room decisions. Courts are efficient and, in some cases, often faster than US or European courts. However, still, the legal system lacks transparency as not all decisions are public, and the litigation dockets are incomplete. As to the publicly available data it looks as if SEP decisions with Chinese companies involved do not rule in favor of the local Chinese companies. However, if rulings and decisions are not all public it’s very difficult to confirm that with the given data. Also, while judges have access to the dockets and other do not, we see decisions that reference nonpublic court rulings which creates confusion and makes it difficult to win a case.

Despite the incomplete data China has however gained importance as being an international venue for SEP litigation. This may not be surprising given that most worldwide sold smartphones are manufactured in China and that the Chinese single market is the biggest in the world for SEP relevant products such as phones, tablets, smart watches, TVs and so on. SEP owners one the one hand find it adventures to litigate in China as injunctions are much more frequently granted. However, on the other hand damages are much lower compared to Europe and the US. China is not the country of unlicensed products anymore and Intellectual Property enforcement is taken much more seriously. However, Mark stresses again cases matter and if not all of them are public we have a problem as lawyers and judges need to be able to reference and consider decision from past cases.

Mark also worries about the increasing cases of anti-suit and anti-anti-suit injunctions. The Chinese legal system should not be underestimated, and its power and influence will grow. So are the increasing number of internationally active patent owners. Indeed, the IPlytics data confirms that Chinese companies have had the highest growth rates in SEP declarations and standards contribution submissions over the past 5 years with increasing numbers of patent filings not only in China but also granted in the US and Europe. Mark believes that the WTO (World Trade Organization) should help in aligning international rules and guidelines and should be much more recognized not only by China but also the US and other countries.

Mark also discusses the trade war between China and the US and the ban of some Chinese companies on the US market. A company such as Huawei that is banned from selling products in the US but is one of the largest SEP holders in the world with a large valid US portfolio creates a risk for US operating companies. If there is no need to cross license Huawei acts like an NPE in the US and may enforce patents much more aggressively. Also, to recoup its R&D investments and missing income from the product market.

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#12 Paul Bawel | How to Manage And Set Up Patent Pools

Paul is Senior Vice President at Access Advance LLC where he is responsible for business development. He has been involved in multiple patent pools and licensing program during his 25+ years as an intellectual property attorney, including for MPEG 2, MPEG 4 Part 2, AVC, HDDVD, BluRay, HEAAC, HEVC and now VVC. Paul started his career to work for General Electric’s licensing department. He went on to work for General Instrument, first as the IP Portfolio Law Director, and then as the Broadband Sector IP Law Director (for Motorola after it purchased GI) managing the IP law department and IP related matters. After that Paul worked for Microsoft as a Business Division Patent Counsel to then work for Acacia Research Group identifying, valuing, and purchasing patent portfolios. Since 2015, Paul has worked for Access Advance, first as Senior VP of Licensing building their HEVC Advance licensing program, and now as Senior VP of Business Development developing, launching and now building their VVC Advance licensing program.

Paul believes that patent pools are important to facilitate standardized technologies such as HEVC or VVC. Paten pools reduce the transaction costs for all implementers. Havening more than just one patent pool (HEVC is subject to 3 patent pools, VVC currently has 2 patent pools set up), also will in his view not hamper standards adoption. Also, two or three patent pools still reduce the number of licensors. There has been criticism that HEVC was not as successful as AVC, where Paul argues that there is a lot of data tell a different story and that provides evidence of the success and wide adoption of HEVC. In his view the HEVC patent pool situation supported that success. Also, the recent litigation between Access Advance and Vestel was no setback for Access Advance, Paul argues. Here media did not tell the whole story. What is true due to a substantial number of overlapping patents in the HEVC Advance Patent Pool and MPEG LA’s HEVC patent pool to which Vestel was licensed to, the German court In Düsseldorf found the Access Advanced HEVC license not FRAND. Access Advanced in March 2022 therefore revised its policy responding to the Düsseldorf District Court’s December 21, 2021 ruling. Importantly, the court once again did not express concerns with any other facet of the HEVC Advance Patent Pool, including its royalty rates.

One reason why more than just one patent pool was formed for VVC is that not only the licensing rates and licensing models differ across the pool programs, but also the internal revenue sharing policies can be very different. At Access Advance Paul states that the pool considers the internal royalty sharing counting patents on a patent family basis so that there are no incentives for patent pool licensors to file e.g. multiple divisional patent applications that cover very minor inventions just to increase their share in the patent pool. The different rules and licensing rates therefore attract different SEP licensors to either join Access Advance or MPEG LA’s VVC patent pool.