Tuesday, 2 August 2022

Japan's METI Releases Guidelines on Negotiating SEP Licenses

On March 31, 2022, the Japanese Ministry of Economy, Trade and Industry (METI) released guidelines concerning the negotiation of SEP licenses.  The METI description states:

In recent years, disputes have arisen worldwide on licensing Standard Essential Patents (SEPs) due to the widespread use of standards and the complication of technologies required for such standards. In particular, as the Fourth Industrial Revolution progresses in which many products will be computerized and processing data will create new added-value, SEP licensing among different industries, especially those in which Japan has strengths (e.g., automobiles, construction machinery and factories), is expected to expand in the future. Therefore, it is crucial for Japan to consider measures to resolve such disputes efficiently.

In light of this situation, the Competition Enhancement Office and the Intellectual Property Policy Office of Ministry of Economy, Trade and Industry (METI) held the “Study Group on Licensing Environment of Standard Essential Patents” (hereinafter referred to as “the Study Group”). The Study Group, comprised of representatives from industry and experts on intellectual property and competition law, has discussed the measures preferable for Japan. Considering problems faced by SEP holders and implementers caused by low predictability and transparency due to the absence of clear rules on the SEP licensing negotiations as well as international trends, METI indicated that “the Japanese government will promptly consider and externally disseminate the rules on good faith negotiations that should be complied with by both SEP holders and implementers” in the interim report of the Study Group published in July 2021, so that good faith negotiations between the parties may encourage early settlements and avoidance of unnecessary disputes, leading to the development of Japanese industries.

Following this policy, METI asked domestic and foreign companies, etc., about their opinions on actions at each of the main steps of SEP licensing negotiations, and METI also asked opinions on the same contents on the website. The Study Group discussed good faith negotiations with reference to these opinions. METI then established the “Good Faith Negotiation Guidelines for Standard Essential Patent Licenses” (hereinafter referred to as “the Guidelines”), considering the results of the discussions. METI also published a report that indicates the process of discussions to establish the Guidelines in the Study Group. 

The Guidelines are the norms of good faith negotiations provided by the Japanese government to be followed by SEP holders and implementers involved in SEP licensing negotiations, including Japanese patents, to realize an appropriate licensing environment through improvement of transparency and predictability of the negotiations. The Guidelines are not legally binding and do not guarantee that, even if followed, negotiations can be judged to be in good faith in each individual case as there are no clear global rules for SEP licensing negotiations. However, METI expects that various parties related to SEP licensing negotiations, such as those in the negotiations and the judiciary, utilize the Guidelines, because METI established the Guidelines considering opinions of domestic and foreign companies, etc., industries and experts on intellectual property and competition law in Japan. METI will also utilize the Guidelines to realize an appropriate licensing environment of SEPs.

The Guidelines are available, here.  The Report is available, here (in Japanese).  A document summarizing the differences between the Guidelines and the JPO document on negotiating concerning SEPs is available, here

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