Film and TV Tax Credits Working for California?

California significantly increased tax credits to incentivize the location of film and TV production in the state of California in late 2014.  I've written about it and its impact, here, back in 2016.  How is it doing since then?  The California Film Commission, the government entity responsible for administering the tax credit program, issued a Report examining the impact of the program over the last three years from 2015 to 2018.  A press release concerning the Report states: 

Employment – in terms of hours worked in-state by below-the-line crew members. Program year-three continued the long-term growth trend with a 15.6 percent increase in hours worked in 2017 compared to 2014 (the year before Program 2.0 began). This growth builds on 2016’s 12 percent increase over 2014. These figures are based on data for below-the-line workers including Teamsters, IATSE members, basic crafts and others covered under the Motion Picture Industry Pension & Health Plans.  In addition, Los Angeles-area sound stages are operating at near capacity (as reported by FilmL.A.), which is leading to substantial growth in construction for new stages and production support facilities.   

- Big-Budget Films (over $75 million) – which are a target for the uncapped incentives offered by other states and countries. During year-three of Program 2.0, California attracted five additional big-budget films (“Call of the Wild,” “Captain Marvel,” “Ford v. Ferrari,” “Island Plaza” and “Once Upon a Time in Hollywood”). To date, the expanded tax credit has attracted a total of 10 big budget films. 

- Relocating TV Series – which have their own dedicated allocation of tax credits. During year three of Program 2.0, California attracted two additional relocating TV series (NBC’s “Timeless” from Vancouver, and Amazon Studios’ “Sneaky Pete” from New York). To date, the expanded tax credit program has gained a total of 15 relocating TV series from across the U.S. and Canada. 

- Production Activity Statewide – for which Program 2.0 provides an added incentive uplift. During the program’s first three fiscal years, tax credit projects spent a total of more than $78 million in 19 counties outside the Los Angeles 30-Mile Zone. This figure will continue to rise as more tax credit projects for year-three (and prior years) report their out-of-zone spending.

Moreover, the supposed impact of Captain Marvel on the local California economy has been estimated to be around $100 million.  The latest installment of Sherlock Holmes will also be shot in California, estimated to provide another $100 million boost to the local California economy.  Notably, Governor Newsom has pointed to restrictive social policies concerning abortion (mostly in Southern U.S. states, such as Georgia) as a reason for production companies to move their operations back to California. 

Reinvigorating Competition Law in the United States: A Path Forward?

In late 2018, Professor Timothy Wu at Columbia University Law School published a short, readable and nicely priced book at about 140 pages titled, “The Curse of Bigness: Antitrust in the Gilded Age.”  This ambitious and accessible book lays out and defends the general thesis that American antitrust law (competition law) has gone astray.  He essentially attacks the narrow focus on the consumer welfare theory of antitrust law as failing to completely encompass other values, particularly related to the protection of democracy from influence by a concentrated private sector relying on the work of U.S. Supreme Court Justice Lewis Brandeis.  He traces the history of antitrust enforcement in the United States from the “Gilded Age” and notes that the remedy of breakup of concentration has historically led to more innovation, and an important harm of the narrow Chicago/Harvard School approach to antitrust is a failure to find actionable concentration enough and that “bigness” in and of itself is harmful.  Indeed, concentration leads to those benefiting from it doing whatever necessary to preserve their position, which includes suppression of innovation through raising rival costs, mergers and cloning, and exercising control over government.  Cloning is essentially copying of the features of smaller rivals, particularly in the technology/internet industry.  It seems that intellectual property protection may provide some cover for small firms from abuse.  He points to the lack of enforcement by the George W. Bush administration (and also points the finger at the Obama Administration, but gives them the excuse of the background of a judiciary that has adopted the Chicago/Harvard School approach--perhaps the W Bush Administration may benefit a bit from the same excuse) that led to a significant amount of concentration across several industries.  Interestingly, the Trump administration recently approved the Sprint/T-Mobile merger. 


Professor Wu is particularly concerned about the technology sector and specifically critiques the behavior of Google, Facebook and Amazon.  Professor Wu points to several policy prescriptions: 1) reinvigorate merger review, including “a simple but per se ban on mergers that reduce the number of major firms to less than four”; 2) "democratization of the merger process"; 3) taking on big cases (he lauds the EU's approach); 4) using the breakup remedy; 5) adopting a “market investigation” practice similar to the United Kingdom; and 6) essentially “abandoning ‘consumer welfare’ as the lodestone of antitrust law” and adopting a standard based on the “protection of competition” that is process oriented in nature.  Notably, other additional values worth protecting could include individual privacy and even more difficult to cabin in today's age--national security.  Professor Wu’s book lays out a strategy for approaching antitrust issues in the Internet Age and perhaps he will be the one to lead the next Democratic administration’s antitrust enforcement.  The book is available for purchase, here, for around $12 new and $8 used. 

Another Upside of Intellectual Property's Downside?

In an article titled, The Upside of Intellectual Property Law’s Downside, Professors Christopher Cotropia and James Gibson discuss how IP’s downside, exclusion, can result in some positives or upsides.  For example, so-called “copyright trolls” may be beneficial to society by shutting down and slowing the distribution of pornography.  One relatively “hot topic” in IP law has been the presence and merits of so-called “trademark bullies”—ordinarily a well-resourced individual or large corporation, who uses overbroad trademark claims in a cease and desist letter with the effect of chilling speech, or stifling competition or creativity (for more on trademark bullying, see here and here).  The target of the cease and desist letter usually capitulates in the face of the prospect of paying large legal fees.  

Recently, an organization, Super Happy Fun America, set up a website to publicize its “straight parade.”  In doing so, it also listed a group of companies that purportedly were either associated with the parade or were in negotiations to sponsor it.  Apparently, the companies were not associated with or in negotiations with the parade in any way.  A number of companies responded with cease and desist letters and one stands out.  Adding to the fantastic list of creative cease and desist letters, an attorney at TripAdvisor sent a letter full of references to gay pride anthems.  Do we have another example of an upside of intellectual property law?  There doesn’t seem to be much free speech value in misrepresenting the relationship between one group and another—I guess I could find some comment here (that may eat up a fair bit of trademark law). Surely, this will squelch potentially harmful associations between entities. And, the added benefit of a creative cease and desist letter is the potential positive publicity and reinforcement of corporate values (at least in this case).  

After receipt of the cease and desist letters, the organization is still using the marks with "Xs" on them (sometimes, but apparently with some advice of trademark and copyright counsel) and includes a nice list with reproductions of all of the cease and desist letters its received thus far, here (which includes apparently truthful statements about their relationship with those companies). Ultimately, it appears that free speech is a winner here--and intellectual property law did not stand in its way and, indeed, may have worked to eliminate confusion as to a "true and accurate relationship" and the messages are being heard.  Here is a copy of the TripAdvisor letter: 

Dear Mr. Hugo,

I am writing on behalf of TripAdvisor LLC concerning Super Fun Happy America’s unauthorized use of TripAdvisor’s logo, as displayed on your website at superhappyfunamerica.com/2019/07/09/corporate-sponsors/. I’m Coming Out and saying this clearly: you are infringing upon TripAdvisor’s intellectual property rights. Further, your statement that you are “in negotiations” with TripAdvisor as a “potential sponsor” is completely false.

To be precise, your use of the TripAdvisor trademark and our Beautiful logo infringes TripAdvisor’s trademark and trade name rights. TripAdvisor’s trademarks are protected in many countries around the world and Over The Rainbow, including in the United States under Registration Nos. 2727627, 3171193, 4612678 and 4454774. We have become a well-known brand for our reviews of hotels, restaurants, experiences and even the occasional YMCA, but we weren’t Born This Way – we obtained that recognition through significant advertising and promotion since as early as 2000. As a result of the breadth of the services it provides and its widespread renown, TripAdvisor enjoys substantial rights in its mark and name.

Contrary to your claims, TripAdvisor is not “in negotiations” with your organization for sponsorship of its “Straight Pride Parade.” Similarly, we have not authorized you to use our name or logo in any way. You Need To Calm Down – you are not sponsored by, associated or affiliated with TripAdvisor in any way, and thus, your use of our marks could confuse the public as to an affiliation with TripAdvisor. These inaccurate statements, which I trust do not show your True Colors, infringe on TripAdvisor’s rights under the Lanham Act, and impinge upon our Freedom! to decide with what organizations we want to associate our brand. Have A Little Respect and remove those statements. TripAdvisor and I Will Survive without being associated with your event.

There is nothing Vogue or acceptable about making false claims about others merely to support your own cause. If I Could Turn Back Time, I would tell you not to use our name in the first place. But now that you have, TripAdvisor demands that you remove all uses of our name, mark and logo from your website (and anywhere else you might use it) within 24 hours and not use them again. In other words, Black Me Out with an “X” on the above webpage. You Make Me Feel (Mighty Real) disappointment that you thought this might be an acceptable way to do business.

TripAdvisor is willing to resolve this matter amicably, today, on the above terms. That said, if you Don’t Stop Me Now by taking the requisite actions, TripAdvisor reserves all rights to take whatever enforcement actions it deems appropriate, including – if necessary – taking legal action against Super Fun Happy America, its principals, affiliates, or those acting in concert with you. Finally, I likely am not Dancing On My Own here, as I suspect the above arguments apply to most or all of the companies listed on the above webpage.

Please know and Believe that we take this matter seriously and look forward to your prompt compliance.

Sincerely,

Bradford Young

Vice President, Associate General Counsel

For more discussion concerning this event, please see here, here, here and here. 

"Decluttering" the U.S. Trademark Register?

The USPTO recently announced that “foreign-domiciled trademark applicants, registrants, and parties to [TTAB] proceedings" must secure a U.S. attorney.  At least part of the justification for this new requirement is the filing of apparently fraudulent applications.  This may help declutter the U.S. Trademark Register—to the extent you believe there is a clutter problem.  I plan to open my own law office soon to provide low cost and quality U.S. trademark services (lol).  Here is some more detail concerning the requirement with helpful links to more information: 

• Foreign-domiciled trademark applicants, registrants, and parties to Trademark Trial and Appeal Board proceedings, including Canadian trademark filers, must be represented at the United States Patent and Trademark Office (USPTO) by an attorney who is licensed to practice law in the United States. See more about foreign-domiciled trademark applicants, registrants, and parties.
• U.S.-licensed attorneys representing trademark filers must provide all of the following:
• Their name, postal address, and email address
• A statement attesting to their active membership in good standing of a bar of the highest court of a U.S. state, commonwealth, or territory
• Information concerning their bar membership (state, number if applicable, and year of admission).

      See more about U.S.-licensed attorneys.

• Canadian patent agents will no longer be authorized to represent Canadian trademark applicants, registrants, or parties before the USPTO in trademark matters. See more about Canadian patent agents.
• Canadian trademark attorneys and agents will continue, if eligible, to be recognized as additionally appointed practitioners who can represent their Canadian clients, although the USPTO will correspond only with the appointed U.S.-licensed attorney. See more about Canadian trademark attorneys and agents.

New Report: UK's Cell and Gene Therapy Sector Growing at a (very) Healthy Rate

The Alliance for Regenerative Medicine and the Bioindustry Association of the UK have released a report (Report) concerning development and growth of the cell and gene therapy field in the United Kingdom.  The Report notes “four key takeaways”: 

[1] The UK is a leading source of innovation in the research and development of advanced therapy medicinal products (ATMPs) in Europe.  [2] There is strong government support for scientific innovation, capital formation, and patient access to cell and gene therapies in the UK. [3] There is significant investment in the UK   to support the development of these life-changing therapies. [and 4] The clinical pipeline in the UK, both in terms of UK-based companies and other companies interested in clinical development in the UK, is robust and growing.

The Report states that 24% of ATMP companies in Europe are headquartered in the United Kingdom, additionally there was over a billion US dollars in funding.  The funding in 2019 is on track to meet or exceed 2018’s funding.  There are detailed stats on funding by type in the Report.  Moreover, since 2012, there has been a substantial uptick in ATMP activity—from 22 companies to over 70 companies, some of which is attributed to significant government support and organization.  The Report also contains data regarding current and past clinical trials and case studies concerning relevant companies and their technology.  


The Report concludes with the following recommendations: 

Support scientific research to develop and advance both cell and gene therapies and ancillary processes, including manufacturing and scale up.

Foster economic development and the creation of a skilled workforce to promote the continued growth of this industry in the UK.

Cultivate a positive regulatory environment for the research and development of cell and gene therapies, including fostering accelerated pathways to ensure that patients are able to access safe and effective therapies in a timely manner.

Develop the necessary infrastructures within NICE and its counterparts in Scotland, Wales, and Northern Ireland to ensure health technology assessments are able to address the long-term value provided by cell and gene therapies.

Collaborate with the NHS and other public and private payers in the UK to develop innovative financing models to ensure patients can access approved therapies in an efficient manner.

The development of a skilled workforce (and attraction of one) and the related issue of international collaboration is important, but not expressly tied together in the recommendations. The full Report is available, here. 

U.S. Court of Appeals for the Federal Circuit: Public Universities do not have Sovereign Immunity from Patent IPRs

In a new U.S. Court of Appeals for the Federal Circuit opinion, Regents of the University of Minnesota v. LGI Corporation, et al., the court held that states, including public universities, are not entitled to sovereign immunity from Inter Partes Review (IPR) proceedings filed at the United States Patent and Trademark Office (USPTO) to challenge an issued patent.  Judge Dyk, writing for the court, provides a nice overview of the history of administrative challenges to issued patents as well as the process for filing and prosecuting an IPR.  Notably, Judge Dyk points to the resource constraints of the USPTO in evaluating patentability and that the federal government is essentially drafting third parties through IPRs to test patentability.  Judge Dyk discusses and relies upon the reasoning of Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc., 896 F.3d 1322 (Fed. Cir. 2018).  In that case, the Federal Circuit refused to apply tribal sovereign immunity to IPRs.  The court notes that it was unnecessary to reach the issue whether the University of Minnesota waived sovereign immunity for an IPR by filing a patent infringement suit concerning the IPR challenged patent.  This decision puts U.S. public university generated and owned patents in the IPR crosshairs.  Interestingly, it puts U.S. public university patents on the same footing as foreign university owned and generated U.S. patents for purposes of challenge through IPRs, thus, removing a potential advantage for U.S. public universities versus foreign universities in the United States.  

OxFirst Presentation: "Patent Aggregator meets Patent Aggregator: SISVEL and RPX Join Forces"

OxFirst is offering another interesting presentation titled, “Patent Aggregator meets Patent Aggregator: SISVEL and RPX Join Forces,” on June 3, 2019, at 14.00 BST and 15.00 CET.  Registration is available, here.  The description of the presentation states: 

For the first time in history, an aggregator of innovative Standard Essential Patents (SEPs) and an aggregator of willing licensees worked together to enter into a deal that simplifies access to widely-used technology, effectively allowing hundreds of transactions involving patent rights to occur through a single agreement. The aggregator of innovative SEPs is Sisvel International S.A., a patent management company that pools and licenses patented technology essential to widely-used standards such as Wi-Fi. The aggregator of willing licensees is RPX Corporation, a patent risk management company that acquires rights in patents for members. Sisvel and RPX entered into an agreement providing a license to specified RPX members under 500 standard essential patents that make up the Sisvel Wi-Fi Joint Licensing Program. In addition, Sisvel also licensed those RPX members under 200 non-essential Wi-Fi patents, owned by Sisvel’s subsidiary, Hera Wireless S.A. The presenters are Mattia Fogliacco, CEO of the Sisvel Group, and Dan McCurdy, CEO of the RPX Corporation.  Their respective short biographies are below.

As CEO of the Sisvel Group Mattia Fogliacco’s focus lies in making sure Sisvel maintains its leadership in the creation of value through licensing activities, while continuing to foster innovation and Intellectual Property protection. He is in charge of defining the strategies, growing the business and manage the resources of the Group. As CEO of the Sisvel Group my focus lies in making sure Sisvel maintains its leadership in the creation of value through licensing activities, while continuing to foster innovation and Intellectual Property protection. Mattia Fogliacco has a background in business and innovation management and holds an MSc from Bocconi University and a CEMS master's in international management. He has been part of the Executive Management team of the Sisvel Group since 2014, working as Chief New Business Officer for the last 3 years. Before joining Sisvel, Mr. Fogliacco was Managing Director at Iinnovation SA, a company focused on licensing and IP transactions. He also served as Senior International Manager at a service provider of Deutsche Bank, managing three IP and innovation investment funds. Dan McCurdy is CEO of RPX Corporation, where he previously served as senior vice president from 2014 to 2016. Prior to RPX, Dan was a partner with Quatela Lynch McCurdy. From 2008 through June 2014, he was CEO of Allied Security Trust, and Chairman and CEO of PatentFreedom. In June 2014, PatentFreedom was acquired by RPX.  Previously, Dan was founding CEO of ThinkFire; President of Intellectual Property of Lucent Technologies and Bell Laboratories; a Vice President of IBM responsible for the creation of its Life Sciences business unit; a Vice President of Ciena Corporation where he directed merger, acquisition and corporate development; Director of Business Development for IBM Research; and Manager of Technology and Intellectual Property Policy for IBM worldwide.  Dan graduated summa cum laude from the University of North Carolina. He served on the Intellectual Property Policy committee of the United States’ National Academies, in 2011 was named CEO of the Year by Intellectual Property Magazine, and in 2014 was named one of the 40 most influential “movers and shakers” in IP transactions and acquisitions by Intellectual Asset Magazine. He has been named in the IAM Strategy 300, honoring the leading 300 IP strategists worldwide, every year since the annual list has been published.

California to Raise Taxes Significantly?: What Impact on the Entertainment and Technology Industries?

In past posts, here and here, I discussed federal estate taxes in the United States and the right of publicity.  Celebrities at death may owe significant federal estate taxes based on a valuation of their right of publicity.  Generally, most states in the United States do not have an estate tax, including California.  However, that may change soon.  According to a recent update by Baker and McKenzie, a California bill creates a California estate tax in SB 378 (as well as a gift tax and generation skipping tax).  It would include an exemption of around US $3.5 million and has a cap at the level of the federal exemption of a single filer of US $11.4 million (the federal exemption).  This means that California would basically receive around 40% of every dollar between US $3.5 million and US $11.4 million.  Every dollar above US $11.4 million would be taxed by the federal government by 40%, but not by the state of California, according to the article.  This new tax would seem to impact workers in many important California industries, including the entertainment and technology industry.  Notably, the taxes collected by SB 378 would be used specifically to create a fund to benefit under-resourced people in California to achieve “'socio-economic equality and build assets among people who have historically lacked them.'”  


Moreover, the U.S. Supreme Court will also soon decide a case concerning the ability of a state to tax undistributed income from out-of-state trusts (see here and here).  

Large differences in FRAND rates and royalty payments are legitimate and pro-competitive

Cellular technology companies with substantial device businesses — including Huawei and Samsung today, and Nokia until it sold its handset business in 2014 — generate no more than modest net licensing revenues, despite the significant Standard-Essential Patent (SEP) portfolio sizes they have declared. Crucially, they must also cross license their manufactures against infringement of other companies’ patents.  Companies without significant device businesses, including Qualcomm and InterDigital, have no such overriding need to barter their intellectual property. Instead, their businesses are focused on licensing cellular and smartphone patents for cash, upon which their technology developments crucially depend.

SEP licensors do the costly technology developments that make new generations of standards including 3G, 4G and 5G openly available to all OEMs: however, since 2011, if not earlier, none of the former has received, in licensing revenues, even as much as an average of $4.50 per phone or a few percent of global wholesale handset sales revenues, for example, totalling $398 billion in 2018. Aggregate royalties paid to all licensors have averaged less than five percent. In contrast, Apple has taken up to 43 percent revenue share with its iPhone sales and other smartphone leaders Samsung and Huawei are also currently in double digits.

Leaders' technology licensing and OEMs' total handset sales revenues in cellular

FRAND rates and net payments in cash

Some licensors legitimately generate rather more licensing income than others. Net royalty rates charged, and cash payments received, by the same licensor may vary substantially from licensee to licensee without violating Fair Reasonable and Non-Discriminatory (FRAND) licensing obligations.

The question of what levels of royalty rates should be deemed FRAND for licensing SEPs in cellular technologies has loomed large in commentary on the recent US Federal Trade Commission (FTC) v. Qualcomm antitrust trial in the Northern District of California. Witness Huawei claimed 80% to 90% of its SEP royalty payments are made to Qualcomm. Apple previously claimed Qualcomm charged it at least five times more in payments than all other cellular patent licensors combined. That was until Apple unilaterally withheld all such payments a couple of years ago. Notwithstanding the April 2019 settlement of all litigation between Qualcomm and Apple and with resumption of licensing payments to Qualcomm, including a one-off payment of between $4.5 billion to $4.7 Billion, the court’s decision in the above case is imminent.

It should be expected that some companies net much higher licensing rates and generate much more licensing income than most others. It should not be considered untoward or a violation of FRAND or antitrust requirements. FRAND rates negotiated bilaterally or multilaterally, let alone licensing payments made after netting off parties’ charges, may vary substantially from case to case due to different business models, patent holdings cross-licensed, payment timing and disparate trade flows of products licensed, manufactured and sold among SEP licensees. Substantial differences in net rates and payments can therefore be quite legitimate due to various quid pro quos, as well as differences in patent portfolio sizes and strengths.

Major OEMs would rather limit rates to minimize out-payments than maximize royalties received

Companies with predominantly downstream business models as device OEMs, that implement numerous SEP technologies, tend to benefit from generally low royalty rates, even if they have substantial patent holdings themselves. Many device OEMs have, accordingly, tended to advocate licensing regimes that cram down royalty charges by capping aggregate royalty rates. As I have explained in my publications for more than a decade, SEP owners with large device businesses prefer to limit rates, even though that limits them to generating only modest licensing fees, because low rates also minimise their royalty out-payments on those devices.

Market leaders in cellular handsets, including Nokia 12 years ago, Apple, Huawei and Samsung today, invariably have much larger market shares in featurephone or smartphone sales than they have shares of SEPs reading on the cellular standards. They are therefore far more financially exposed as licensees than they stand to gain as licensors — particularly in negotiating licensing agreements with other SEP owners that have no downstream device business in need of licensing. Even though some of the above companies are also major patent owners, their royalty incomes were or are modest in comparison to licensors without downstream operations producing or selling devices.

Patent pools

Patent pools provide notable evidence of this downstream effect with their rates tending to be much lower than bilaterally negotiated rates. Patent pools are typically dominated by leading implementers of the applicable standard and that may also own many SEPs reading on that standard. For example, MPEG LA lists Apple, HP, Panasonic, Samsung, Sharp, Sony, Toshiba and ZTE among its many licensors for the very popular AVC/H.264 video standard employed in smartphones and TVs. Its maximum rate is around $0.20 per unit sold including smartphones, PCs and TVs.

Royalty-free joint licensing, very similar to pooling in many ways but without the need to check patent essentiality or collect and distribute royalties, is an extreme case of this downstream effect. The Bluetooth Special Interest Group allows its members royalty-free implementation of this popular standard so long as they also commit to license their patents on that basis.

Some joint licensing arrangements, also very similar to pools, are not dominated by the applicable standard’s implementers. Major SEP licensors in Avanci are companies that do not manufacture automotive products including Ericsson, InterDigital, Nokia and Qualcomm. It was telling, and quite self-serving, that the Huawei speaker at the recent TILEC recent conference on patent pools asserted that Avanci’s cellular-SEP licensing charges [of $3 to $15 per car] are too high.

Patent pool benchmarks were, at first, presented by TCL in its FRAND licensing rate litigation versus Ericsson in the Central District of California. But the dynamics of patent pools were totally inapplicable to this dispute about bilateral rates. Patent pool licensing rates were never even considered by the Court because these, following my expert rebuttal report, did not even make it into direct testimony at trial.

Proportional allocations

SEP owners with major downstream operations commonly also contrive for apportionment so that, for example, owners of only few SEPs can command no more than very low rates. This action was, among other reasons, to counter some OEMs with small patent portfolios punching way above their weight in cross-licensing negotiations with large SEP holders who were also seeking freedom to operate with low patent infringement risk as major device OEMs. For example, Nokia had a $50 billion handset business in its heyday approaching and including 2008. The threat of litigation from small patent holders against such a large amount of trade made it impossible to achieve anywhere near Qualcomm’s rates when Nokia sought to license them for use of Nokia’s SEP technology. In contrast, Qualcomm exited the handset business many years earlier around the turn of the millennium.

If it ain’t broke don’t price fix it

Antitrust authorities, including the FTC, should not be price setters. Instead of adjusting established royalty rates—underpinned by hundreds of licenses and billions of dollars in payments over many years—applicable questions for these organizations are: is the market competitive, efficient and maximizing consumer welfare? Copious evidence shows that it is: with relentless market entry and disruption to incumbents, ever-improving quality and declining prices. The unintended consequences of price regulation would harmfully disincentivise new-technology investments in standard-essential technologies that could be exploited by the entire ecosystem of suppliers and consumers at very low incremental costs in comparison to product and service prices.

FRAND rates and payments differ with variations in other licensing terms and trading volumes 

FRAND licensing must accommodate a wide variety of factors. Rates and payments can vary substantially among different pairs of licensors and licensees – even for the same patent portfolios — because other contractual terms and trade flows for licensing vary so much (i.e. how many handsets manufactured and at what prices sold by each party). But that does not mean that anything goes. The words fair, reasonable and non-discriminatory still have meaning— it is just that the detail with various offsets and other factors is devilish and can account for major differences in apparent royalty rates and actual payments – particularly between licensors that are predominantly that, and those that are largely major implementors and patent licensees as device OEMs.

A very similar article to the above was first published for the cellular industry in RCR Wireless. The full version of my above analysis is available here.