Comments on the Guidelines for the Use of Intellectual Property Under the Antimonopoly Act (Draft)

J. Gregory Sidak

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July 28, 2015

Person in Charge of the Partial Amendment of the IP Guidelines (Draft)
Consultation and Guidance Office
Trade Practices Division
Economic Affairs Bureau
Japan Fair Trade Commission
Section B, No. 6 Central Joint Government Building
1-1-1, Kasumigaeseki
Tokyo 100-8987, Japan

Re: Comments on the Guidelines for the Use of Intellectual Property Under the Antimonopoly Act (Draft)

Ladies and Gentlemen:

The Japan Fair Trade Commission (JFTC) has invited public comments on the draft version of its Guidelines for the Use of Intellectual Property Under the Antimonopoly Act (IP Guidelines). I respectfully submit my comments and suggestions to the IP Guidelines.

My name is J. Gregory Sidak. I am the founder and chairman of Criterion Economics, L.L.C. in Washington, D.C. I am also a founding co-editor of the Journal of Competition Law & Economics, published quarterly by the Oxford University Press since 2005. For more than three decades, I have worked at the intersection of law and economics in academia, government, and private practice. As an expert economic consultant, I have served clients in the Americas, Europe, and the Pacific. I have done extensive work in the area of standard-essential patents (SEPs): I have testified as an economic expert on issues regarding fair, reasonable, and nondiscriminatory (FRAND) licensing in various legal proceedings, I have published academic articles, and I have presented my research at international conferences on FRAND matters and related topics. I have also served as Judge Richard Posner’s court-appointed neutral economic expert on patent damages in the U.S. District Court for the Northern District of Illinois. With respect to this submission, I do not represent any party, and I have no economic interest in the adoption of the Intellectual Property Enforcement Guidelines.

I attach four articles that I have written in recent years that add depth to the ideas expressed in my comments submitted herein. The first article, The Meaning of FRAND, Part I: Royalties, analyzes the economic methodology to determine a FRAND royalty for SEPs. The second article, The Meaning of FRAND, Part II: Injunctions, analyzes the SEP holder’s right to request and obtain an injunction against an infringer of an SEP. The third article, Patent Holdup and Oligopsonistic Collusion in Standard-Setting Organizations, evaluates the risk of horizontal collusion within standard-setting organizations (SSOs). The fourth article, The Antitrust Division’s Devaluation of Standard-Essential Patents, examines the errors of legal and economic reasoning contained in the business review letter that the Antitrust Division of the U.S. Department of Justice issued in February 2015 with respect to the IEEE’s watershed change in patent policy concerning the licensing of SEPs.

I. The SEP Holder’s Right to an Injunction

A FRAND commitment is a contract between the SEP holder and the SSO, to which the implementer of the standard is a third-party beneficiary. The obligations arising from a FRAND commitment must be interpreted in accordance with the provisions of the FRAND contract and the intent of the parties when specifying the terms of that contract. The bylaws and policies of most SSOs determine that the primary purpose of a FRAND commitment is to grant implementers of the standard access to the SEP holder’s patented technology that has been incorporated into the standard and to fairly compensate the SEP holder for its contribution to the standard.

A FRAND commitment typically imposes on an SEP holder a duty to grant access to its SEPs on FRAND terms to any party seeking to implement the standard. However, the SEP holder’s duty to make a FRAND offer does not ensure that a negotiation with the potential licensee will result in a licensing agreement. Even if the SEP holder makes a FRAND offer and negotiates the licensing terms in good faith, the negotiation might fail. For example, the potential licensee might refuse to accept a FRAND offer. As a general principle, if an SEP holder makes an initial licensing offer that is in the FRAND range, then the SEP holder has discharged its FRAND obligation. Any further negotiation of the licensing terms is solely at the discretion of the SEP holder. A potential licensee cannot refuse an offer that is in the FRAND range and hope to avoid an injunction because it wants a better deal.

The draft version of the IP Guidelines correctly recognizes that an SEP holder should be able to request and obtain an injunction, without triggering antitrust concerns, against an infringer that is not willing to accept FRAND licensing terms. The draft version of the IP Guidelines also correctly emphasizes that whether a potential licensee is willing to license the SEP holder’s technology on FRAND terms depends on the specific circumstances of each case. However, without future clarifications, the draft version of the IP Guidelines risks inviting opportunism by the potential licensee. It suggests that a potential licensee is a “willing licensee,” as long as it agrees to be bound by the FRAND licensing terms that a court or an arbitral body sets as a result of litigation or arbitration. That is, the IP Guidelines would confer the status of “willing licensee” even to a party that initiates litigation against the SEP holder (for example, by alleging that the SEP holder breached its contractual FRAND obligations) or to a party that disputes the validity, essentiality, or infringement of the SEP. Such an approach would allow a licensee to use the SEPs free of charge—that is, without compensating the SEP holder for the use of its technology—and delay compensating the SEP holder until the final decision of a court or arbitration tribunal. That behavior would prevent the SEP holder from obtaining compensation for its innovative contribution in a timely manner and could negatively affect innovation and the quality of the standardization process.

The Court of Justice of the European Union (CJEU) has recognized the risk of opportunism by the potential licensee and found that an infringer that is already using the SEPs should not be able to avoid an injunction by merely stating that the SEP holder’s offer is not FRAND. On July 16, 2015, in Huawei Technologies Co. v. ZTE Corp., the CJEU addressed the question of whether an SEP holder has the right to request an injunction against an infringer. The CJEU addressed the question from the perspective of EU competition law and found that an SEP holder does not abuse its dominant position by requesting a remedy against an infringer if (1) the SEP holder has made a written offer to the implementer, and (2) the infringer continues to use the SEPs, has not promptly replied to the offer, or has engaged in delaying tactics. The CJEU emphasized the general principles that a patent holder—including a holder of FRAND-committed SEPs—“may not be deprived of the right to have recourse to legal proceedings to ensure effective enforcement of his exclusive rights, and that, in principle, the user of those rights, if he is not the proprietor, is required to obtain a licence prior to any use.” The CJEU found that a FRAND commitment does not alter those basic principles, as long as the SEP holder makes an offer to license its SEPs on FRAND terms.

U.S. competition authorities have similarly acknowledged that an SEP holder should be able to obtain an injunction against an infringer that demonstrates a “constructive refusal to negotiate, such as by insisting on terms clearly outside the bounds of what could reasonably be considered to be F/RAND terms in an attempt to evade the putative licensee’s obligation to fairly compensate the patent holder.” By the same logic, the JFTC should revise the IP Guidelines to clarify the implementer’s duties when negotiating the licensing terms for SEPs.

II. The Need to Balance the Possibility of Opportunism by the SEP Holders Against the Possibility of Opportunism by the Implementer

The draft version of the IP Guidelines states that opportunism by the SEP holder might impede research and development of technologies related to a standard and the production or sale of products that implement that standard. However, it would be helpful to clarify that parties to a FRAND dispute need to support a reference to theoretical conjectures about the possibility of opportunism by an SEP holder with empirical evidence. Otherwise, there is a risk that abstract conjectures with no relation to the specific facts of the case would unduly distort analysis of the lawfulness of the SEP holder’s conduct.

Two seminal articles from 2007 introduced the patent-holdup and royalty-stacking conjectures most closely associated with economists Carl Shapiro and Joseph Farrell of Berkeley and lawyer Mark Lemley of Stanford. The patent-holdup conjecture posits that, when a potential licensee has made a sunk investment to implement an industry standard and thereby becomes locked into the use of SEPs, the SEP holder can demand from the potential licensee a royalty exceeding the value of the SEP holder’s technology. Lemley and Shapiro argued that an SEP holder’s use of (or even its threat to use) an injunction would exacerbate the risk of patent holdup. In their view, an SEP holder’s mere threat to exclude a licensee’s standard-compliant products from the market, even if only for a limited period of time, could enable the SEP holder to extract licensing fees from that licensee that exceed the SEP’s genuine economic value. Apple, Cisco, Intel, and Microsoft provided funding for the Lemley-Shapiro article, and those companies remain major proponents of policies that would decrease the value of SEPs.

Many scholars in economics and law since 2007 have exposed the flawed logic of the patent-holdup and royalty-stacking conjectures. Scholars have shown that the patent-holdup conjecture fails to account for economic circumstances that restrict the SEP holder’s incentive and ability to demand exploitative licensing terms. Legal and economic scholars have also empirically analyzed sectors that use SEPs the most and have found no evidence of patent holdup. In 2013, Commissioner Joshua Wright of the U.S. Federal Trade Commission (FTC) emphasized that, “[d]espite the amount of attention patent hold‑up has drawn from policymakers and academics, there have been relatively few instances of litigated patent hold‑up among the thousands of standards adopted.” In 2014, Alexander Galetovic, Stephen Haber, and Ross Levin found that, “over long periods[,] SEP industries tend to show better performance than most other industries” in terms of quality-adjusted price decreases, and that innovation appears to be most rapid in SEP-reliant industries. Those empirical findings are inconsistent with the predictions of the patent-holdup and royalty-stacking conjectures. Economic scholars and legal scholars also dispute the proposition, associated with the patent‑holdup conjecture, that an SEP holder would use an injunction to extort excessive royalty rates from a potential licensee.

In December 2014, the U.S. Court of Appeals for the Federal Circuit addressed the evidentiary significance of the patent-holdup and royalty-stacking conjectures. In Ericsson, Inc. v. D-Link Systems, Inc., the Federal Circuit clarified that a jury may be instructed that a theoretical conjecture can affect the computation of a FRAND royalty only when empirical evidence supports that conjecture. Mere invocation of an abstract risk of patent holdup does not suffice. In April 2015, Administrative Law Judge Theodore Essex of the U.S. International Trade Commission similarly found that unsubstantiated claims about the risk of patent holdup were insufficient to prevent the issuance of an exclusion order that would exclude the importation into the United States of products infringing the valid U.S. patents at issue. The skepticism of the Federal Circuit and Judge Essex is economically sound. Abstract theories can assist the finder of fact only when they relate to the specific facts of the case. When there is no evidence that an abstract theory applies to the specific facts of the case, then that theory cannot assist the finder of fact in answering the questions that it must address.

Furthermore, if one assumes that patent holdup might occur, one should consider that the symmetric risk of reverse holdup might also occur. Commissioner Wright of the FTC has said that “weakening the availability of injunctive relief for infringement—including infringement of F/RAND-encumbered SEPs—may increase the probability of ‘reverse holdup’ and weaken any incentives implementers have to engage in good faith negotiations with the patent holder.” Randall Rader, former Chief Judge of the U.S. Court of Appeals for the Federal Circuit, made a similar observation in Apple, Inc. v. Motorola, Inc. that “‘hold out,’” a different term used to refer to reverse holdup, “is equally as likely and disruptive as a ‘hold up.’” Therefore, it would be helpful for the IP Guidelines to adopt a balanced, symmetric approach to considering the risk of opportunism by the SEP holder and opportunism by the implementer (that is, patent holdout or reverse holdup). Empirical evidence should support any allegation of patent holdup or patent holdout.

Respectfully Submitted,

/s/ J. Gregory Sidak

Criterion Economics

〒100-8987 東京都千代田区霞が関1-1-1

件名    知的財産の利用に関する独占禁止法上の指針案に関する意見関係者各位:


私は、J. Gregory Sidakと申します。ワシントンD.C.にあるCriterion Economics, L.L.C.の創業者であり、会長を務めております。また、2005年からオックスフォード大学出版局(Oxford University Press)が四半期毎に発行しているJournal of Competition Law & Economics誌の創刊者兼共同編集者でもあります。30年以上にわたり、私は学術、行政および個人事業において法律と経済学にまたがる分野に従事してきました。専門の経営コンサルタントとして、南北アメリカ、ヨーロッパおよび太平洋地域のクライアントにサービスを提供してきました。標準必須特許(SEP)の分野では、さまざまな訴訟で経済専門家として公正、妥当かつ無差別な(FRAND)ライセンス供与に関する問題について証言を行ったり、学術論文を発表したり、またFRAND問題および関連テーマに関する国際会議で研究発表を行うなど、幅広い仕事を手がけました。米国連邦地方裁判所イリノイ州北部地区においては、特許損害賠償に関するRichard Posner判事の裁判所任命の中立的な経済専門家としての役割も果たしました。私は、本件提出に関して、利害関係者の代理を務めておらず、また知的財産施行ガイドラインの採用に一切経済的利益も持っていません。

私が近年執筆した4つの論文を添付しております。これらは私が本書で提出する意見の中で表明する考えを、さらに奥深く踏み込んだものです。最初の論文、The Meaning of FRAND, Part I: Royalties(FRANDの意味、パート1:ロイヤルティ)では、SEPに対するFRANDロイヤルティを決定するための経済学方法論について分析しています。2つ目の論文、The Meaning of FRAND, Part II: Injunctions(FRANDの意味、パート2:差止命令)では、SEP侵害者に対する差止命令を請求し取得するためのSEP所有者の権利について分析しています。3つめの論文、Patent Holdup and Oligopsonistic Collusion in Standard-Setting Organizations(標準化機関における特許ホールドアップおよび買手寡占的共謀)では、標準化機関(SSO)内における水平的共謀のリスクを評価しています。4つめの論文、The Antitrust Division’s Devaluation of Standard-Essential Patents(反トラスト局の標準必須特許評価低下)では、米国司法省反トラスト局が2015年2月に発表したSEPライセンス供与についての米国電気電子技術者協会の特許政策における重要な転換点に関するビジネスレビューレターに含まれる法的および経済的根拠付けの誤りを検証しています。

I.     SEP所有者の差止命令に関する権利




欧州連合司法裁判所(CJEU)は、潜在的ライセンシーのオポチュニズムを招くリスクを認め、SEPをすでに使用している侵害者はSEP所有者の申し出がFRANDでないと言明するだけで差止命令を回避することができるべきではないとしています。CJEUは2015年7月16日に、Huawei Technologies Co. v. ZTE Corp.(Huawei Technologies Co.対ZTE Corp.の訴訟)において、SEP所有者が侵害者に対する差止命令を請求する権利を有するかどうかという問題について判断を下しました。CJEUはEU競争法の観点から、(1)SEP所有者が実施者に書面による申し出を行った場合、および(2)侵害者がSEPの使用を続け、ただちに申し出に回答しなかったり、引延し戦術を使ったりした場合、SEP所有者は侵害者に対して救済を請求したとしても自らの支配的地位を乱用したことにならないとしました。CJEUは、特許権者(FRAND確約したSEP所有者を含む)は「自らの独占的権利の有効な実施を確保するために法的手続に訴える権利を奪われてはならず、原則として当該権利の行使者は、自らが所有者でない場合、いかなる使用の前にもライセンスを取得することが求められる」という一般原則を強調しています。CJEUは、SEP所有者が自らのSEPをFRAND条件でライセンス供与することを申し出た以上、FRAND確約はこれらの基本原則を変更するものではないとしています。


II.     実施者のオポチュニズムを招く可能性に対してSEP所有者のオポチュニズムを招く可能性のバランスをとる必要性


2007年以降の2つの独創的論文では、カリフォルニア大学バークレー校の経済学者Carl Shapiro氏およびJoseph Farrel氏ならびにスタンフォード大学の法律家Mark Lemley氏と最も関連が深い特許ホールドアップおよびロイヤルティ累積の推定を紹介しました。特許ホールドアップの推定は、潜在的ライセンシーが工業規格を実施するために埋没投資を行い、それによってSEPの使用に組み込まれた場合、SEP所有者は潜在的ライセンシーからSEP所有者の技術の価値を超えるロイヤルティを要求することができると仮定しています。Lemley氏およびShapiro氏は、SEP所有者の差止命令の行使は(または行使のおそれのみであっても)特許ホールドアップのリスクを拡大すると主張しました。彼らの見解によると、ライセンシーの規格準拠製品が市場から排除されるというSEP所有者の単なるおそれのため(たとえその脅威が限られた期間のみであっても)、SEP所有者はライセンシーからSEPの純経済価値を超えるライセンス料を搾取することができるようになる可能性があります。Apple、Cisco、IntelおよびMicrosoftはLemley-Shapiro論文のための資金を提供しており、この4社はSEPの価値を低下させる方針の主要な提唱者です。

多くの経済学者および法学者が2007年以降特許ホールドアップおよびロイヤルティ累積推定の論理的不備を明らかにしています。学者たちは、特許ホールドアップ推定ではSEP所有者が搾取的ライセンス条件を要求する動機および能力を制限する経済的環境を説明できないことを示しています。法学者および経済学者はさらに、SEPを最も活用するセクターを経験的に分析し、特許ホールドアップの証拠がないことを発見しました。連邦取引委員会(FTC)のJoshua Wright委員長は2013年に、「注目されているにもかかわらず、特許ホールドアップは政策決定者および研究者の手を離れ、適用特許数千件のうち訴訟に至った特許ホールドアップの事例は比較的少なかった」ことを強調しました。2014年には、Alexander Galetovic氏、Stephen Haber氏およびRoss Levin氏が、品質調整後の値引きに関して「SEP産業は長期にわたって他のほとんどの産業よりも優れた実績を示す傾向にある」こと、および、革新の速度はSEP関連産業において最も急速であると思われることを発見しました。これらの経験的発見は特許ホールドアップおよびロイヤルティ累積推定の予想と食い違っています。経済学者および法学者はさらに、特許ホールドアップ推定に関連して、SEP所有者が過度に高いロイヤルティ料率を潜在的ライセンシーから搾取するために差止命令を行使するという問題についても議論しています。

米国連邦巡回区控訴裁判所は2014年12月に、特許ホールドアップおよびロイヤルティ累積推定の証拠としての重要性について判断を下しました。巡回区控訴裁判所はEricsson, Inc. v. D‑Link Systems, Inc.(Ericsson, Inc.対D‑Link Systems, Inc.の訴訟)において、経験的証拠によってその推定が支持された場合のみ、論理的推定がFRAND条件ロイヤルティの計算に影響を及ぼしうると陪審員団が教示された可能性があることを明らかにしました。単に特許ホールドアップの抽象的リスクを援用するだけでは不十分です。2015年4月には米国国際貿易委員会のTheodore Essex行政法判事も同様に、特許ホールドアップのリスクに関する根拠のない主張は、係争中の有効な米国特許を侵害する製品の合衆国への輸入を排除する排除命令が下されないようにするには不十分であるとしました。巡回区控訴裁判所およびEssex判事の疑念は経済的には理に適っています。抽象的理論は、事件の具体的事実に関連する場合のみ事実認定に役立ちます。抽象的理論が事件の具体的事実に適用される証拠がない場合、当該理論は事実認定員が判断を下すべき問題に回答する際の参考とはなりません。

さらに、特許ホールドアップが発生する可能性があると仮定すれば、均衡をとろうとする逆ホールドアップが発生するリスクもあることを考慮すべきです。FTCのWright 委員長は、「F/RANDが妨げとなったSEP侵害を含め、侵害差止による救済を得られる可能性を低下させることは、「逆ホールドアップ」の可能性を高め、実施者が善意を持って特許権者との交渉を行わなければならないという動機を低下させる可能性がある」と述べています。米国連邦巡回区控訴裁判所のRandall Rader元首席判事は、Apple, Inc. v. Motorola, Inc.(Apple, Inc.対Motorola, Inc.の訴訟)において、逆ホールドアップを指すもう1つの用語である「ホールドアウト」は、「ホールドアップ」と同様に起こる可能性があり、破壊的なものである」という同じ見解を示しました。したがって、知的財産ガイドラインでは、バランスの取れた対称的な方法を用いてSEP所有者のオポチュニズムおよび実施者のオポチュニズム(即ち、特許ホールドアウトまたは逆ホールドアップ)を招くリスクを考慮することが有用でしょう。経験的証拠は、特許ホールドアップまたは特許ホールドアウトのいかなる申し立てに対しても裏付けとなるはずです。


/s/ J. Gregory Sidak



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