Singapore Competition Authority Guidelines on SEP Licensing Add Legal Certainty

12 January 2021, Brussels – The Fair Standards Alliance (FSA) applauds the acknowledgement by the Competition and Consumer Commission of Singapore (CCCS) that refusal by owners of standard essential patents (SEPs) to license any potential licensee and the use of injunctions in SEP disputes can harm competition.

In its Guidelines on the Treatment of Intellectual Property Rights, the CCCS confirms that such practices by dominant SEP owners that had voluntarily committed to license on fair, reasonable and non-discriminatory (FRAND) terms may infringe Singapore competition law.

In section 4.11 of the Guidelines, the CCCS clearly states that a dominant SEP owner’s “refusal to license its SEP on FRAND terms to any applicant for a licence (irrespective of its position in the value chain)”; and “seeking an injunction based on an alleged infringement of a SEP… may give rise to competition concerns.”

We have long advocated that licences for standardised technology should be made available to any user of the standard that seeks a licence.

Clear guidance is timely. In the recent past, some SEP owners have refused licences on their own, and collectively, to virtually all businesses in the value chain, except for end-product manufactures. This has caused legal uncertainty, which is stalling innovation, uptake of IoT technologies, and has led to extensive litigation across different jurisdictions.

We also appreciate the CCCS confirming that SEP owners using the threat of exclusion through injunctions may be abusive. Indeed, potential licensees may effectively be forced into accepting non-FRAND licensing terms they would not have agreed to absent the injunction claim.

“It is very encouraging to see authorities around the world recognising that SEP owners with dominant market power cannot pick and choose potential licensees and become gatekeepers of innovation,” – said the FSA Secretary General Evelina Kurgonaite. “It is also reassuring that competition authorities continue to caution against dominant SEP holders seeking injunctions enabling them to demand and enforce unfair licensing terms.”

In a welcome recent speech, the US Federal Trade Commissioner noted that “the threat of exclusion against a willing licensee casts a shadow over licensing negotiations and can allow an SEP holder to leverage that threat into royalties that are not in fact FRAND.”

The FSA remains committed as ever to promoting the legal framework around the world that supports fair and open standards benefitting of the entire economy.