Japanese Government established “Good Faith Negotiation Guidelines for SEP Licenses”

Disputes involving standard-essential patents (SEPs) have arisen in many countries around the world, and SEP disputes between different industries are expected to increase in the future. Therefore, the Japanese government (METI) has indicated the desirable actions to be taken by patent holders and implementers in SEP license negotiations (*1).

Previously (2018), the Japan Patent Office (JPO) published the “Guide to Licensing Negotiations involving Standard Essential Patents” (*2). The JPO’s guide was an objective summary of issues related to licensing negotiations based on domestic and foreign court cases, competition authorities’ decisions, and licensing practices, whereas the METI’s guidelines are explained to be a set of norms for good faith negotiations as Japan.

The guidelines include the following:

  1. When a patent holder makes a licensing offer, the patent holder should provide a claim chart that corresponds the patent claims to the standard on a per-element basis, and also provide material that indicates the FRAND (Fair, Reasonable, And Non-Discriminatory terms and conditions) declaration has been made for the subject patent. 
  2. An implementer who receives such an offer should express its willingness to license on the FRAND terms and conditions. However, it is acceptable to reserve the right to dispute the essentiality, validity, and infringement of the subject patent in the course of license negotiations.
  3. If the implementer expresses willingness to enter into an agreement under FRAND terms and conditions, the patent holder should present specific license terms and conditions, including royalties. At that time, the patent holder should explain that the license terms are FRAND, showing evidence so that the licensee can objectively understand them.
  4. If the license terms are not acceptable, the implementer should present a specific counterproposal. Also, the implementer should explain so that the patent holder can understand objectively that the counterproposal is FRAND, showing evidence.

These guidelines are not legally binding. However, it is expected that many Japanese companies will negotiate according to these guidelines in the future. Hopefully, this will allow negotiations to proceed more or less smoothly without Japanese companies having to worry about how to respond.