Who needs injunctions? Alternative remedies in standard essential patents disputes

The possibility of seeking and obtaining injunctions for the infringement of standard essential patents (SEPs) is restricted in the USA and EU due to concerns about patent hold-up, ie the risk that SEP holders may force standard implementers to accept onerous licensing terms, exceeding the patent’s true economic value. Further, injunctions are frequently seen as incompatible with the commitment given by patent holders to license SEPs on fair, reasonable and non-discriminatory (FRAND) terms.

ﰁLimiting the use of injunctions by SEP holders may enable implementers to engage in hold-out, ie delaying tactics that force the patentee to engage in expensive and protracted litigation and may result in royalty rates that fall below FRAND terms.

ﰁCourts may avoid the use of injunctions by employing some procedural remedies in SEP disputes to restore the balance between the interests of pat- ent holders and implementers. At the beginning of the trial, a court could order the implementer to make interim payments into escrow, or provide any other type of security, reflecting the value of the SEP holder’s whole portfolio, and not just the pat- ents in litigation. Interim payments would secure the interests of SEP holders and make hold-out strategy more costly, while eliminating the need for injunctions and mitigating concerns about hold-up.