Time for medtech to wrap its head around 5G licensing

Matthew Jones, partner and solicitor at EIP, explains the importance of making it easier for medtech start-ups to obtain FRAND licences for their 5G innovations

It is becoming increasingly clear that many future health innovations will rely on 5G. As the necessary infrastructure for this is developed and deployed, it is paramount for companies in the medtech sector to ensure they properly understand the 5G licensing landscape to avoid infringing intellectual property.

The promise of 5G

The hallmark of 5G is extremely low latency speeds. In theory, robotics will soon be controlled from long distances with just 0.1 seconds of a delay, allowing highly-skilled doctors to perform remote surgery almost anywhere on Earth, provided the 5G infrastructure is in place. Amazingly, surgeons could react to a bleed with the kind of speed required when operating in real-time.

Most of the technical capabilities needed for such surgeries already exists. In 2019, Huawei, one of the world’s leading providers of 5G technology, performed the first live experiment with 5G-enabled surgery on an animal. The company reported that the operation achieved “neat” surgical wounds with “no trace of blood in the whole process,” while the animal’s vital signs were stable following the procedure.

We may also see 5G-connected ambulances soon. In Milan, Vodafone has been trialling connected vehicles that allow paramedics to send 360° images to hospitals in real time, and instantly review patients’ medical histories. If this was widely rolled out it would transform the scale of care that can be offered in an ambulance before a patient reaches the hospital.

However, all these advances will require a major expansion in the existing 5G infrastructure. A key feature will be the construction of many more base stations per square mile than what has been needed for previous generations of cellular technology to enable the necessary network speeds.

Keeping an eye on FRAND

As this infrastructure gets rolled out, businesses in the medtech sector will need to get to grips with a complex part of intellectual property law, right at the interface of intellectual property and competition / antitrust law, known as fair, reasonable and non-discriminatory (FRAND) licensing.

The fundamentals of cellular technologies such as 5G are laid down in standards, which effectively act as a blueprint for how the technology works and how devices made by different companies can all interoperate as part of a network. These standards are made up of technical contributions and innovations from companies and researchers, and what exactly goes into and makes up the standard is determined by organisations such as the European Telecommunications Standards Institute, which is governed by French law.

Like with all other technical innovations, companies can obtain patents to protect their invention and reap rewards on the investment behind their R&D efforts. The difference with cellular standards such as 5G is that certain patents will be standard-essential. This means effectively, it is impossible for the manufacturer or seller of a 5G-enabled device not to infringe the relevant standard-essential patents (SEPs). That is why, in the interests of the technology being made widely available, SEP owners must agree to license their patents on FRAND terms. This FRAND requirement is one of the key differences between the licensing of ordinary patents and SEPs.

In principle, this means anyone who wants a licence to 5G SEPs can obtain one, while the companies and institutions behind these technical innovations can secure a return on their investment in the form of a royalty.

It is far from easy to boil down what FRAND terms are into a bite size paragraph. The exact content of a licensing agreement will always vary and be the result of a commercial negotiation between patent owner and implementer. Where there are disagreements between the parties on this question, this may potentially be resolved through arbitration. But there has also been extensive litigation over what FRAND terms for a given SEP portfolio should be.

International courts have seen many high-profile FRAND disputes in recent years, which have shaped the case law underpinning such licensing. This area of IP law is perhaps not widely known because it is, or at least it has been, limited to a relatively select group of industries. But this will change with the roll out of 5G because its standards will be practiced in many more types of devices than was the case with 3G or 4G. And if you sell a device or service that practices or uses the 5G standard, you will need a licence.

A steep learning curve

There may be something of a steep learning curve ahead for many industries that have not previously been exposed to liabilities over SEPs and FRAND licensing. This is true of medtech, which is an IP-rich industry familiar with the core principles of patent law. Medtech manufacturers, for example, are likely to be familiar with freedom-to-operate analyses, which determine potential liabilities in the form of rival patents, and they may be familiar with securing patents on their own inventions. Less likely, however, is that they will have much experience with FRAND licensing and the complex practical procedures and case law behind it.

This means that manufacturers may be at something of a disadvantage when it comes to FRAND licensing negotiations. The major SEP owners in 5G all have extensive experience of them, and so do the patent pools who offer licences for broad portfolios of patents contributed by different rights owners. For a medtech business new to the game, there will almost certainly be an imbalance in any negotiation. 

In short, it is now crucial for medtech manufacturers to ensure they familiarise themselves with FRAND, which is also evolving rapidly like any area of IP law. A good place to start is to keep abreast of the many legal developments, such as the ongoing Nokia v Daimler litigation in Germany relating to whether component suppliers should be liable to take FRAND licences. It is also key to research the identities of the major SEP holders in the 5G space, as well as licences that other manufacturers have negotiated with them, to prepare for actively engaging with them.

By actively preparing for a future where FRAND will become a bigger part of everyday operational life, the medtech industry can ensure it reaps the benefits of 5G technology while also stimulating further innovation.