The integration of advanced technologies in the life sciences sector is leading to a transformative shift in the industry as innovations in wearable technology and 5G connectivity are revolutionising healthcare delivery. The burst in popularity of wearable devices is reflected in the rapid growth of the wearables market, which is projected to be valued at $74.03 billion by 2025, an increase of 227% from 2020.[1]

Further to the commercial growth of the industry, the value of wearables is also reflected in their increased importance in clinical trials. Since the COVID-19 pandemic, healthcare providers and researchers have sought to develop new ways to track patient data, and wearables have facilitated this allowing the monitoring of critical data through non-invasive means. 

The deployment of 5G networks further enhances the capabilities of these devices, enabling faster data transmission, lower latency, and more reliable connections. This technological synergy promises to enhance remote patient monitoring, telemedicine, and personalized healthcare, allowing the sharing of clinical data with healthcare professionals in real time.

However, the integration of 5G technology and wearables in the life sciences sector has the potential to lead to significant legal considerations particularly concerning Standard Essential Patents (SEPs) and Fair, Reasonable, and Non-Discriminatory (FRAND) licensing terms. The rapid rise in innovation aimed at monitoring, analysing, and transferring patient data may lead to more innovators in the sector finding it necessary to interact with SEP owners in the telecoms sector.

Standard Essential Patents and FRAND Terms

SEPs are patents for inventions that have been identified as essential for use in a particular technology standard. These standards help ensure that different technologies can interact with each other and cover various technologies including, by way of example, 5G, Wi-Fi and Bluetooth. Manufacturers must ensure their products comply with the relevant standards, including through the use of any patented technology included in these standards. 

Standard Setting Organizations (SSOs), such as the European Telecommunications Standards Institute (ETSI) and the Institute of Electrical and Electronics Engineers (IEEE), develop and uphold these standards. For a patent to be included in a standard, the patent holder is usually required to provide an undertaking to the relevant SSO to licence the patent on FRAND terms. 

FRAND Disputes 

SEP holders and implementers often have very different positions when it comes to what terms they consider to be FRAND, leading to disputes where parties are unable to agree on what constitute FRAND terms following negotiations. 

Where the implementer is making and selling products incorporating the patented technology without a licence, the SEP holder may seek to bring patent infringement proceedings against the implementer, creating the risk of an injunction being obtained against the implementer, and often leading to what will inevitably be costly and multi-jurisdictional litigation due to the national nature of patent rights. 

As with most patent disputes, FRAND disputes often require a series of technical trials, where the court will determine whether the patent is valid, and if so, whether it has been infringed. If the SEP is found to be valid and infringed, the court will proceed to determine a FRAND royalty rate and other licence terms, adding an extra element of complexity to the dispute. The courts will consider various factors when making this assessment, including any comparable licences available (i.e. similar licences between similar parties in similar circumstances). Once a FRAND rate is set, the court will consider any past sales made by the implementer and apply the FRAND rate to those sales, often also awarding interest to the SEP holder.

What should the life sciences industry look out for?

In 2021, the UK Government published a call for views on Standard Essential Patents and Innovation to assess the efficiency and effectiveness of SEPs and the adherence of SEP holders to FRAND terms. The survey results indicated that while a majority of participants agreed that SEPs contribute to a balanced ecosystem, some expressed concerns about potential imbalances, with one party gaining more benefits than the other. There were worries that SEP holders might exploit their market dominance and the threat of injunctions to impose high royalty rates. This raises a question as to whether there may be a tightening of standards in the future.

The development of case law around the use of comparable licences to determine FRAND rates is relevant to innovators in the life sciences industry, especially given the potentially limited number of such comparables in the life sciences sector. For example, in InterDigital Technology Corporation and others v Lenovo Group Ltd [2023] EWHC 539 (Pat) the High Court found that the volume discounts provided by InterDigital to its largest licensees lacked economic rationale and were primarily aimed at maintaining its preferred rates, resulting in discrimination against smaller licensees.

Furthermore, the recent Court of Appeal decision in that case (InterDigital Technology Corporation and others v Lenovo Group Ltd and others [2024] EWCA Civ 743) confirmed that limitation periods should not be taken into account when assessing FRAND terms (i.e. royalty rates could potentially apply to all past sales) and that interest should also be paid on these royalties for past sales. It therefore appears that the assessment for determining FRAND licence terms differs to the assessment of damages in patent litigation which are limited in this way. One of the reasons behind this decision was that it avoids giving implementers an incentive to delay agreeing a licence. 

Given these complexities, companies in the life sciences sector must be vigilant in their approach to SEP licensing. They should engage in thorough due diligence to understand the landscape of SEPs relevant to their technologies and seek expert legal advice to navigate potential FRAND disputes.

[1] Exploring the Future of Wearable Technology: What Lies Ahead? - Telepresenz®