Validity of Non-Disclosure Agreements in SEP Licensing

Forthcoming as 'Royalty Rates and Non-Disclosure Agreements in SEP Licensing: Implications for Competition Law’ in (2018) 40(6) European Intellectual Property Review.

TILEC Discussion Paper No. 2018-004

19 Pages Posted: 25 Dec 2017 Last revised: 8 May 2018

See all articles by Vikas Kathuria

Vikas Kathuria

Max Planck Institute for Innovation and Competition

Jessica C. Lai

Victoria University of Wellington

Date Written: December 22, 2017

Abstract

Requiring a Non-Disclosure Agreements (NDAs) is a common business practice used to safeguard the commercial interests of a licensor and a licensee in intellectual property licensing matters. The recent litigation involving Standard Essential Patents (SEP) has, however, raised doubts over the practice of patentees requiring NDAs before licensing SEPs to putative licensees. It has been argued that the inclusion of royalty rates in NDAs leads to discriminatory pricing of technology — a violation of the commitment to licence under fair, reasonable and non-discriminatory (FRAND) terms. That is, licensees cannot know if they receive non-discriminatory terms, if they cannot compare their licences due to NDAs. This article examines this issue from both theoretical and practical perspectives, and concludes that the inclusion of royalty rates in NDAs may be justified in view of the technological and commercial realities involved in SEP licensing.

Keywords: SEPs, Non-Disclosure Agreements (NDAs), FRAND, Royalty, Discrimination, Competition Commission of India

JEL Classification: K12, K21, L24, O34

Suggested Citation

Kathuria, Vikas and Lai, Jessica C., Validity of Non-Disclosure Agreements in SEP Licensing (December 22, 2017). Forthcoming as 'Royalty Rates and Non-Disclosure Agreements in SEP Licensing: Implications for Competition Law’ in (2018) 40(6) European Intellectual Property Review.; TILEC Discussion Paper No. 2018-004. Available at SSRN: https://ssrn.com/abstract=3092219

Vikas Kathuria (Contact Author)

Max Planck Institute for Innovation and Competition ( email )

Marstallplatz 1
Munich, Bayern 80539
Germany

Jessica C. Lai

Victoria University of Wellington ( email )

PO Box 600
Wellington
New Zealand

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