Intellectual Property Branch of China Automotive Engineering Society, IMT-2020 (5G) Promotion Group and Essential Patents Working Group of Automotive Standards jointly issued the Licensing Guidelines for Automobile Standard-Essential Patents (2022 Edition) (hereinafter referred to as the Guidelines). The Guideline puts forward four core principles, including "the principle that any link in the industrial chain is eligible for licensing", and clarifies the calculation basis, consideration factors, calculation methods and the principle of limiting cumulative licensing rates of reasonable licensing fees, thus providing reference documents for the necessary patent licensing of automobile industry standards. 

"Standard Essential Patent (SEP)" refers to a patent that must be used in the implementation of a technical standard. "Automotive products" refers to parts or complete vehicles on automobiles. "Essential patents for automobile industry standards" refers to the standard essential patents involved in the technical standards followed by automobile products. The principle of "equity, reasonableness and non-discrimination" is recognized as the licensing principle by international standardization organizations, also known as FRAND principle. 

The core principles of standard-essential patent licensing for automobile include: 

1. The principle of balance of interests 

Standard essential patent license should follow the principle of interest balance, which should not only ensure the payoff of patentee's innovation investment, but also keep the license fee within a reasonable range, so as to ensure that the technical standards can be widely popularized and applied to promote the healthy and sustainable development of the automobile industry, taking the public interests into consideration. 

2. The principle of equity, reasonableness and non-discrimination 

The principle of "equity and reasonableness" mainly indicates that the standard essential patentee has the right to get rewards on its R&D investment and technological innovation on the premise of following the FRAND principle, but the license rewards of the patentee should be maintained within a reasonable range. 

The principle of "non-discrimination" means that the standard essential patentee should license the implementers under the same or similar conditions, and must not refuse the license without reason or attach unreasonable license conditions; if there are significant differences in licensing conditions or terms, reasonable explanations should be made to avoid putting the implementers of substantially the same or similar conditions at a competitive disadvantage. 

In case of subsequent changes in patent ownership such as inheritance and transfer of standard essential patents promised in ISO, the original patentee and its successors or transferees shall, through appropriate forms, make all subsequent successors or transferees still subject to the principles of equity, reasonableness and non-discrimination. 

3. Any link in the industrial chain is eligible for the licensing principle 

According to the FRAND commitment made in ISO or the intellectual property policy of ISO, any patent implementer in good faith has the right to obtain the standard essential patent license, and the standard essential patentee has the obligation to grant the license to the implementer who intends to obtain the license, regardless of the level of the industrial chain. 

Holders of standard essential patent should not repeatedly collect the standard essential patent license fee from manufacturers at different levels in the same industrial chain. 

4. The principle of handling industry differences by negotiation

The industry chain of automobile system is complex, as there are tens of thousands of parts on the whole vehicle. In current industrial practice, the prevailing business practice in the automobile industry is the vertical licensing of the industrial chain, that is, automobile enterprises usually solve the intellectual property licensing problem of their supplied parts and components products by the higher-level suppliers in the way agreed in the contract, and vehicle enterprises usually solve the intellectual property problem of various parts and components products on the whole vehicle through suppliers. 

When there are differences between the standard essential patent licensing model for automobile products and the current licensing model and business practices of automobile industry, it is advisable to fully respect and consider the industry characteristics and business practices of both industries, to negotiate in an active and goodwill manner, and seek licensing model acceptable to both parties. 

The calculation basis of standard essential patent license fee should take the product unit that the standard essential patent technology actually contributes to automobile products as the calculation base of license fee, and avoid including other product units irrelevant to the standard essential patent technology into the calculation base of license fee. Reasonable license fee should consider the contribution of standard essential patent technology to the actual value of automobile products, the accumulated license rate of the industry, the number of standard essential patents held by patentees, the geographical distribution of patents and other factors, and the license rate should not benefit extra because patents are included in the standard. The contribution of standard essential patents to the value of automobile products needs to consider that the value of automobile products is composed of technology, market, production, brand and after-sales, especially the contribution of brand in the value of automobile products; in addition, the contribution of standard essential patent technology to the sales and profits of automobile products should also be considered. In order to ensure the balance of the interests of both parties, the sum of the standard necessary patent license fees for automobile products should have a reasonable upper limit, which can be a certain proportion of the reasonable profits of the licensed products. License fees can be calculated by "top-down" method and comparable license agreement method. 

The guidelines will be implemented as of the date of promulgation.