Remember Zhang Ping, the IPR professor of Peking University who in December 2005 attacked a patent of Philips that was part of the 4C DVD pool because it was alleged to be not essential, read here. Emma Barraclough followed the story for Managing IP:
In January 2006, Zhang got support of four other law professors who joined her case.
In August 2006 the Patent Reexamination Board began hearing the dispute, see Barraclough's article about this here.
However, the parties have agreed to settle the matter.
Philips will remove the Chinese patent from the patent lists attached to the DVD patent licence agreement and "never again claim the rights of the Chinese patent".
The academics have withdrawn their request for SIPO to invalidate the patent.
Notwithstanding this settlement, the total royalty of $ 3.50 per unit charged to DVD manufacturers would not change, according Barraclough who cited a spokesman for Philips.
This position was anticipated by Zhang. Barraclough quoted Zhang in her August article:
"Even if a questionable patent is declared invalid, typically, royalties are unchanged. It seems as if that unless the last so-called essential patent is declared invalid or expires, the licensing policy will stand unchanged. Therefore, by imposing prohibitive costs on the opponent and by offering little fruit to the challenger, patent pools are protected from challenge and public supervision."
In this respect Philips' withdrawal is a Pyrrhic victory. However, manufacturers can start using the technology, although non-essential, manifested in the withdrawn patent without authorisation. This could stimulate innovation. Besides, the professors have acquired a new case study for their students.
Read Barraclough's January 2007 article here (free access as part of MIP Week).