Preliminary initiatives
In 2017, in its Communication on “Setting out the EU approach to Standard Essential Patents”, the Commission called for a balanced approach based on increased transparency in SEP licensing.
Between 2014 and 2020, the Commission conducted a number of studies and set up an expert group on the licensing and valuation of SEPs.
While there have been a number of improvements since 2017, there still continue to be significant disagreements among stakeholders with regard to SEP licensing. For this reason, in its 2020 intellectual property action plan (‘the IP action plan’), the Commission announced that it would further promote transparency and predictability in SEP licensing, including by possibly reforming the SEP licensing system.
Political context
A patent that protects technology essential to a standard is called a standard-essential patent (SEP). Patent-holders commit to licence their SEPs to users of the standard on fair, reasonable and non-discriminatory terms and conditions.
Typically, SDOs require that any person or company wishing to have their patented technology included in a standard commit to licensing the relevant patents to others who may wish to use the standard. (Article 101(1) and Article 101(3) TFEU for standardisation agreements – 4 guideline principles)
These licences must be granted to implementers on fair, reasonable and non-discriminatory (FRAND) terms and conditions
If not patented technology cannot be included in the standard.
However, some users have found that the system for licensing SEPs is not transparent, predictable or efficient. Moreover, patent disputes are governed by national patent laws and civil proceedings or enforcement laws which lead to national discrepancies.
This initiative seeks to create a framework : fair, reasonable and non-discriminatory (FRAND) terms and conditions for SEPs licencensing
The proposal
The European Commission presented on 27 April 2023 a legislative package including measures to facilitate access to patents needed to comply with technical standards : COM(2023)232 - Proposal for a regulation on standard essential patents
The proposal contains 5 building blocks:
1. SEP register, database and essentiality checks:
Establishment of an compulsory register held by the EUIPO, where SEP holders record their SEPs, providing details on patent and standard. Selected SEPs are subject to a non-binding essentiality check. The proposal further provides for an electronic database that would contain information on, among other things, aggregate royalties, FRAND terms and conditions or any licensing programmes, as well as collective licensing programmes.
2. SEP aggregate royalty:
SEP holders will be able notify in the register the expected maximum aggregate royalty. Alternatively, both SEP holders and/or implementers can ask a conciliator to recommend a (non-binding) aggregate royalty.
3. FRAND determination
An expert-driven and time-limited out-of-court dispute resolution mechanism that SEP holders and implementers can benefit from when negotiating a FRAND licence.
In certain circumstances, and subject to certain safeguards regarding the genuineness of commitment and access to justice, a SEP holder and an implementer would have to try first to agree on a royalty during the FRAND determination of no longer than 9 months, before they could resort to litigation.
The FRAND determination would thus be a safe harbor to negotiate without the pressure of litigation for implementers and would help to limit the duration of otherwise protracted licensing negotiations for SEP holders.
4. SME support measures:
Free advisory services; reduced fees for registration of SEPs and for essentiality checks and access to the SEP register; promoting more favourable FRAND terms and conditions for SMEs.
5. Establishment of a ‘Competence Centre' at EUIPO
to administer the elements above (registry, database, essentiality checks, aggregate royalty, FRAND determination and SME support services).
Key players and next steps
Ex-post public consultation
The Commission’s ex-post public consultation on standard essential patents was initially set to close on 4 August 2023, however, a new deadline has been set for 10 August 2023.
Key players:
European Commission - GROW.DDG1.C.4
Ms Maive RUTE Deputy Director-General – Chief Standardisation Officer
Ms Merete CLAUSEN Director – [GROW C] Investment
Mr Kamil KILJANSKI - Head of Unit GROW.C.4 Intangible Economy
European Parliament - JURI was officially appointed as the lead Committee on the file and will tentatively nominate a Rapporteur in the coming weeks.
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