With industry and the US Government voicing concerns, there is much for European policymakers to discuss before the proposed rules for SEPs can be enacted
A new licensing framework for Standard Essential Patents: On 27 April 2023, the EC unveiled a suite of rules intended to help EU citizens and companies – especially small and medium-sized enterprises – make the most of their inventions, leverage new technologies and contribute to the bloc's competitiveness and sovereignty. Complementing the forthcoming Unitary Patent system, the proposed ‘Patent Package’ seeks to create a more transparent, effective and future-proof intellectual property (IP) rights framework. It has three pillars, its centrepiece being a revised standard essential patents (SEPs) licensing framework, which the EC hopes will address the unpredictable and litigious nature of the current system. The applicability of SEPs, particularly for connectivity standards, is expected to increase with growth in the IoT market. The EC’s draft framework therefore aims to set a “global benchmark for SEP transparency”, reduce conflicts and facilitate efficient negotiations, while enabling end users to benefit from products based on the latest standardised technologies at fair and reasonable prices.
EU-wide compulsory licensing and supplementary protection certificates: The two other dimensions to the proposed regulations also look to make the patents system more effective by further eliminating Single Market fragmentation and reducing red tape, while protecting innovation and ensuring fair access:
Compulsory licensing: There are currently 27 national regimes for compulsory (i.e. government-authorised) licensing, which can be a source of legal uncertainty for both users and holders of IP rights. The new rules foresee EU-wide compulsory licensing that would complement crisis instruments, such as the Single Market Emergency Instrument, HERA regulations and the Chips Act, thereby enhancing the bloc’s resilience to crises should (preferred) voluntary licensing agreements not be available or adequate; and
Supplementary Protection Certificates (SPCs): With protections only available at national level, the existing framework suffers from fragmentation, which leads to complex and costly procedures, as well as legal uncertainty. The EC’s proposed reforms would introduce a unitary SPC to complement the Unitary Patent and a centralised examination procedure, under which an application to extend the term of a patent could be valid in multiple Member States through a single decision.
Industry and the US have expressed concerns: While the package of measures is comprehensive, it was met with mixed reaction – with notable doubts about whether the European Union Intellectual Property Office (EUIPO) has the expertise to oversee SEP licensing. The European Automobile Manufacturers' Association (ACEA) welcomed the proposals, but wanted the EC to be more ambitious and establish rules that mandate SEP holders to offer licences to any willing party on fair, reasonable and non-discriminatory (FRAND) terms. The Fair Standards Alliance, which counts some tech and automotive firms as members, had a similar view; however, IP Europe (which represents the likes of Ericsson and Qualcomm) has called the draft framework "harmful and unbalanced" with concerns that Europe will lose its leadership position (to China). US officials have also conveyed to the EC its concerns that the aspects of the proposals could inflict unintended harm on domestic patent owners. The draft regulations will still need to be debated and agreed by the European Parliament and the Council of the EU, with the stakeholder response making it plain that several issues will need resolving before new patent rules can be adopted.
