EU's SEP Regulatory Framework and the Future of IP Rights

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EU’s SEP Regulatory Framework and the Future of Intellectual Property Rights

By The Fatty Fish Editorial Team - July 26, 2023

The European Union (EU) is taking significant strides in shaping the future of intellectual property (IP) rights as the Standard Essential Patents (SEP) regulatory framework continues to advance. The EU has made significant progress in establishing a comprehensive regulatory framework for Standard Essential Patents. SEPs are patents that are crucial to the implementation of certain industry standards, and their accessibility and licensing terms which have long been a subject of debate and legal battles.

The new EU SEP regulatory framework aims to strike a balance between promoting innovation and competition, while ensuring fair access to essential technologies. Under the SEP regulatory framework, patent holders will be required to license their SEPs on fair, reasonable, and non-discriminatory (FRAND) terms. This move is expected to foster an environment that encourages research, development, and the seamless adoption of standardized technologies. The EU’s commitment to enforcing FRAND-based licensing for SEPs is expected to boost technological collaboration, making it easier for companies to build upon existing standards, leading to increased interoperability and a more vibrant market ecosystem, according to the EU.

The EU’s SEP reform strives to establish an equitable structure that establishes a worldwide benchmark for SEP transparency and centers on two primary goals:

Encouraging innovation, production, and sales of products within the EU for both SEP owners and implementers, while also enhancing their competitiveness in markets outside the EU.
Guaranteeing that end users, including small and medium-sized enterprises (SMEs) and consumers, reap the benefits of cutting-edge standardized technologies at reasonable prices.

Here is an opinion piece we found of interest relating to the EU’s SEP reform and its impact on the EU.

EU SEP reform gambles Europe’s long-term future

In an opinion piece, “EU SEP reform gambles Europe’s long-term future” for POLITICO EU, Christina Petersson, chief intellectual property officer, Ericsson, discusses the potential risks and opportunities presented by the proposed reform of the EU’s standard essential patent (SEP) system. The reform aims to address issues related to patent standardization and streamline the patenting process across EU member states. She highlights that while the reform could lead to significant benefits, such as increased innovation, investment, and job creation, there are also concerns about potential drawbacks. For example, the proposal not only presents an extensive and experimental system, but also lacks the necessary commitment of resources and expertise required for its successful implementation. As an example, consider the idea of entrusting control of specialized SEP tasks to a new competence center within the EU Intellectual Property Office (EUIPO), an organization with no prior experience in patents or standards. Establishing the appropriate infrastructure and expertise to handle various SEP issues will undoubtedly demand significant time and resources. Rushing this process without adequate staffing could potentially undermine the entire system.

She argues that contributors require economic motivations to invest in the research and development (R&D) essential for creating SEPs. Reduced incentives for investment and contribution have a cascading impact, leading to a slowdown in the pace of innovation. As a consequence, implementers face increased expenses, ultimately affecting consumers with higher costs. The absence of readily-available standards would require companies to bear the expensive burden of conducting R&D on their own. Additionally, lacking the interoperability facilitated by standards, their products may not generate sufficient revenue due to market fragmentation.

Petersson emphasizes the need for careful consideration and transparency in the reform process to ensure that it truly benefits all EU members and promotes a competitive and innovative landscape. By striking the right balance between harmonization and safeguarding the interests of smaller companies and nations, the EU can secure its long-term future in the global technology and innovation arena. Read the full article on POLITICO EU.

The Fatty Fish Editorial Team

The Fatty Fish Editorial Team includes a diverse group of industry analysts, researchers, and advisors who spend most of their days diving into the most important topics impacting the future of the technology sector. Our team focuses on the potential impact of tech-related IP policy, legislation, regulation, and litigation, along with critical global and geostrategic trends — and delivers content that makes it easier for journalists, lobbyists, and policy makers to understand these issues.