The European Patent Office Concerns on Proposed SEP Reform

The European Patent Office Concerns on Proposed SEP Reform

By The Fatty Fish Editorial Team - October 5, 2023

The European Patent Office (EPO) recently voiced concerns on proposed SEP reform in a letter to the European Parliament. In particular, the EPO points to the lack of patent and technical competence at the European Union Intellectual Property Office (EUIPO). The EUIPO is the authority designated to manage the new standard essential patents (SEPs) policy. The European Commission has been analyzing and discussing matters related to proposed SEP reform for a long time. It has stated the proposed SEP reform is necessary because the number of SEP licensing disputes are only likely to increase. However, one study from the Commission itself suggests that SEP licensing disputes are rare and have been decreasing over time. In a letter signed by many former leaders of U.S. government agencies under several presidents (Clinton, G.W. Bush, Obama, Trump, Biden) expressed “shared concerns regarding an apparent pivot in the European Commission’s long standing IP policy that threatens European and American innovation leadership, and European and American economic success and security.” The letter says SEP policies “should be data-driven and should consider the practical impact on industry and relevant geopolitical realities.”

There are still significant contributions to cellular technology and standards (cellular technology represents the dominant part of the SEPs market) from European firms. Ericsson and Nokia are two significant contributors, but there are many more European firms among technology contributors and holders of patents that are essential to a standard. In Europe’s information and communications technology (ICT) sector, development and manufacturing are actually quite distributed across countries, with activities scattered around Europe and many countries having a good performance in ICT royalties. Here is an opinion piece we found of interest relating to the EU’s proposed SEP reform.

EU committee: more evidence needed to support SEP reform

In an opinion piece “EU committee: more evidence needed to support SEP reform” for Managing IP, Rani Mehta, senior reporter, discusses the Committee on International Trade draft opinion published on October 2nd outlining potential changes to the European Commission’s proposed regulation. He reports that standard-essential patent (SEP) owners may be hopeful that the European Union’s (EU) proposed SEP reform could be reduced after a European Parliament committee proposed various changes to the text. The regulation, which has been criticized by SEP owners, proposed handing the European Union Intellectual Property Office (EUIPO) the power to set fair, reasonable, and non-discriminatory (FRAND) rates for SEPs. The EUIPO would also be responsible for checking whether a declared SEP is truly essential to the standard. According to Mehta, SEP owners would not be able to litigate those patents until they had been declared on the EUIPO register and gone through the essentiality and FRAND checks.

Mehta reports that the original regulation suggested establishing a register for SEPs that would contain “the specific sections of the technical specification for which the patent is considered essential.” The draft opinion suggested using the term “illustrative section” instead of “specific sections” and that it would be “burdensome and unnecessary” to require identification of all sections for which the standard was essential. The opinion reads “such a provision is likely to lead to further litigation and is not necessary for the purposes of establishing whether a patent is essential and therefore required to be licensed.” The opinion is a draft and has yet to be formally approved by the committee or the wider parliament. Read more on Managing IP.

Disclosure: Fatty Fish is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

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.