The Impact of the EU SEP Regulation 5G/6G Global Innovation

The Impact of the EU SEP Regulation 5G/6G Global Innovation

By The Fatty Fish Editorial Team - October 23, 2023

Standards for cellular technology, particularly with 5G/6G for global innovation, serve as the cornerstone for all facets of society and the worldwide economy, enabling market entry and stimulating technological innovation. Businesses, researchers, contributors or standard essential patent (SEP) holders are compensated by users of the standardized technology (implementers). Currently, compensation is structured by way of patent licensing whereby contributors license their SEPs to implementers on fair, reasonable and non-discriminatory (FRAND) terms. Typically, FRAND terms mirror the economic value that the patented technology adds to the end product.

A number of experts agree on the need for a balanced approach to SEP licensing that both incentivizes inventors and provides predictability to companies that license the use of another company’s inventions. They believe the proposed EU SEP regulation is significantly flawed and will undermine European leadership in 5G/6G. Among their concerns is that the EU SEP regulation will require the patent owner to register its SEPs and participate in one or more ADR processes before pursuing any court action. Experts indicate no similar requirements are placed on implementers. For example, implementers do not need to register when they are selling standard-compliant products and can choose not to go through the alternative dispute resolution (ADR) process.

The EU SEP regulation provides an elaborate notification system of standards and declared SEPs, essentiality checks, and aggregate and individual royalty-rate determinations. However, experts are not certain it would help with licensing. Here is an opinion piece we found of interest relating to the proposed EU SEP regulation.

EPO president expresses serious doubts about EU SEP licensing regulation

In an opinion piece “EPO president expresses serious doubts about the European Union (EU) standard essential patents (SEP) licensing regulation” for IAM Media, Joff Wild, editor-at-large, discusses a letter written by António Campinos, the President of the European Patent Office (EPO), to the chair and vice-chair of JURI, the European Parliament’s legal affairs committee, expressing serious doubts that the EU SEP regulation will achieve many of its stated goals. According to Wild, Campinos joins with the draft opinion of the European Parliament’s Committee on International Trade in questioning the extent to which there is evidence to support the Commission’s claims that the EU SEP regulation is necessary.

Wild reports that this is the first time the EPO President has commented in public on the proposed EU SEP regulation since it was published in April 2023. He adds that the move will likely generate significant interest given the major role that the office plays in the development, and management of the European patent system. This includes the administration of the Unitary Patent, even though the EPO is not an EU institution. All EU member states are members of the European Patent Organization, and all have representatives sitting on the Administrative Council, the office’s supervisory body.

According to Wild, Campinos acknowledges that the EPO shares the EU SEP regulation’s goals as “enhancing legal certainty, transparency, and reducing fragmentation and transaction costs related to licensing SEPs”. But, Campinos says the EPO is concerned that “some of the proposed changes may be ill-suited to achieve these stated goals and require more in-depth analysis”. Campinos believes “the proposed measures may impose disproportionate regulatory burdens and hamper and delay access to justice, which could result in legal insecurity, not only for patent holders, but also for third parties implementing the standards concerned.” Read more on IAM Media.

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.