The EU Commission is seeking to address repeated disputes caused by the licensing system for standard-essential patents (SEP), which have arisen in relation to standards for 5G and networked cars. According to a leaked draft, a key proposal is the creation of a SEP register. Patents registered would be subject to examination to determine whether they are decisive for a standard, and a dispute settlement mechanism would be established along with fee rates for technical procedures.
SEPs play a vital role in wireless technology, such as 5G, WLAN, NFC, and in audio and video compression (MPEG), data formats (JPEG), and interoperability of applications. Telecommunications device manufacturers are the traditional users of these standards, but with the growth of the Internet of Things, small and medium-sized enterprises are increasingly using standards with SEPs.
Owners of standard-essential patents are obligated to offer a license on fair, reasonable and non-discriminatory terms (FRAND), but there are disputes as to who should license protected technology and how fees should be set. This results in excessive administrative and transaction costs that lower the fairness and efficiency of the licensing system.
The plans aim to improve competitiveness among EU firms, including start-ups, facilitate the development of critical and digital technology, and promote the transition to a climate-neutral economy. The EU Intellectual Property Office would run the proposed competence center, and the register would function as a trustworthy source of information about SEPs.
Although welcomed by some associations in the car, app developer, and smart energy sectors, the proposals have met resistance. The IP Europe lobby, which includes Qualcomm, Orange, Ericsson, Panasonic and Nokia, argues that they compromise intellectual property rights and undermines the incentives for open innovation.
