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SEP Regulation: European Union Calls for Stakeholders’ Views

Following public consultation rounds on the regulation of standard-essential patents (SEPs) in the United States and the United Kingdom, the European Union followed suit and published a “Call for Evidence” concerning an impact assessment on the European Union’s new framework for SEPs on 14 February 2022.

The Call for Evidence is part of the European Commission’s proposal for new EU legislation and non-legislative actions, which is expected to be adopted in the fourth quarter of 2022. While the European Union remains open on how exactly a system for licensing SEPs can be made more balanced, fair, transparent, predictable and efficient, there are already signs of a stricter approach in European competition policy towards dominant positions, including SEP holders, in high-tech markets. The European Commission stresses that the expected entry into force of the European unitary patent system requires an initiative at EU level, as initiatives at national level will not apply to unitary patents. Key elements of discussion include:

  • Enhancing transparency of SEPs by: (1) requiring the disclosure and update of certain information to improve publicly available information and (2) introducing a system for independent third-party assessments of essentiality under the management and control of an independent body
  • Providing clarity on various aspects of obligating SEP holders to offer licenses on fair, reasonable and non-discriminatory terms (F/RAND terms) by developing guiding principles and/or processes for clarifying the concept of F/RAND, negotiating F/RAND terms and conditions and determining appropriate level(s) of licensing in a value chain
  • Improving the effectiveness and efficiency of enforcement by incentivizing mediation, conciliation and/or arbitration.

The European Commission is accepting feedback in all 24 EU languages until 9 May 2022 (midnight Brussels time), and is particularly interested to hear opinions of SEP holders, SEP implementers, patent lawyers, legal practitioners, academics, patent-pool administrators, industry associations, start-ups, small and medium-sized enterprises (SMEs), standard development organizations (SDOs), consultants, policy makers and any other stakeholders that have experience with SEPs. All feedback will be published online.

Practice Note: Stakeholders should consider participating in the consultation, irrespective of whether they are more in the SEP holders’ or implementers’ camp, and even if their EU business may be limited. In times of global licensing campaigns, dialogues between the European Union and the United States on competition policy in the technology sector, and EU courts assuming jurisdiction in global SEP disputes, a future EU SEP policy will have an impact also elsewhere around the globe.

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The Net Is Tightening on European SEP Regulation

The regulation of standard-essential patents (SEPs) has increasingly attracted the attention of policymakers in recent years. This includes the European Commission, which institutes multiple projects to profoundly review the European Union’s SEP and competition law framework. Some of these EU projects are still in the making, with the next public consultations coming up in early 2022.

EU review has been undertaken mainly for two reasons. The first is that the European Commission is responsible for the enforcement of European competition law. It is this set of rules that prohibits the abuse of a dominant market position in the European Union and, at least from an EU perspective, also obligates SEP holders to offer licenses on fair, reasonable and non-discriminatory terms (F/RAND terms). The second reason is the European Union’s goal to act as an international norm-setter in intellectual property (IP) protection.

In November 2017, the European Commission published an EU approach to standard-essential patents as part of its “IP Package.” The aim was to provide a clearer framework to incentivize and facilitate access to the key technologies enabling interconnection and connectivity.

These relatively narrow targets were made more concrete in November 2020 with the release of the “Intellectual Property Action Plan.” This plan sought to support the European creative and innovative industry sector in remaining a global leader. In the area of SEPs, the European Commission’s objective was to reduce friction and litigation between SEP holders and users by relying on potential regulatory reforms—in addition to industry-led initiatives—to clarify and improve the framework for SEP enrollment, licensing and enforcement. By providing incentives for good faith negotiations, the European Commission tried to reconcile the interests of SEP holders, standard development organizations (SDOs) and users of SEP-protected technologies.

In January 2021, the European Commission’s Group of Experts on Licensing and Valuation of SEPs published its contributions to the debate. This group, which consists of scholars, judges and stakeholders, proposed, inter alia, a number of principles for licensing SEPs, namely licensing at a single level of the value chain, a single F/RAND royalty, passing on F/RAND royalties downstream and establishing licensee negotiation groups. The European Commission’s next step in terms of a new framework for standard-essential patents is a public online consultation to be held in the first quarter of 2022.

Ahead of that event, on 2 February 2022, the European Commission presented its new Standardization Strategy, as well as a draft law amending EU Regulation No 1025/2012, with the aim of ensuring a balanced stakeholder representation within European SDOs and addressing the issue of agility and governance in the European standardization system. This strategy and the draft law highlight the European Union’s priority to defend its key position as a global standardization policymaker.

The EU Regulation of SEPs is also affected by the review of the EU Horizontal Block Exemption Regulation, which defines certain research and development (R&D) and specialization agreements that can be [...]

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