A Proposed European Commission Regulation Would Dramatically Alter How Standards Organizations And Their Members Approach Standard Essential Patents

Published date05 September 2023
Subject MatterIntellectual Property, Patent
Law FirmSeyfarth Shaw LLP
AuthorArnold E. Brown, II

The European Commission's ("EC") Proposal for a Regulation of the European Parliament and of the Council on Standard Essential Patents COM(2023) 232 final (27 Apr 2023) (the "Proposed Regulation") was issued by the Commission as the first step in the EU's legislative process. After the release of the proposal, the Commission solicited feedback from stakeholders (those affected by the proposal like patent holders and implementers) until August 10, 2023. This update explores what the Proposed Regulation would mean for standards development groups and for companies that are participating in standards development, and offers an analysis of the future of the Proposed Regulation based upon a recent conversation with the unit within the European Commission responsible for the Proposed Regulation, the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs ("DG GROW"). A Standard Essential Patent or "SEP" as used in this update is a patent that is technically essential to a technical standard, or put another way, is a patent necessarily infringed by an implementer of that standard. Of note, standards organizations with royalty-free licensing obligations appear to be outside of the scope of the Proposed Regulation.1 This update is not legal advice, is provided for informational purposes only, and the author is not licensed to practice law in the European Union.

Introduction

The Proposed Regulation, if enacted, would be nothing short of transformative, with impacts ranging far beyond the EU. In describing the background and reasons for the Proposed Regulation, the EC makes salient arguments about the need to improve transparency and accessibility of standardized technology and to remove or reduce barriers or friction that can be created by the current patent licensing framework. Under the Proposed Regulation the following would be established: (A) a SEP register with essentiality checks; (B) a "Competence Centre", under the aegis of the EU Intellectual Property Office ("EUIPO"), that manages the registry, the essentiality checks and provides objective information regarding aggregate royalty rates to implementers; (C) conciliation procedures that are required before launching patent infringement litigation for SEPs; and (D) a process for the determination of an aggregate royalty for using a standard, before or shortly after its publication.

There are several concerns often raised by implementers of technology standards regarding the existing SEP...

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