Reforming Standard Essential Patents: What do the Expert Bodies Say?

The European Commission’s proposal to reform Standard Essential Patents (SEPs), which have been covered in several blogs by ECIPE scholars, has caused a lot of surprise in the expert community. One reason for that reaction is that the Commission did not enlist many of the expert bodies in Europe that could have helped them to craft a proposal that better reflect current conditions for work around standards and patents.

The European Telecommunications Institute (ETSI), an officially recognized standards body by the EU for ICT-enabled products, declared some of its concerns already when the Commission’s proposal had leaked in advance of its publication. In a letter to the Commission in April this year, ETSI’s Director General said that the idea of building up a registry for SEPs at the EU Intellectual Property Office (EUIPO) would duplicate ETSI’s already existing registry of SEPs and essentiality declarations, and could lead to confusions and problems for the standards body. He is, as noted below, not alone in making this point.

At the inauguration of the new Unified Patent Court in May, the President of the UPC Court of Appeal said that the proposal could undermine the fundamental right of access to justice in the EU. The establishment of this court – for seventeen countries that are members of the EU and have introduced the unitary patent – has been an important step to make patent disputes in Europe easier to manage, and the UPC is likely to be a place where SEPs disputes are resolved. Under the Commission’s proposal, SEP holders would not be able to bring infringement actions to a court while the EUIPO was attempting a “conciliation” between the SEP holder and implementer, if they previously had not managed to reach an agreement on FRAND terms. Obviously, it would lead to a delay in infringement action and, following the old adage, “justice delayed is justice denied”.

In August, CEN and CENELEC – two other standardization bodies in Europe with strong expertise – released a paper commenting on the Commission’s proposal. While it passed unnoticed by the media, the two bodies put forward a couple of important observations. First, the two standards bodies issued warnings that new roles for European Standardisation Organisations (ESOs) under the Commission’s proposal will undermine their current roles and integrity, and that it could lead to new standards work to migrate to less regulated bodies. Second, on the issue of building up a new register of SEPs at the EUIPO, CEN and CENELEC note that there are already such registers and that adding an additional register is not advisable. In their view:

“Adding a new layer of SEP disclosure is likely to increase administrative burden on participants to standardization activities and disincentive innovators voluntarily bringing their contributions to standards. This would also create market confusion such that standards implementers may not be fully aware of declared essential patents given that they might be relying on the wrong SEP database.”

Recently, views on the Commission’s proposal have also come from another expert body – the European Patent Office (EPO). In a letter to two MEPs involved in the European Parliament’s work on the Commission’s SEP proposal, the President of the EPO put some new light on what remains a conundrum in the Commission’s proposal – its preference for using the EUIPO as the competent body for managing the new SEP policies rather than the EPO (or other bodies). The EUIPO is doing good work in its field of expertise, but that work does not include patents or standards. In fact, it does not have any in-house competence about patents. The EUIPO is predominantly a trademark register and, unlike the EPO, is not a body that has built up experience working with the European standardisation organisations on matters such as essentiality.

Those who have followed the Commission’s work on SEPs over the years will remember that it has been discussed several times that the EPO was going to receive a role in checking essentiality claims. The EPO also took part in a pilot study by the EU’s Joint Research Center that explored this area. In the October letter, the EPO said that it had followed up with the European Commission in several communications but that the Commission had failed to take notice of the EPO in drafting the regulation. It also says, in an overview paragraph about the Commission’s SEP proposal, that:

“We feel that some of the proposed changes may be ill-suited to achieve these stated goals and require more in-depth analysis. 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.”

Interestingly, the EPO also draws the attention to the rules of the World Trade Organisation (WTO) and their consequences for patents. In a previous blog, I drew attention to the fact that the EU has recently filed a WTO complaint against China for, effectively, denying European firms access to justice. The EPO now says:

“We furthermore believe it is crucial to ensure that any proposed measures are consistent with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and respect fundamental rights under the European Charter of Human Rights, as highlighted by the President of the Court of Appeal of the Unified Patent Court (UPC) during the inauguration ceremony of the UPC on 30 May 2023. In that respect, some of the proposed measures need more analysis concerning the balance between property rights and their limitations.”

The assignation of the EUIPO (and not the EPO) as the new body for managing SEP policy is surprising because the EPO, even if it is not a direct EU body (it has all EU states plus 12 more countries as members), has been given official EU policy roles in the recent past. For instance, the EPO plays a crucial role for managing the unitary patent. Therefore, the EPO says it is “questionable whether it is opportune to create any new and specific Register for SEPs”.

Of course, the EPO speaks out of its own interest, but it points to a practical and important argument for assigning this new role to the EPO instead of the EUIPO: the EPO already has a register of the patents. Moreover, it has a unitary patent register too, and “(t)hese Registers are linked to the databases on SEPs operated by major SDOs like ETSI and ITU-T. The Registers hold information on global patent families beyond European patents, via direct access to the registers of the patent offices of many EPO Member States and other major patent offices across the globe. Importantly, the Unitary Patent Register contains patent holders’ commitments to license Unitary Patents on FRAND terms”.

These are valid points. The Commission has proposed to establish a completely new SEP operations at a body with no particular competence of patents and standards, or in working together with standardisation bodies in Europe and across the world. It is going to take time and resources to build up competence and experience, and the establishment of a new register will add new burdens and only duplicate already existing registers. It is difficult to see what positive objective it would serve while the risks and disadvantages are blatantly obvious. It is indicative of the process leading to the Commission’s proposal that the EPO was not even consulted on this new plan.