Facing strong opposition from rights holders, the EC’s controversial proposal has cleared one hurdle but must now secure Member States’ support
The EU takes a step forward in modifying the licensing regime for patents
In late February 2024, the European Parliament voted 454-83 in favour of a new – and contentious – EC regulation for Standard Essential Patents (SEPs). With other IP-related votes scheduled for the same session, there was limited time for policymakers to debate matters, with speeches focused on whether or not to approve the text, rather than suggesting major changes to it. Having received around 70 stakeholder opinions to consider, the Parliament’s Committee on Legal Affairs (JURI) approved a draft version in January, enabling MEPs to vote on the EC proposal announced in April 2023. This put forward a revised SEPs licensing framework, which the EC hopes will address the unpredictable and litigious nature of the current system. Through the framework, the EC aims to set a “global benchmark for SEP transparency”, reduce conflicts and facilitate efficient negotiations, while enabling end users to benefit from products based on the latest standardised technologies at fair, reasonable and non-discriminatory prices. It was unveiled as the centrepiece of a proposed ‘Patent Package’ alongside an EU-wide compulsory licensing model and a unitary system for Supplementary Protection Certificates (SPCs).
There has been opposition to the draft regulation, fearing it would harm investment and innovation
While a seemingly comprehensive set of measures, the EC’s proposed package has been met with mixed reaction – with notable doubts expressed about whether the European Union Intellectual Property Office (EUIPO) has the expertise to oversee SEP licensing. Some trade bodies, such as the Fair Standards Alliance (which counts Apple, Google and Microsoft among its members), have largely welcomed the EC’s proposals – or at least acknowledged efforts made. However, other associations immediately voiced concerns. For instance, IP Europe – which represents the likes of Ericsson, Orange and Qualcomm – called the draft regime "harmful and unbalanced". The framework has since faced significant opposition over the past year from patent holders that feel the regulation would weaken and delay the enforcement of IP rights. It is also considered troubling the relatively little airtime such a regulation has received and the limited engagement between the EC, patent holders and the European Patent Office during the drafting process. There is also a broader worry that the Patents Package could lower incentives for investment and innovation, undermining Europe’s prospects for technological leadership while enabling certain tech giants to reduce the amount they pay in patent royalties.
Member States still need to have their say on the EC’s proposal, with some said to be harbouring significant concerns
The draft regulations will still need to be agreed upon by the European Parliament and the Council of the EU, with the timeline for that currently unclear. Several issues would be in need of resolution before the co-legislators could formally adopt new patent rules. Though the EC’s proposal has passed a key hurdle (and done so mostly intact), the Council is said to have many outstanding questions, with countries such as Finland, the Netherlands and Sweden reportedly strongly opposed to the legislation. Member States are therefore yet to reach a position to take into inter-institutional negotiations. They are set to vote on a ‘qualified majority’ basis rather than unanimity. Should Member States then table substantial amendments, a tough trilogue phase could ensue, causing the process to stall. Also, MEPs may not be in a rush to progress through the legislative process ahead of the upcoming elections, effectively passing the baton to the next set of Commissioners. With neither patent holders nor implementers entirely satisfied with the system as it stands, the challenge for EU policymakers now is about striking a balance between protecting IP rights, promoting fair competition and delivering benefits for end users, while supporting the region’s technological ambitions.
