Insights Standard Essential Patents: European Parliament Committee adopts report on proposed Regulation


European standards are voluntary technical specifications defining requirements for products, processes, services or test methods, often defined pursuant to EU legislation. They exist in various industry areas including communications (e.g. in relation to 5G and Wi-Fi) and consumer electronics (e.g. the European standard that specifies high-level security and data protection provisions for consumer IoT devices that are connected to network infrastructure). European Standardisation Organisations, such as ETSI, CENELEC and CEN, are responsible for standards.

Many standards are based on technologies, without which products to which the standards relate cannot be developed, and such technologies are often protected by patents. There are existing rules and practices to ensure the efficient licensing of patents that are determined to be essential for European standards (“standard essential patents” or “SEPs”) with a view to ensuring a broad and rapid take up of the relevant technology, while giving patent holders an adequate return on their investment in research and development.

In 2023, the European Commission proposed a new regulation on SEPs reflecting the fact that the number of SEP holders and users are increasing and that navigating the SEP landscape can be challenging for licensees.  The proposed Regulation includes, amongst other things, a new obligation to notify SEPs for inclusion in an electronic register open to third parties (but with certain confidentiality protection for the SEP owner), including providing information about the parts of the patent’s technical specification for which the patent is considered essential, and the SEP holder’s public licensing terms and conditions and royalty policies. Certain SEPs will be subject to an annual essentiality check. A new royalty determinations procedure is proposed with the aim of helping SEP owners and implementers agree a SEP licence on fair, reason and non-discriminatory (“FRAND”) terms if they are unable to reach an agreement. The Commission proposes a new Competence Centre, based at the EU Intellectual Property Office, which would be responsible for administering the new arrangements under the Regulation. The Centre would also publish results of essentiality checks and non-confidential reports of FRAND determinations and methodologies and FRAND royalties. The Regulation would apply to standards published after its entry into force.

On 24 January 2024, the European Parliament Legal Affairs Committee adopted it position on the proposed Regulation, which includes several amendments to the original proposal. According to reports, these include greater support for small and medium sized businesses and startups to determine which SEPs they will need to use and pay for.

The agreed text will now need to be approved by the European Parliament in plenary before discussions with the European Council can begin on the final shape of the law.

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