The Commission has proposed new rules to help businesses, especially small and medium-sized enterprises, make the most of their inventions, new technologies and contribute to the competitiveness and technological sovereignty of the EU.
The proposed regulations on standard essential patents, the compulsory licensing of patents in crisis situations and the revision of the legislation on complementary protective certificates should constitute a more transparent and effective intellectual property rights framework. A compulsory patent license is also proposed which allows a government to authorize the use of a patent/invention without the consent of the patent holder: it would complement existing crisis management tools.
The Community proposals will integrate the Unitary Patent system, which will be operational from 1 June. Standard Essential (SEP) patents protect technology that has been declared essential to the implementation of a technical standard adopted by a standards development organization. These standards concern, for example, connectivity (5G, Wi-Fi, Bluetooth) or audio/video compression and decompression standards. To make a product that complies with the standards, the relevant “essential” patents must be used. The monopoly granted by these specific patents is balanced by the commitment of the SEP owners to license these patents on fair, reasonable and non-discriminatory terms.
The flaws of the current system
For many years, the current system, they explain to the Commission, has suffered from a lack of transparency, predictability and lengthy disputes and litigation. Self-regulation has not proved effective. The applicability of essential standard patents (particularly for connectivity standards) will increase with the advent of the ‘Internet of Things’. It is about ensuring that both the owners and implementers of these standards make and sell products in the EU and are competitive in global markets. And that end-users, including SMEs and consumers, benefit from products based on the latest standardized technologies at fair and reasonable prices. The proposed core licensing framework would provide further transparency regarding portfolios, aggregate royalties (when patents of multiple licensees) and allowing the parties to have a more efficient means of agreeing on the terms of their licenses.
The proposed new measures
The proposal introduces measures on the following aspects: a register, a database and essentiality checks; expert opinions on aggregate royalty; determination of the terms of the license through substitutive conciliation of onerous litigation; support measures for SMEs; the establishment of a “centre of expertise” at the European Union Intellectual Property Office (EUIPO). The proposed regulation will apply to all standards that will be published after its entry into force. However, the Commission will determine which standards, their implementations or use cases would be excluded from the aggregate royalty-setting and conciliation process in situations where the respective license does not pose significant difficulties or inefficiencies affecting the functioning of the internal market. Conversely, standards published before the entry into force of the regulation will not be subject to them, unless specific market distortions due to inefficiencies in the licensing of standard patents lead the Commission to include them in its scope.
Compulsory patent licensing allows a government to authorize the use of a patented invention without the consent of the patent holder. It is generally the preferred tool for increasing production, but if voluntary agreements are not available or adequate, compulsory licensing can help provide access to key crisis-relevant products and technologies as a last resort in times of crisis. There is currently a patchwork of 27 national compulsory licensing regimes and this can be a source of legal uncertainty for both right holders and for users of intellectual property rights. Such a tool would complement crisis tools such as the Single Market Emergency Tool, the HERA regulations and the Chips Act.