What changed

SHORT JUSTIFICATION

ORDINARY LEGISLATIVE procedure

IMCO fully supports the objective of the draft proposal to improve the licensing of standard essential patents (SEPs). Such improvement aligns with our European goals of fostering innovation, enhancing the digital transition, and ensuring that Europe is a frontrunner in new technologies, thereby encouraging the voluntary participation of European businesses in the European standardization process and ensuring the broadest possible implementation of standardized technologies.

Follow up to the European Parliament legislative on the proposal for a regulation of the European Parliament and of the Council on standard essential patents and amending Regulation (EU) 2017/1001

SEPs play a pivotal role in the broader objectives of achieving a seamless single market and ensuring Europe's global competitiveness. Their central role in promoting technological innovation aligns with the emphasis on socio-economic recovery and encourages businesses to invest in the research and development of new technologies, which benefits our entire economy. At the same time we should ensure that SMEs, crucial for the Single Market, aren't left behind in the technological race, that access to these technologies remains fair, and that patent holders do not abuse their power to hinder competition.

(First reading without prior interinstitutional negotiations)

Given this broader context, which underscores the importance of integrating technology, innovation, and fair competition within the European -technological landscape, it is clear that standard essential patents (SEPs) are vital in achieving these goals. The proposal's overarching objective, which is to streamline and improve the licensing of SEPs, is certainly commendable in light of these ambitions. It aligns with the larger vision of fostering a more cohesive, innovative, and competitive European Union. However, while its intentions are in the right direction, specific areas within the proposal need closer examination.

1. Rapporteur: Marion WALSMANN (EPP / DE)

First, the scope of the Regulation should include all SEPs, present and future. Without such inclusivity, the benefits of transparency and reduced litigation will not be fully realized. They will continue to be subject to the issues this regulation seeks to address, including protracted litigation over the appropriate FRAND values for these SEPs. It is, therefore, imperative to extend the scope of application to all SEPs.

2. Reference numbers: 2023/0133 (COD) / A9-0016/2024 / P9_TA(2024)0100

Existing SEPs should be allowed to be registered to ensure that legacy technologies remain both accessible and competitive. The current agreement should still be enforceable even if an existing SEP isn't registered. It's only upon submission to the register that all related rules should apply. Consequently, Article 24 of the proposal should be revised to eliminate penalties associated with non-registration of these SEPs.

3. Date of adoption of the resolution: 28 February 2024

Second, the processes for checking whether a patent is “essential” and determining FRAND should be improved. With the diverse importance of each SEP category in mind, we need a more comprehensive and discerning approach to inspections. Specifically, the current restriction that limits random checks to just one patent in each category should be revised. Such a limitation might overlook incorrectly registered patents. It's crucial to recognize that not all categories or SEP types carry equal weight, and their total counts can vary significantly.

4. Legal basis: Article 114 of the Treaty on the Functioning of the European Union

Furthermore, both SEP holders and implementers should be able to request checks and determinations, and they should be able to do so with a lower threshold, particularly for SME implementers.

5. Competent Parliamentary Committee: Committee on Legal Affairs (JURI)

In keeping our commitment to transparency and inclusivity, the SEP information database must be accessible to all without charge. While it's understandable to impose fees for specialized checks—like determining a patent's essentiality or FRAND value—the overarching costs for the database's upkeep should fall to the EUIPO. This ensures that a diverse group, from researchers to the general public, can access the information without bearing the financial burden.

6. Commission's position: takes note of the amendments proposed by the European Parliament, while reserving its detailed position on these until the opening of interinstitutional negotiations.

Lastly, the draft opinion introduces technical corrections and clarifications to the proposal. In addition to correcting the terminology, this involves clarifying that mechanisms to determine a SEP's FRAND value and essentiality are separate from the standardization process itself.

AMENDMENTS

The Committee on the Internal Market and Consumer Protection calls on the Committee on Legal Affairs, as the committee responsible, to take the following into account:

Amendment 1

Proposal for a regulation

Recital 3

Or. en

Justification

1.ESOs examine standards development participants, patented knowledge and modify projects if essential patents exist. They only cite relevant patents if licenses are granted and independently verify the patented technology - 2. FRAND is defined in recital (2) - 3. Pre-existing standards that have encountered licensing issues should fall within the scope of application of the SEP regulation - 4. Clarification - The FRAND commitment does not cease to apply in the event of a change of owner of the SEPs.

Amendment 2

Proposal for a regulation

Recital 4

Or. en

Justification

1. The reference to “standards for wireless communications” may imply that standards such as Wi-Fi, HEVC, and LTE (4G, 5G etc.) fall outside the scope of the SEP Regulation. Removing this reference in its entirety avoids any confusion - 2. Deletion of the recital is consistent to the deletion of Art. 1(3) and (4).

Amendment 3

Proposal for a regulation

Recital 5

Or. en

Justification

1. The regulation, and the impact assessment, lack a definition of a "use case", we suggest to delete to avoid any confusion - 2. Deleting Article 66, and its references through the text, could promote innovation and economic resilience - 3. Older versions of standards may be included, supplementing the Huawei versus ZTE process and having no impact on licenses already in force - 4. Temporary exclusion of exclusive rights may be limited. Exceptions to the exclusive rights of SEP holders would therefore be consistent with Articles 7 and 8 of the TRIPS Agreement.

Amendment 4

Proposal for a regulation

Recital 13

Or. en

Justification

SMEs are the backbone of Europe's economy and are therefore central to the EU’s twin transitions. They are essential to Europe’s competitiveness and prosperity, industrial ecosystems, economic and technological sovereignty, and resilience to external shocks.

Amendment 5

Proposal for a regulation

Recital 16

Or. en

Justification

1. Technical clarification - 2. No definition of a “use case” in the Regulation and in the impact assessment. It would be more appropriate to refer to “standards”.

Amendment 6

Proposal for a regulation

Recital 24

Or. en

Justification

It is not clear how the Competence Centre shall select the one patent among others in the same family. The limitation to one patent per family may limit transparency. In reality, not necessarily all patents are standard-essential merely because they belong to the same patent family of the sampled SEP and, conversely, not all of them are non-essential in case the selected SEP fails the essentiality check.

Amendment 7

Proposal for a regulation

Recital 26

Or. en

Justification

Same justification as recital 24.

Amendment 8

Proposal for a regulation

Recital 33

Or. en

Justification

1. Same justification regarding "use cases" - 2. This procedural step will significantly reduce lengthy and costly disputes and will have a significant positive impact for suppliers. Furthermore, the concept of a mandatory conciliation attempt before initiating litigation is well known and has never been considered unconstitutional or contrary to European law.

Amendment 9

Proposal for a regulation

Recital 34

Or. en

Justification

The Draft Regulation provides little guidance on what “committing to comply” with the outcome of FRAND determinations means and what legal effects such commitment will have. The obligation to initiate FRAND determinations should not be detrimental to the effective protection of the parties’ rights.

Amendment 10

Proposal for a regulation

Recital 35

Or. en

Justification

1. Same comment as above - 2. This Regulation seeks to enable parties to resolve issues arising in SEP disputes without the threat and expense of litigation impacting the negotiation dynamic. This provision introduces terminology that is not used in many member states and creates legal uncertainty as a result.

Amendment 11

Proposal for a regulation

Recital 47

Or. en

Justification

Same justification about “use cases”.

Amendment 12

Proposal for a regulation

Article 1 – paragraph 2 – introductory part

Or. en

Justification

Technical clarifications.

Amendment 13

Proposal for a regulation

Article 1 – paragraph 2 – point a

Or. en

Justification

The current restriction may make it easier for SEP owners to obtain injunctions and distort the balanced negotiation process. By removing Article 66 and amending Articles 1, paragraphs 3 and 4, the Regulation would promote innovation and the economic resilience of the internal market.

Amendment 14

Proposal for a regulation

Article 1 – paragraph 2 – point b

Or. en

Justification

Same justification as above.

Amendment 15

Proposal for a regulation

Article 1 – paragraph 3

Or. en

Justification

There is a significant risk that this provision will render the regulation ineffective. The limited scope of the regulation could favor certain SEP owners. By amending, it would promote innovation and the economic resilience of the internal market.

Amendment 16

Proposal for a regulation

Article 1 – paragraph 4

Or. en

Justification

Same justification as above.

Amendment 17

Proposal for a regulation

Article 2 – paragraph 1 – point 1

Or. en

Justification

The essential character of a patent is difficult to predict ex ante. Essentiality can be confirmed or contested, depending on how the standard is applied and the ingenuity of the users. With respect to SDOs, any patent mentioned in a standard may or may not be an SEP. It is therefore appropriate to shed light on the fact that another party - a third party - took responsibility for observing this relationship.

Amendment 18

Proposal for a regulation

Article 2 – paragraph 1 – point 2

Or. en

Justification

Same as above.

Amendment 19

Proposal for a regulation

Article 2 – paragraph 1 – point 3

Or. en

Justification

Technical clarification as standardization organizations never have the power to make their deliverables compulsory, because this power belongs to the public authority. A public authority can make a standard compulsory.

Amendment 20

Proposal for a regulation

Article 3 – paragraph 2 – point h

Or. en

Justification

SMEs are the backbone of Europe's economy and are therefore central to the EU’s twin transitions to a sustainable and digital economy. They are essential to Europe’s competitiveness and prosperity, industrial ecosystems, economic and technological sovereignty, and resilience to external shocks.

Amendment 21

Proposal for a regulation

Article 5 – paragraph 2 – introductory part

Or. en

Justification

1. Consistent with the deletion of 5(4).

Amendment 22

Proposal for a regulation

Article 5 – paragraph 3

Or. en

Amendment 23

Proposal for a regulation

Article 5 – paragraph 4

Or. en

Amendment 24

Proposal for a regulation

Article 7 – paragraph 1 – introductory part

Or. en

Justification

Proposal to make the wording consistent with art. 14 and to clarify that it is applicable not to all SEPs, but to those for which FRAND commitments have been made.

Amendment 25

Proposal for a regulation

Article 7 – paragraph 1 – point a

Or. en

Justification

This gives more clarity regarding the deadline.

Amendment 26

Proposal for a regulation

Article 7 – paragraph 1 – point b

Or. en

Justification

The regulation provides for a procedure for registering SEPs and not standards. The standards are notified in accordance with art. 14.

Amendment 27

Proposal for a regulation

Article 8 – paragraph 1 – introductory part

Or. en

Justification

Proposal to make the wording consistent with art. 14 and to clarify that it is applicable not to all SEPs, but to those for which FRAND commitments have been made.

Amendment 28

Proposal for a regulation

Article 9 – paragraph 1 – point g

Or. en

Justification

According to article 2 (11), the patent pool is the entity. Therefore, it is redundant.

Amendment 29

Proposal for a regulation

Article 9 – paragraph 1 – point h

Or. en

Justification

Strengthen the disclosure requirement by including more useful details.

Amendment 30

Proposal for a regulation

Article 12 – paragraph 2

Or. en

Justification

Pre-verifying information could help to avoid overloading the database with unnecessary or obsolete information.

Amendment 31

Proposal for a regulation

Article 14 – paragraph 1 – introductory part

Or. en

Justification

1. Technical clarification - 2. SDOs should be strictly outside of any discussion of the validity of patent claims or the valuation of licenses.

Amendment 32

Proposal for a regulation

Article 14 – paragraph 4 a (new)

Or. en

Justification

This would allow pre-existing standards to be notified on a voluntary basis.

Amendment 33

Proposal for a regulation

Article 14 – paragraph 5

Or. en

Justification

SDOs should be strictly outside of any discussion of the validity of patent claims or the valuation of licenses.

Amendment 34

Proposal for a regulation

Article 14 – paragraph 6

Or. en

Amendment 35

Proposal for a regulation

Article 17 – paragraph 1

Or. en

Justification

By removing this reference, we gain flexibility.

Amendment 36

Proposal for a regulation

Article 17 – paragraph 2 a (new)

Or. en

Justification

Addition of a provision on existing patents – without it, due to the deadline in paragraph 2, the article in practice would not apply to existing standards.

Amendment 37

Proposal for a regulation

Article 17 – paragraph 7

Or. en

Justification

Clarification - The purpose of the process is to mediate the discussions for a joint submission of an aggregate royalty (paragraph 1).

Amendment 38

Proposal for a regulation

Article 17 – paragraph 8

Or. en

Justification

Clarification

Amendment 39

Proposal for a regulation

Article 18 – paragraph 1

Or. en

Justification

No definition of "global" aggregate royalty. The addition ensures that the process for aggregate royalty determinations remains balanced, practicable and efficient. There should be sufficient safeguards that the process will yield an outcome and cannot be obstructed by any party.

Amendment 40

Proposal for a regulation

Article 18 – paragraph 2 – introductory part

Or. en

Justification

Technical clarification. There should be no time limit for seeking expert advice for SEP implementers, given that no material information is available to implementers within a timely manner of 150 days.

Amendment 41

Proposal for a regulation

Article 18 – paragraph 2 a (new)

Or. en

Justification

Addition of a provision on existing patents – without it, due to the deadline in paragraph 2, the article in practice would not apply to existing standards.

Amendment 42

Proposal for a regulation

Article 18 – paragraph 4

Or. en

Justification

SDOs should be strictly outside of any discussion of the validity of patent claims or the valuation of licenses.

Amendment 43

Proposal for a regulation

Article 18 – paragraph 5

Or. en

Justification

This ensures that current and future users of the standard can participate in the process, as the interests of those seeking to integrate the standard into their products or services are just as important as those currently doing so.

Amendment 44

Proposal for a regulation

Article 18 – paragraph 6

Or. en

Justification

A small number of SEP implementers is easier to calculate and provides legal certainty. A smaller number of companies is also preferable for the same reason. The sole request from the SEP implementers must be sufficient to appoint a conciliation commission.

Amendment 45

Proposal for a regulation

Article 18 – paragraph 8 – introductory part

Or. en

Justification

The process for determining aggregate royalties will be more informative if it leverages input from diverse stakeholders, including SEP holders, as well as implementers and participating entities outside the process who may have valuable information to offer.

Amendment 46

Proposal for a regulation

Article 19 – paragraph 1 – point a

Or. en

Justification

As standards are published by ESOs, it is better to refer just to the information in Art. 14(7)

Amendment 47

Proposal for a regulation

Article 19 – paragraph 2

Or. en

Justification

SDOs should be strictly outside of any discussion of the validity of patent claims or the valuation of licenses.

Amendment 48

Proposal for a regulation

Article 20 – paragraph 1

Or. en

Justification

Changes in line with the definition in Art. 2(1) and with Art. 1(2)

Amendment 49

Proposal for a regulation

Article 22 – paragraph 1

Or. en

Justification

Clarification - According to Art. 22 (2), the EUIPO is the one which carries out the annual inspection.

Amendment 50

Proposal for a regulation

Article 24 – paragraph 2 a (new)

Or. en

Justification

Addition to address the issue of retroactivity. Paragraphs (1) and (2) will be applicable to existing standards only if implementers notify them according to art. 14(4)

Amendment 51

Proposal for a regulation

Article 28 – paragraph 2

Or. en

Justification

Evaluating the essential nature of a patent for the implementation of a standard can only be possible ex post, with full knowledge of market dynamics. This cannot be done ex ante because the potential interrelation and reciprocal impact of documents are inherently difficult to assess.

Amendment 52

Proposal for a regulation

Article 28 – paragraph 3

Or. en

Justification

It is not clear how the Competence Centre shall select the one patent among others in the same family. The limitation to one patent per family may limit transparency. In reality, not necessarily all patents are standard-essential merely because they belong to the same patent family of the sampled SEP and, conversely, not all of them are non-essential in case the selected SEP fails the essentiality check.

Amendment 53

Proposal for a regulation

Article 29 – paragraph 2

Or. en

Justification

It seems doubtful that a violation analysis could be carried out on the basis of such a table. The proposed approach does not take due account of difficult issues regarding the correct interpretation of claims, in particular the lack of harmonized standards of claim interpretation between different European jurisdictions.

Amendment 54

Proposal for a regulation

Article 33 – paragraph 1

Or. en

Justification

It is not clear how the Competence Centre shall select the one patent among others in the same family and this limitation may limit transparency. In reality, not necessarily all patents are standard-essential merely because they belong to the same patent family of the sampled SEP and, conversely, not all of them are non-essential in case the selected SEP fails the essentiality check.

Amendment 55

Proposal for a regulation

Article 34 – paragraph 1 – introductory part

Or. en

Justification

Technical clarification.

Amendment 56

Proposal for a regulation

Article 37 – paragraph 1

Or. en

Justification

Wrong reference. Changing it makes it consistent.

Amendment 57

Proposal for a regulation

Article 38 – paragraph 2

Or. en

Justification

The Draft Regulation provides little guidance on what “committing to comply” with the outcome of FRAND determinations means and what legal effects such commitment will have. The obligation to initiate FRAND determinations should not be detrimental to the effective protection of the parties’ rights.

Amendment 58

Proposal for a regulation

Article 38 – paragraph 3 – introductory part

Or. en

Justification

Same as above.

Amendment 59

Proposal for a regulation

Article 38 – paragraph 3 – point a

Or. en

Justification

Same as above.

Amendment 60

Proposal for a regulation

Article 38 – paragraph 3 – point b

Or. en

Justification

Same as above.

Amendment 61

Proposal for a regulation

Article 38 – paragraph 4 – introductory part

Or. en

Justification

Same as above.

Amendment 62

Proposal for a regulation

Article 38 – paragraph 4 – point a

Or. en

Justification

Same as above.

Amendment 63

Proposal for a regulation

Article 38 – paragraph 4 – point b

Or. en

Justification

Same as above.

Amendment 64

Proposal for a regulation

Article 38 – paragraph 4 – point c

Or. en

Justification

Technical clarification.

Amendment 65

Proposal for a regulation

Article 38 – paragraph 4 a (new)

Or. en

Justification

The Draft Regulation provides little guidance on what “committing to comply” with the outcome of FRAND determinations means and what legal effects such commitment will have. The obligation to initiate FRAND determinations should not be detrimental to the effective protection of the parties’ rights.

Amendment 66

Proposal for a regulation

Article 38 – paragraph 5

Or. en

Justification

Clarification to be consistent with all of Article 38.

Amendment 67

Proposal for a regulation

Article 39 – paragraph 1

Or. en

Justification

Wrong reference.

Amendment 68

Proposal for a regulation

Article 47 – paragraph 2

Or. en

Justification

The FRAND determination process must remain practicable, effective and cannot be hindered. The article as it stands could allow proceedings conducted in third countries to torpedo FRAND determinations in the EU.

Amendment 69

Proposal for a regulation

Article 56 – paragraph 1 – introductory part

Or. en

Justification

Addition for clarification.

Amendment 70

Proposal for a regulation

Article 62 – paragraph 3 a (new)

Or. en

Justification

Benefits granted to SMEs will not be opened in case of circumvention or misuse. For example, most Non-Practicing Entities are considered SMEs, but should clearly not benefit from any exemption under the draft regulation.

Amendment 71

Proposal for a regulation

Article 63 – paragraph 3 – point b

Or. en

Justification

These factors are more relevant for determining the apportionment of the fees than the sole size of these companies.

Amendment 72

Proposal for a regulation

Article 66

Or. en

Justification

By deleting article 66, it would promote innovation and the economic resilience of the internal market.

Amendment 73

Proposal for a regulation

Article 67 – paragraph 2

Or. en

Justification

Deletion in accordance with the deletion of Articles 1(4) and 66.

Amendment 74

Proposal for a regulation

Article 67 – paragraph 3

Or. en

Justification

Same as above.

Amendment 75

Proposal for a regulation

Article 67 – paragraph 6

Or. en

Justification

Same as above.