Marking World IP Day 2023, the European Commission tabled a proposal to overhaul the bloc’s framework for the licensing of standard essential patents (SEP). As the name suggests, standard essential patents protect technologies that are essential to implementing a technical standard.
Most people interact with technical standards in their daily life. For instance, the GSMA’s report on the state of mobile internet connectivity estimates that there are close to 12 billion cellular connections and more than 5.5 billion unique mobile subscribers worldwide. Because technical standards are so ubiquitous, changes to SEP licensing systems have a significant impact worldwide and reform should be carefully assessed.
Our role in supporting EU innovation
For more than 40 years, we have pioneered the development of global connectivity standards, from 2G to 5G. Today, we lead among companies globally in the share of 5G patent families we hold when essentiality and jurisdictional quality filters are applied. To continue innovating, Ericsson invests more than 17% of its global revenue into research and development every year. This investment is only possible thanks to patents and licensing.
Just as we have a legacy of sharing our technology, throughout our history we have also licensed and implemented patents from others. Having seen both sides of the equation, how do we view the proposed standard essential patents reform package? What impact could it have on the EU’s leadership in the development of global ICT standards?
Ericsson’s position on the proposed reform
Ericsson supports the Commission’s overall goals with the standard essential patents regulation: improving licensing of SEPs, and incentivizing participation by European firms in both the standard development process and the broad implementation of such standardized technologies.
However, the measures proposed in the regulation will not address these goals in an effective or efficient manner.
The standardization ecosystem is global, complex and has many interdependencies. The system has evolved over many years, building on consensus between the different stakeholders active in it. This has taken time and careful consideration by all involved, favoring long term industry-led improvement over heavy-handed interventions. The system should continue to further improve and evolve, but for such evolution to be efficient it must start from what has been built and proven to be successful.
Yet the proposed regulation departs from this inclusive consensus-driven approach by imposing different, new and untested procedures, all at once in a very short time frame and with a very tight budget. Some of the proposed measures include introducing an SEP register and essentiality checks, and the establishment of a new SEP “Competence Center” sitting within the EU Intellectual Property Office (EUIPO), which has no previous experience with patents and standardization.
The Commission’s overly broad and imbalanced intervention into the currently successful telecoms innovation system also places additional (and often duplicate) burdens on owners of EU standard essential patents without clear benefits or efficiency gains over the solutions that already exist today. The EU is currently a global hub for standards, SEPs, and adjudication, and is home to companies like ours that play a leading role globally in SEP development for cellular standards. But the proposed reform puts European leadership in 5G/6G, as well as the European standardization ecosystem, at risk.