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Reform of standard essential patents licensing in the European Union

At Ericsson, we are proud of the long-standing contribution our technologies have made to innovation around the world. Now, a proposed reform of the standard essential patents (SEP) framework in the EU puts the global standardization ecosystem at risk.
optic fiber in city, view from above

In April 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 unbalanced 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.  

More on Ericsson’s view

Network evolution, connected city, drone, aerial view

The regulation tries to do too much, with too little means, in a too short timeframe

As a company, we support the intention to further improve the standardisation and SEP licensing system. However, the Commission’s proposal is unbalanced. Not only does it introduce a wide-ranging and experimental system, but it does so without committing the time, resources, and expertise needed to deliver on it. Ericsson’s Chief Intellectual Property Officer, Christina Petersson, explains how the reform package puts one of Europe’s key advantages in the global knowledge economy in jeopardy. 

Read the article

Connecting urban area top down

The reform jeopardizes European leadership

The Commission has not provided evidence that points to an urgent and material problem that needs to be addressed. On the contrary, the data shows the current system has allowed Europe to lead the world in standard essential patents development and shape global SEP rules. And the system has proven its ability to improve over time. Together with Nokia, we highlight how the regulation weakens Europe’s ability to reap the benefits of the SEP licensing system rather than solving issues.

Read the article 

Drone inspecting traffic

The proposed EU regulation is unbalanced and will not reach the objectives it sets out

Ericsson supports the overall goals of the proposed regulation. However, we are worried that the proposed measures will not address these goals in an effective or efficient manner. In our consultation response to the Commission, we describe in more detail some of our present concerns regarding aspects of the proposed regulation and provide some ideas for alternative solutions. 

Read the response

Three robot arms in action - 5G Factory Tallin

The proposal would disrupt a long-standing global system – to the EU’s detriment

Making improvements to the SEP licensing ecosystem doesn’t need to come at the expense of EU tech champions’ incentives to continue innovating.  

Alongside speeding up adoption of new technologies and facilitating economic growth, the standardisation of mobile network technology has put European tech companies like ours in a leading position worldwide. We call for policymakers to take the time needed to advance a balanced SEP licensing framework that supports the EU’s consumers, businesses, and global standing.

Read more here and here.  

External analysis and industry position

Fiber optics

Using data on trade, specialisation, and market revenues, Brussels-based think tank ECIPE (European Centre for International Political Economy) determines that the EU economy is likely to end up with net losses if the reform goes ahead.

Read ECIPE’s analysis

How 5G powers progress

The licensing of 5G mobile technology is ensuring a continuous technology transfer, ushering in new opportunities and capabilities set to transform industries. We are proud to have had a leading role in the development of the 5G standard. However, the EU’s SEP reform undermines the patent and licensing process that supports 5G standardization, jeopardizing long-term innovation in Europe.

Learn more about our role in 5G standardization