Last month, the European Parliament gave its approval in principal to a new proposed regulation concerning standard essential patents (SEPs). These patents, vital components of standardized technologies such as 5G and Wi-Fi, could experience a makeover in terms of their licensing under this new proposal approved by the European Parliament and further explained by LexisNexis.
This could have far-reaching consequences, creating a more balanced setting conducive to innovation. It will seek to reduce government intervention in SEP licensing ensuring fairness to all — patent owners, potential licensees, well-established industrials in the auto, consumer electronics, energy, infrastructure, and telecommunications sectors and also emerging companies.
Germany’s regional courts have, for nearly a decade, been favoring companies seeking to monetize essential patents Crai. This practice led to a ‘tax’ on companies using these patented features. The concern is that this incentivizes litigation to obtain excessive royalties. The implications of verdicts from German courts are noteworthy – from triggering Europe-wide sales bans to disrupting global markets such as the automotive industry Android Police Juve Patent Juve Patent.
Given these worldwide implications, reforms are urgently required. Charles River Associates’ economists found that in the past 20 years, 65% of all injunctions globally for these patents have been issued by German courts Crai.
The proposed regulation aims to create transparency related to patent licensing requirements and estimates the maximum possible royalty burden for company-wide adoption of the standard. It introduces earlier non-binding conciliation proceeding before litigation, and this is expected to lead to fairer settlements and reduce the role of courts in setting industrial policies.
The new regulation brings two primary obligations for essential patent holders – disclosure and submission of patents for random essentiality checks Crai. This is seen as an approach moving away from the aggressive tactics previously used in German courts and instead streamlining and clarifying the negotiation process for SEP licenses.
While the European Parliament’s vote on Feb. 28 represents a major step towards these reforms coming into effect, it is not the end of the legislative process. The Council of the European Union will now review the proposed regulation, deciding whether to accept it or propose further amendments.
Rafał Sikorski, a law professor at Adam Mickiewicz University and a senior partner at SMM Legal, and David Katz, an attorney at PacTech Law specializing in SEP licensing and policy, contributed reporting.
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Original article found at Bloomberg Law.