Commission to propose competence centre on essential tech patents

The European Commission will propose the establishment of a new unit within the EU’s Intellectual Property Office to focus on the transparency of standard patents, according to a draft version of an upcoming regulation seen by EURACTIV.

The EU executive will present the Regulation on Standard Essential Patents as part of a broader Patent licensing package next month.

In an early version obtained by EURACTIV, a new “competence centre” would be established to deal with standard essential patents (SEPs), patents covering technologies that are incorporated into formal international standards like 5G and the Internet of Things.

The project stems from the Commission’s 2020 Action Plan on Intellectual Property, which included a pledge to introduce measures to “improve transparency and predictability” in SEP licensing, given their centrality to the digital transformation of Europe’s industry.

The regulation proposes rules on licensing transparency, SEP registration, evaluation of SEP essentiality, and dispute resolution processes related to fair, reasonable and non-discriminatory (FRAND) terms.

According to the draft proposal, the SEP licensing system faces several issues, including insufficient transparency regarding SEPs, FRAND terms and conditions and licensing, and “the unavailability of dispute resolution procedures suitable for resolving FRAND disputes”.

“All these together reduce the overall fairness and efficiency of the system and result in excess administrative and transactional costs,” it reads. In particular, the intent is to reduce the litigation regarding the royalties paid for using SEPs.

The proposal’s centrepiece is creating a new Competence Centre housed within the existing European Union Intellectual Property Office.

The centre will be tasked with supporting SEP licensing transparency and FRAND determination. It will carry out several specific functions, including establishing and maintaining a SEP register managing a roster of SEP evaluators, and constructing systems for assessing the essentiality of SEPs and determining aggregate royalties.

The body will also maintain a case-law library, enable access to SEP-linked rules in third countries and provide training and support to evaluators and SMEs.

The SEP register, the centre’s key function, contains information on topics such as standards, products and processes, identifying information on claimed SEPs and their owners, and on the technical reasoning behind their classification as essential.

The centre will also maintain an electronic database of information related to relevant case law, third-country SEP rules, competence centre studies and expert opinions.

Data on individual SEPs is to be presented to the centre by their owners following formal decisions on essentiality by the Unified Patent Court or a national court.

As part of its transparency provisions, the centre will also collect information on FRAND terms and conditions made public or disclosed by SEP owners. It will publish an annual report on the methodologies used for FRAND determinations.

According to the draft, the centre will be tasked to conduct checks on the claimed essentiality of SEPs, publishing the results in its register. There is also a peer evaluation element of annual essentiality checks.

The proposal also clarifies the rules surrounding FRAND determinations, which it says should be initiated by either the SEP owner or prospective implemented and should be concluded within a nine-month window.

The FRAND determination should be a mandatory step before patent infringement proceedings can be initiated by a SEP owner or an assessment of FRAND terms and conditions can be sought by an implementer, the document says.

“This is necessary”, it reads, “because disagreements about the FRAND terms are the main reason to seek recourse in courts.”