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A Balanced Framework for Licensing Standard Essential Patents

This article discusses the need for a framework to enable smooth and efficient licensing of Standard Essential Patents (SEPs) in the new environment of the Internet of Things. It highlights the challenges and imperfections in the current system and proposes measures for transparency, valuation, and enforcement. The integration of SEPs with open source software and the need for clarifying their interaction with standardization processes is also addressed.

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A Balanced Framework for Licensing Standard Essential Patents

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  1. A balanced framework for the licensing of Standard Essential Patents Anne von Zukowski Intellectual Property and Fight against Counterfeiting European Commission, DG GROWTH SBS training IPR-based standardisation – What are the opportunities and challenges for SMEs? Brussels, 29 June 2017

  2. The dilemma at the intersection of IP and standardisation • Create incentivesandrewardfor R&D, innovationandcontributionof top technologytostandards • Access tostandardisedtechnology at fair termstoensurewidedisseminationof a standardanditstechnology Need for a frameworkenabling smooth andefficientprocessfor SEP licensing New environmentwiththeadventofthe Internet of Things Clear stancetaken in otherjurisdictions – needforEuropean vision on thetopic

  3. Three key ingredients for balanced and effcient SEP licensing • A transparent environment for negotiations between SEP holders and potential licensees • Common valuation principles for SEPs technology • A balanced and predictable enforcement regime

  4. Imperfections in all three pillars • Opaque information about SEP exposure • Very high number of declared SEPs • Based on self-declaration without scrutiny • Increasing number of SEP holders for a single standard • Key valuation and licensing principles debated • Calculation base for royalty • Licensing level in the production chain • No transparency on licensing conditions • Lack of predictability • Compatibility of Open Source and FRAND • An evolving enforcement regime • Interpretation and development of the Huawei judgement

  5. Room for improvement? Commission Communications on “Digitising European Industries” and “ICT Standardisation Priorities” (April 2016): “The Commission will work in collaboration with stakeholders including ESOs, EPO, industry and research, on the identification, by 2017, of possible measures to • improve accessibility and reliability of information on patent scope, including measures to increase the transparency and quality of standard essential patent declarations as well as • to clarify core elements of an equitable, effective and enforceable licensing methodology around FRAND principles and • to facilitate the efficient and balanced settlement of disputes.”

  6. Guiding principles • Holisticapproachacross all threepillars • Focus on licensingprocessconditions not on prescribing an outcome • Preserveflexibilityforevolvingbusinessandtechnologyenvironment • Soft lawinstrumentprovidingsignpostsfor European visionofbalanced SEPs licensingenvironment

  7. Possible measures suggested in Commission consultations and studies:Transparency • Increaseprecisionofdeclaration • Revision atthe time of final adoptionofthestandard • Update followinglitigation • Essentialitychecks?

  8. Possible measures: Valuation and licensing principles • Mapping ofvaluationmethodologiesfor FRAND • Differentiation accordingtousecaseoftheimplementedtechnology? • Clarify licensingrightsalongproductionchain • Transfer • Roleof Patent pools

  9. Possible measures: Enforcement • Someguidance on theHuawei-process • Portfolio litigationanddamages • Enhancingtheroleofarbitration • Proportionality

  10. SEPs and Open Source • In the context of current technology evolution, open source software implementations becomes more and more extended, included for ICT standardisation • Integration between open source based solutions and interoperability standards is win-win situation • Commission supports OS solutions. FRAND can also accommodate royalty-free concepts • Need to clarify the interaction between open source communities projects and SDOs processes

  11. Next steps • Ongoingfollow-updiscussionswithstakeholders in bilateral and multilateral settings • Internal workoftheCommission • Commission Communication scheduledforthisyear

  12. Thankyouforyourattention! anne.von-zukowski@ec.europa.eu https://ec.europa.eu/growth/industry/intellectual-property/patents/standards_de

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