Context: The primary political sponsor of the proposed EU regulation on standard-essential patents (SEP), Thierry Breton, has essentially been sacked (September 16, 2024 ip fray article). There is a new spirit in Brussels that may lead to less (but more well-thought-out) regulation in general (September 17, 2024 ip fray article). Obviously, no new commissioner could have said at a parliamentary confirmation hearing that the will of the European Parliament (EP) was not going to be respected. But the EP is actually the weaker one of the EU’s two co-legislators. The Council matters most.
What’s new: An outspoken critic of the proposed EU SEP Regulation, Spanish MEP Adrián Vázquez Lázara, said at a Qualcomm-sponsored Euractiv event yesterday (YouTube recording) that the bill was stuck in the EU Council and might not move forward for ten years, lamenting a missed opportunity in recent years to develop something better concerning SEP enforcement.
Direct impact: A European Commission (EC) official, Markus Kicia, downplayed the impasse, saying the last Council presidencies simply had other priorities. But ip fray has corroborating information from multiple sources according to which Mr. Vázquez Lázara is right, such as that most countries have not even stated their position yet (among them some extremely important ones), though there appears to be a push by those advocating the proposal to make headway under the Polish presidency (first half of 2025).
Wider ramifications: The panel also discussed international trade implications of the proposal and interinstitutional issues. The President of the Unified Patent Court (UPC), Judge Dr. Klaus Grabinski, noted that ultimately global SEP disputes would be resolved outside of the EU, wherever the first binding decision (as opposed to some non-binding opinion) comes down.
Mr. Kicia, a legal officer at the EC’s Directorate-General for the Internal Market (DG GROW) and former “Administrator” at the EU institution now named EUIPO (but still little more than a trademark office), was outnumbered by critics of the proposal. And even if he had been supported by other panelists, it would have been difficult to defend the indefensible. By and large, with the exception discussed in the next paragraph, he made the most out of a difficult situation.
What does raise significant concern is that Mr. Kicia is either misinformed to an extent that would be completely unacceptable for a so-called Legal Officer of the EU’s executive government or purposely sought to spread disinformation. After incredibly saying that the bill was designed with the goal to minimize delay, he said that the UPC and national courts “can prepare the case” during the delay caused by the mandatory FRAND determination (effectively about one year) and “when the FRAND determination is there, they can resume the proceedings.” President Grabinski then had to educate Mr. Kicia that the word “suspension” has a specific and clear legal meaning, and there is nothing that courts can do while a case is suspended. Should the term have a different meaning in the context of the SEP Regulation, he encouraged the EC to make that fact known before it is passed into law.
Various good (but previously known) arguments against the SEP Regulation were made by the panelists. Speaking for the European Patent Office (EPO), Dr. Michael Froehlich (“Fröhlich” in German) explained how the SEP Regulation runs counter to the EC’s stated goal of promoting innovation and a robust IP system. He noted that a complex regulatory enviroment stifles innovation and explained how it undermines the UPC and its Patent Mediation and Arbitration Centre (PMAC) (October 18, 2024 ip fray article). A WIPO representative, András Jókúti, noted that his organization, too, offer SEP dispute resolution. The opening remarks by Bird & Bird’s Richard Vary and concluding remarks by Ericsson’s Patrick Hofkens should also give policy makers pause. For example, Mr. Hofkens noted that the EU SEP Regulation mentions that the goal is to incentivize participation in standarization, but that there is nothing in it to that effect. And even if the bill entered into effect in two years, the UPC will have decided various SEP cases by then, raising the question of whether there will then be (in other words) redundance or divergence, in the latter case undoing 70 years of work on the harmonization of the European patent system.
An interesting legal aspect highlighted by President Grabinski was that in order to perform essentiality checks, the EUIPO-appointed experts will have to interpret the claims of the patents in question and, therefore, have to apply the European Patent Convention (EPC), but the EPC is not EU law.
The YouTube recording linked to further above is worth watching if one is interested in this legislative process. ip fray tries to understand the needs of implementers as well as SEP holders and would welcome improvements of the SEP licensing and enforcement system, as would MEP Vázquez Lázara.