Context: The European Parliament will hold a vote tomorrow (February 28, 2024) on the proposed EU regulation on standard-essential patents (SEP). The chairman of the lead committee and other Members of the European Parliament (MEPs) propose amendments that would mitigate the bill’s impact (February 22, 2024 ip fray article).
What’s new: The plenary debate took place today. All in all, it reflected far more support than criticism of the proposed SEP Regulation, the absence of evidence of a pressing problem to be addressed, and a lack of understanding of the issues at hand.
Direct impact: EP debates are designed to give as many MEPs as possible the chance to speak (as MEPs come from hundreds of national parties), but only a few minutes each, which limits the ability of such debates to influence the opinion-forming process. There were critical voices, mostly but not only from center-right and libertarian politicians. If the debate is any indication, the proposal will receive overwhelming support in tomorrow’s vote, though it is possible that various MEPs who intend to vote against just weren’t comfortable speaking out in public on a complex subject.
Wider ramifications: It is time to look past the EP’s first reading toward the further process in the EU Council, followed by a “trilogue” (back-room negotiations between representatives of Parliament, Council and Commission). Also, many MEPs will retire or lose their seats in a matter of months, making it a possibility that the Parliament’s positions will be adjusted in one direction or the other after this year’s elections.
As ip fray has stated on other occasions, criticism of the state of affairs of SEP enforcement in Germany is justified, but that fact alone does not make the proposed SEP Regulation any more reasonable or workable.
There is no urgent need to act as there isn’t a lot of SEP litigation, and absolutely zero SEP litigation against SMEs, as we speak. Even in today’s plenary debate, there were voices of reason that called for further consideration, including not only members of the center-right European People’s Party and libertarian Renew Europe group, but even a former chairman of the German Green Party, Reinhard Buetikofer MEP, who stressed that the International Trade Committee (INTA) has concerns over the proposal across party lines.
Owing not only to the format of EP plenary debates but also to the absence of evidence, those advocating the proposal were unable to point out an actual problem. It was symptomatic of the lack of substantive arguments for the proposal as a whole and for the rushed procedure that some of its backers pulled out the Huawei bogeyman, oblivious to the fact that Huawei has the most centrist position of any company when it comes to SEPs. It is not only a major SEP holder but also a far bigger implementer of SEPs than any EU company (its unit volume of standards-implementing products is probably even bigger than that of the top 10 EU-based implementers combined). And the primary victim of SEP overleveraging in the EU is another Chinese company: OPPO. No one in the EP appears to talk about them and the lessons to be learned from their cases.
If the debate is any indication, the ill-conceived proposal will get near-unanimous support on the left wing, while the EPP will be more or less split and even among the libertarian Renew Europe group there appears to be more support (such as from the Free Democratic Party of Germany) than there is resistance to the proposal left of the center. The exact outcome will depend on whether EU-skeptical MEPs realize that the bill just creates some additional EU bureaucracy without benefits to the EU economy.
At the Mobile World Congress 2024 that is currently being held in Barcelona, ip fray has seen first-hand that major SEP holders from the EU and abroad had exciting innovations to showcase. Some MEPs might want to take a closer look, though they obviously have to be in Strasbourg now for their plenary.
It is important to consider that the EU Parliament habitually takes extreme positions and makes unworkable demands, which the experts in the Council’s working groups then have to address. In some other contexts, the Commission has played a constructive role and made rational contributions to the process, but that is too much to ask for when commissioner Breton, whose sole focus is on auditioning for a new post, just wants another “win” he can mischaracterize as one of his achievements. On that basis, the EU institutions also adopted the flawed AI Act.
The EU Parliament is not enhancing its reputation by echoing talking points that lack substance instead of demanding the presentation of hard evidence of an allegedly pressing problem. But the EP’s reputation is generally not the best it could be. A recently published study showed that 1 in every 4 MEPs has at least a significant compliance problem or is simply a convict (February 2, 2024 Le Monde article). Votes in the EP have already been cast from prison. Today’s debate was not reflective of wrongdoing, but showed the Parliament’s susceptibility to fact-free lobbying campaigns.
The outcome of today’s vote will have to be analyzed, but it will merely be the end of the beginning of the actual decision-making process.