Context: The European Parliament has scheduled a plenary debate over the proposed regulation on standard-essential patents (SEPs) for Tuesday (February 27, 2024) and may vote the following day. The bill remains controversial, as indicated by a major Big Tech advertising push (previous ip fray article).
What’s new: After there were no formal “no” votes against the lead committee (Legal Affairs, or JURI) report, the normal course of action would have been, under Rule of Procedure 159, to hold a binary vote on the JURI position as opposed to a contested amendment-by-amendment vote. But apparently the quorum of Members of the European Parliament (MEPs) has been reached to require a vote on amendments, and a number of plenary amendments have been proposed (European Parliament website). In particular, a group of predominantly libertarian MEPs lead by JURI chairman Adrián Vázquez Lázara (profile on European Parliament website) have proposed far-reaching changes.
Direct impact: If adopted, the Vázquez Lázara amendments would substantially limit the scope of applicability of the proposed regulation: no essentiality checks, no aggregate royalty determination or mediation for a standard, no retroactive effect and scope limited to only those standards with respect to which the Commission has established market distortions. It is unclear whether there will be majority support for those amendments, but with a view to the further process and a potential “trilogue” (back-room negotiations between representatives of EP, EU Council and EU Commission), even a substantial minority of votes against the current proposal can serve to weaken the position of rapporteur Marion Walsmann, a German center-right MEP, who struggles to garner support even insider her own group, the European People’s Party (EPP). That is so because in a contested second-reading vote, the EP needs a supermajority of all members to make amendments, which effectively means that not only no votes but also abstentions and absentees count in favor of the Council’s common position.
Wider ramifications: Given these unmistakable signs of division, the Parliament’s leadership might even consider postponing the vote to a subsequent plenary. The rapporteur’s ambition to hold a vote before the elections, on a subject that is as complex as it is controversial, is unusual. A rapporteur should strive to play a unifying role, building rather than burning bridges.
By now it is clear that the absence of formal no votes in the lead committee was far less significant than the exceptionally high number of abstentions. The EP’s Rule of Procedure 159 says in its first paragraph that “[w]here a report was adopted in committee with fewer than one tenth of the members of the committee voting against, it shall be placed on the draft agenda of Parliament for vote without amendment.” Here, there was not even a single vote. Therefore, “Members or a political group or groups reaching at least the medium threshold [must] have requested in writing that the item be open to amendment.” The “medium threshold” is defined in RoP 179 and means 10% of the Parliament’s 705 members.
Mrs. Walsmann’s positions are controversial within her own political group, the EPP. Normally, the EPP prides itself on a strong sense of unity. In the EP, it is much more common than in national parliaments (where a government could be destabilized by failing to win majority support for its proposals) for members to vote against the party line. But the EPP traditionally strives to be more aligned than some other political groups in the EP.
The SEP Regulation is not a topic that will play any role in the EU elections this spring. The number of voters who care about SEPs is negligible. Moreover, no one will get to vote for or against Mrs. Walsmann herself. Each country manages its EU elections differently, and in Germany there are regional lists of candidates, with voters only getting to select a party, not an individual candidate.
All in all, one is left to wonder why Mrs. Walsmann is quite so adamant about taking the bill to a vote. She stands nothing to gain in the elections, but a lot to lose with a view to her standing in the EU Parliament.
Amendments vs. rejection
The simplest course of action and clearest message would simply be for as many MEPs as possible to vote against the specific proposal that is on the table. It would not necessarily mean that a politician is against the idea of legislating on SEP enforcement.
Support for certain Vázquez Lázara amendments would show that specific parts of the proposal are particularly controversial. It’s conceivable that a number of MEPs who are not generally against the proposal may like the idea that its applicability should be limited to standards with respect to which there is hard evidence of a market failure.
For the purpose of sending the Commission back to the drawing board, the primary objective for those opposing the current bill must be to get many votes against the proposal (and abstentions, as they would have the same effect as “no” votes at second reading). But amendments that take aim at certain parts of the bill could serve the purpose of damage control, such as by limiting the scope of applicability and/or removing such elements as the aggregate royalty determination.
Besides the number of votes for or against the proposal, it will be relevant from what parts of the political spectrum those votes come. If Mrs. Walsmann as a nominally center-right MEP largely depends on center-left, Green and far-left votes, while large parts of her own group and of the libertarian Renew Europe group oppose the bill, that could be a Pyrrhic victory. After the upcoming elections, there will predictably be more EU-skeptical MEPs than ever, and the left wing may lose some of its influence.
Today, ip fray heard rumors of other dynamics in the EP that reflect disunity if true. Given that there is no acute crisis, such intra-institutional friction is unnecessary. Especially in recent weeks, various SEP license deals have fallen into place, the latest announcement having been that Volkswagen upgrades its Avanci SEP license to 5G (February 20, 2024 ip fray article). The membership directory of the Fair Standards Alliance increasingly overlaps with the members of the Avanci automotive patent pool, as various FSA members are Avanci licensees and a couple of them (Intel, Deutsche Telekom) are Avanci licensors. All of that serves to show that it is unnecessary for the EU Parliament to hold a contested plenary vote: there appears to be far more of a consensus in the marketplace than in the EP.