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

The dilemma at the intersection of IP and standardisation

➢ Create incentives and reward for R&D, innovation and contributionof top technology to standards

➢ Access to standardised technology at fair terms to ensure widedissemination of a standard and its technology

Need for a framework enabling smooth and efficient process for SEP licensing

New environment with the advent of the Internet of Things

Clear stance taken in other jurisdictions – need for European vision on the topic

2

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

3

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

4

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, industryand research, on the identification, by 2017, of possible measures to

(i) improve accessibility and reliability of information on patent scope, including measures toincrease the transparency and quality of standard essential patent declarations as well as

(ii) to clarify core elements of an equitable, effective and enforceable licensing methodologyaround FRAND principles and

(iii) to facilitate the efficient and balanced settlement of disputes.”

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Guiding principles

• Holistic approach across all three pillars

• Focus on licensing process conditions not on prescribing anoutcome

• Preserve flexibility for evolving business and technologyenvironment

➢ Soft law instrument providing signposts for European vision ofbalanced SEPs licensing environment

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Possible measures suggested in Commission consultations and studies:

Transparency

• Increase precision of declaration

• Revision at the time of final adoption of the standard

• Update following litigation

• Essentiality checks?

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Possible measures: Valuation and licensing principles

• Mapping of valuation methodologies for FRAND

• Differentiation according to use case of the implementedtechnology?

• Clarify licensing rights along production chain

• Transfer

• Role of Patent pools

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Possible measures: Enforcement

• Some guidance on the Huawei-process

• Portfolio litigation and damages

• Enhancing the role of arbitration

• Proportionality

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SEPs and Open Source

• In the context of current technology evolution, open sourcesoftware implementations becomes more and more extended,included for ICT standardisation

• Integration between open source based solutions andinteroperability standards is win-win situation

• Commission supports OS solutions. FRAND can alsoaccommodate royalty-free concepts

• Need to clarify the interaction between open sourcecommunities projects and SDOs processes

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Next steps

• Ongoing follow-up discussions with stakeholders in bilateraland multilateral settings

• Internal work of the Commission

• Commission Communication scheduled for this year

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Thank you for your attention!

anne.von-zukowski@ec.europa.eu

https://ec.europa.eu/growth/industry/intellectual-property/patents/standards_de

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