Thierry Breton – Photo © European Union 2023
(BRUSSELS) – New unified rules on patents, proposed Thursday by the European Commission, will benefit patents holders and users, and will help smaller companies in particular make the most of their inventions.
The Commission says proposed Regulations on standard essential patents, compulsory licensing of patents in crisis situations, and the revision of the legislation on supplementary protection certificates will create a more transparent, effective and futureproof intellectual property rights framework.
“With patented technologies, Europe’s industries are at the forefront of innovation, from automotive to IoT,” said Internal Market Commissioner Thierry Breton: “Today, we are modernising our framework for standard-essential patents, making it more transparent, SME-friendly and ready for the economy of tomorrow.”
With the increasing importance of intangible assets such as brands, designs, patents and data, intellectual property (IP) is seen as a key driver for economic growth as it helps companies gain value from their intangible assets. IP-intensive industries account for almost half of all GDP and over 90% of all EU exports. In the period 20172019, nearly 76% of intra-EU trade was generated by patent-intensive industries.
The patent initiatives tackle the following key areas:
Standard Essential Patents
Standard essential patents (SEPs) are patents that protect technology that has been declared essential for the implementation of a technical standard adopted by a standard developing organisation (SDO). Such standards relate for instance to connectivity (e.g., 5G, Wi-Fi, Bluetooth, NFC) or audio/video compression and decompression standards.
To make a product that is standard-compliant, an implementer is obliged to use the relevant “essential” patents. The monopoly granted by such specific patents is balanced by SEP holders’ commitment to license these patents on fair, reasonable and non-discriminatory (FRAND) terms, allowing access to market to implementers.
The proposed SEP licensing framework aims to create a balanced system, setting a global benchmark for SEP transparency, reduction of conflicts and efficient negotiations. It has the following two main objectives:
- Ensuring that both EU SEP owners and implementers innovate in the EU, make and sell products in the EU and are competitive on global markets.
- Ensuring that end users, including SMEs and consumers, benefit from products based on the latest standardised technologies at fair and reasonable prices.
The proposed SEP licensing framework will provide additional transparency regarding SEP portfolios, aggregate royalty (when patents of several holders are involved) and allow for more efficient means for parties to agree on FRAND terms of their licences. The proposal introduces measures on the following aspects: a SEP register, database and essentiality checks; expert opinions on SEP aggregate royalty; FRAND determination by means of conciliation in lieu of costly litigation; SME support measures; and the establishment of a ‘Competence centre’ at the European Union Intellectual Property Office (EUIPO).
The proposed Regulation will apply to all standards that will be published after its entry into force. However, the Commission will determine which of the standards, their implementations or use cases would be excluded from the aggregate royalty setting and FRAND conciliation process, in situations where the respective SEP licensing does not pose significant difficulties or inefficiencies affecting the functioning of the internal market. Conversely, standards published before the entry into force of the Regulation will not be subject to itunless specific market distortions due to inefficiencies in the licensing of SEPs lead the Commission to include them within its scope of application.
Compulsory Licensing
Compulsory licensing of patents allows a government to authorise the use of a patented invention without the consent of the patent holder. Voluntary licensing agreements with manufacturers are generally the preferred tool to ramp up production, but should voluntary agreements not be available or adequate, compulsory licensing can help provide access to key crisis-relevant products and technologies as a last resort in times of crisis. Currently there is a patchwork of 27 national compulsory licensing regimes even though many value chains operate across the EU. This can be a source of legal uncertainty for both right holders and users of IP rights.
The new rules foresee a new EU-wide compulsory licensing instrument that would complement EU crisis instruments, such as the Single Market Emergency Instrument, HERA regulations and the Chips Act. In the aftermath of the COVID-19 crisis, these new rules further enhance the Union’s resilience to crises, by ensuring access to key patented products and technologies in crises, should voluntary agreements not be available or adequate.
Supplementary Protection Certificates
A Supplementary Protection Certificate (SPC) is an IP right that extends the term of a patent (by up to five years) for a human or veterinary pharmaceutical product, or a plant protection product, that has been authorised by regulatory authorities. It is meant to encourage innovation and promote growth and jobs in these sectors. However, SPC protection is only available at national level. As a result, the current system suffers from fragmentation, which leads to complex and costly procedures, as well as legal uncertainty.
This initiative introduces a unitary SPC to complement the Unitary Patent. The SPC reform also introduces a centralised examination procedure, implemented by EUIPO, in close cooperation with EU national IP offices. Under this regime a single application will be subjected to a single examination process that, if positive, will result in the granting of national SPCs for each of the Member States designated in the application. The same procedure may also result in the grant of a unitary SPC.
2023 EU SME Fund
Concurrently with today’s proposals, the 2023 SME Fund will now also make available new vouchers services concerning, for the first time, European patents and new plant varieties. These new services will allow SMEs to save up to 1,500 on their patent registration costs and 225 on the registration of new plant varieties per application.
The proposed Regulations now need to be discussed and agreed by the European Parliament and the EU Council before adoption and entry into force.
Proposals for a Regulation on Supplementary Protection Certificates
Proposal for a Regulation on Compulsory Licensing of Patents
Proposal for a Regulation on Standard Essential Patents
Supplementary Protection Certificates - guide
Compulsory Licensing - guide
Standard Essential Patents - guide
Factsheet on Supplementary Protection Certificates
