LDN - Business

EU sets out patent rules for smart technology to limit law suits

[April 27, 2023] By Philip Blenkinsop

BRUSSELS (Reuters) -The European Commission proposed rules on Thursday to govern patents increasingly in demand for technologies used in smart devices such as drones, connected cars and mobile phones, to try to reduce litigation.

The Commission said the system for what are known as standard-essential patents (SEPs), was fragmented, lacked transparency, led to lengthy disputes and that self-regulation had not worked.

SEPs protect technology such as for 5G, Wi-Fi or Bluetooth that is needed by equipment producers to comply with international standards.

In the last decade, mobile technology generated extensive patent litigation, involving Apple Inc, Microsoft, HTC Corp, Motorola, Samsung Electronics and Nokia.

Under the proposals from the European Union executive, patent holders in the fields of telecoms, computers, payment terminals and other smart technology, will be required to register their essential patents with the EU Intellectual Property Office (EUIPO). EUIPO will then oversee the process to determine fair,reasonable and non-discriminatory (FRAND) royalties, whichshould be concluded within nine months.

Either party in a dispute would be able to ask a court for a provincial injunction regarding potential royalties even while the two sides negotiate.

Those awarded injunctions say they help to protect their rights while opponents say they can inflate royalties and stifle competition.

Lobby group IP Europe, whose members include Nokia and Qualcomm has said the proposal puts a series of obstacles before patent holders, including a nine-month delay, arguing that it would hinder not enhance research done by European companies.

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European Union flags flutter outside the European Commission headquarters in Brussels, Belgium, June 5, 2020. REUTERS/Yves Herman//File Photo

Carmakers Mercedes and Volkswagen welcomed the proposed system and said it offered more transparency and balance in licensing negotiations.

In 2021, Mercedes parent Daimler agreed to pay Nokia fees for using its patents, ending a German legal row over the use of technologies by automakers.

The EU proposal also includes a new supplementary protection certificate to extend a patent by five years for pharmaceutical or plant protection products. This would complement the EU unitary patent that will be launched on June 1.

Another element of the proposal would allow governments to authorise the use of a patented invention without the patent holder's consent in the case of an emergency, such as for medical technology during the COVID-19 pandemic.

Global vaccine access group the People's Vaccine Alliance said the proposal showed the EU now recognised that intellectual property (IP) rules are a barrier to accessing medicines and urged it to "end its hypocrisy" and help create a global mechanism to suspend IP rules in a health crisis.

The proposal needs to be agreed with EU countries and the European Parliament before they can become law and may be amended.

(Reporting by Philip Blenkinsop and Ilona Wissenbach; editing by Barbara Lewis and Sharon Singleton)

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