Yesterday, the UK government set out its response to its consultation on Standard Essential Patents (SEPs).
It sets out a package of targeted, practical measures the UK government will take forward to improve transparency, make dispute resolution more efficient and support better-informed licensing negotiations for SEPs.
SEPs are patents which protect innovations essential to technical standards, enabling products and services to connect, communicate and operate across borders. They cover and include technology found in smartphones, Wi-Fi, connected vehicles, medical technology and advanced manufacturing. Their importance is set to grow as declared SEPs increase worldwide, and new technical standards develop for emerging technologies such as 6G and AI (artificial intelligence). Owners of these patents are obliged by standard setting organisations to allow the licensing of their technology on fair and reasonable terms.
Jeremy Smith, Partner and Michael Charlton, Associate, at Mathys & Squire which is a leading intellectual property law firm on the UK’s proposed changes to Standard Essential Patents, makes comments below in relation to the government’s next steps for SEP owners, for implementers and for SMEs (small and medium enterprises). Their comments are:
For SEP owners
“The Government’s response is generally positive because it preserves the current framework for SEP licensing and avoids the introduction of significant new regulatory burdens. In particular, the Government has declined to introduce a specialist FRAND rate-setting court, restrict the availability of injunctions, or establish an IPO-run essentiality assessment service.
“While greater transparency and new FRAND guidance may increase scrutiny of SEP owners’ licensing practices, the overall balance of rights and enforcement mechanisms remains largely unchanged.”
For implementers
“The outcome is more mixed. The Government has acknowledged concerns regarding information asymmetry and licensing complexity, and has proposed measures such as a searchable SEP information repository (albeit voluntary in nature), FRAND licensing guidelines, and a potential IPO-led FRAND opinion service. However, it has stopped short of introducing reforms sought by many implementers, including mandatory disclosure obligations, restrictions on injunctions, and a specialised forum for lower-cost FRAND determinations.
“As a result, transparency and procedural support may improve, but the underlying balance of negotiating leverage is likely to remain largely unchanged.”
For SMEs
“Many of the proposed measures are specifically aimed at helping smaller businesses understand their SEP licensing obligations, access better information, and resolve disputes at an earlier stage and potentially lower costs. However, the Government has not adopted measures that would fundamentally reduce litigation costs, provide authoritative essentiality determinations, or substantially rebalance the bargaining position of SMEs when negotiating with large SEP owners. Consequently, while the reforms may make the SEP ecosystem easier to navigate, many of the underlying challenges faced by SMEs are likely to persist.”
