Beyond the SEP regulation – three EU policies to watch

An update on legislative proposals affecting patent pools and standardisation, plus the anti-suit injunction dispute with China at the WTO

By Vincent Angwenyi

For more than a year, the patent world has been intensely focused on the progress of the EU’s controversial SEP regulation – and with good reason. But there are several other issues on the European policy agenda that are worth keeping tabs on for SEP stakeholders. We’ll introduce three of them in this article and tell you where they stand.

But first, a quick update on the SEP regulation itself. The legislation is now with the Council of the EU, so it can adopt a ‘general approach’ to the file.

The first step would be for the presidency of the Council, which currently sits with Belgium and will pass to Hungary in July, to convene the relevant working party to study the proposal. At that point, the SEP file will be placed on the agenda of the Council working party on intellectual property. This has not yet happened. As such, the timeframe for progress remains uncertain.

Now let’s turn to three additional items on the EU agenda that Sisvel’s policy team is monitoring:

• the Technology Transfer Block Exemption Regulation (TTBER), which is being reviewed by DG COMP;

• the European Standardisation Regulation, which is the subject of a DG GROW consultation; and

• the EU’s WTO dispute with China concerning anti-suit injunctions.

Technology Transfer Block Exemption Regulation

In 2023, the European Commission’s Directorate General for Competition (DG Comp) held a public consultation on the TTBER and its related guidelines. This is an important regulation because, among other things, in its guidelines the safe harbour provisions for patent pools are set out. In Sisvel’s view, these have been clear and effective in providing legal certainty.

With the TTBER set to expire on 30 April 2026, DG Comp must decide whether to let it lapse, extend it or revise it.

Following the public consultation, DG Comp held an online workshop on 6th December 2023 to gather more information on the functioning of the TTBER and Technology Transfer Guidelines (TTGL), with a particular focus on the aspects of the rules that attracted most attention during the public consultation.

A couple of key concerns have emerged around the TTBER consultation.

First, DG Comp is considering whether specific guidance on licensing negotiation groups (LNGs) should be added to the technology transfer rules. In Sisvel’s comments, we have raised our significant concerns over the potential for LNGs to facilitate coordinated behaviour among unwilling licensees aimed at distorting competition – potentially resulting in cartel conduct that enables extended hold-out. Our President, Mattia Fogliacco, recently wrote about LNGs for Sisvel Insights.

Following a similar discussion, DG Comp decided to leave the concept of LNGs out of the Guidance on Horizontal Agreements published in 2023 – the hope is that it will exercise the same caution here.

A second, broader concern is whether the European Commission factors in existing guidance for technology pools in the TTGL and the extent to which the SEP regulation is in conflict with this. While the TTBER and TTGL have provided technology pools with clear instructions on how to coordinate the licensing out of pooled technologies, the proposed SEP regulation seems to conflict with both, notably by issuing duplicative guidelines and processes.

The responses to the Q2 2023 public consultation as well as a summary by DG Comp of the feedback are publicly accessible here and here. Commission adoption is planned for Q4 2024.

European Standardisation Regulation

At the beginning of May, the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (DG Grow) initiated a consultation on the European Standardisation Regulation which is slated to run through 25 July 2024. The objective is to assess whether the regulation is still fit for purpose as the basis for the European standardisation system.

This regulation is important for SEP stakeholders to monitor given European standards bodies’ outsized role in steering global standards in key technology areas from wireless communications to media coding.

There is significant interest in contributing, with 26 responses already submitted. After submissions have closed in July, it should become apparent whether any of the issues raised might impact directly or indirectly on the patent licensing ecosystem.

EU v China WTO case – enforcement of IP rights

A third EU policy matter with direct bearing on the patent world is the bloc’s WTO complaint against China over its anti-suit injunction practices. When it filed the case in February 2022, the EU said the following in a press release:

China severely restricts EU companies with rights to key technologies (such as 3G, 4G and 5G) from protecting these rights when their patents are used illegally or without appropriate compensation by, for example, Chinese mobile phone manufacturers. The patent holders that do go to court outside China often face significant fines in China, putting them under pressure to settle for licensing fees below market rates.

Members of the panel were appointed by the WTO Dispute Settlement Body in March 2023. Since then, two substantive hearings have been held and the parties have made written replies to hundreds of questions from the panel. The EU has made its filings in the case publicly available.

In addition to the implications for anti-suit remedies globally, this case is worth watching because some of the positions taken by the EU sit somewhat uncomfortably with the details of the EU SEP regulation. For example, on 6th March at the second substantive meeting, the EU representatives closed their oral argument with the following:

The European Union would like to stress the importance of this case for two reasons. First, given the importance of standard essential patents, which represent a major area of intellectual property protection with significant economic implications in many sectors, and increasingly so in a digital society. Secondly, because this case concerns the effective functioning of the TRIPS Agreement, which requires good faith implementation for the benefit of SEP owners and of all WTO Members.

This recognition of SEPs’ role in digital society, in a case where the EU is championing the enforcement rights of SEP owners, contrasts with the European Commission’s recent portrayal of SEPs as a barrier to digital transformation. Regarding the TRIPS agreement, a research paper published by the 4iP Council last July observed that certain aspects of the SEP regulation appear to interfere with TRIPS Articles 21 and 43, which deal with access to courts in patent litigation.

In November 2023, the WTO panel estimated that it would issue its final report to the parties no earlier than the second half of 2024, with circulation to the public following after its translation into the three official languages.

Vincent Angwenyi is senior IP counsel at Sisvel, based in Hamburg