According to reports, the EU’s patent regulator will be responsible for a new procedure to set fair patent licensing fees for technologies widely used in technology products such as cell phones, according to a draft of the latest EU regulation. The draft aims to reduce litigation arising from disputes over patent royalties.
The so-called “standards-essential patents” refer to technologies that devices must use in order to comply with international standards, such as 4G, WiFi and USB. Some standards involve thousands of underlying patents, and the owners of these patents are required to license them to other companies on fair and reasonable terms.
Users of these standards are typically manufacturers of telecommunications equipment, cell phones, computers, tablets, as well as connected cars, drones, payment terminals and other smart devices. The European Intellectual Property Office (EUIPO) is responsible for the royalty process to resolve disputes between patent owners and users of the standards.
The latest document from the European Commission shows that “the process for determining the fair, reasonable, non-discriminatory (FRAND) principle should be simplified, and negotiations should be speeded up and reduced when these terms are involved. the EUIPO should manage this process.”
The document states that the process of determining whether a patent should comply with the FRAND principle should be completed within nine months. It is also a mandatory step before patent owners can take legal action for infringement. “This is necessary because disagreement over FRAND terms is a major reason for seeking solutions in court,” the document shows.
The draft rule requires EUIPO to establish a registration mechanism for “standard essential patents”. Companies would have to register if they want to charge for these patents or take legal action based on them. The document says: “Unless registered, owners of standard essential patents are not entitled to charge royalties or seek damages for infringement.”
To help owners of standard-essential patents determine how much they can charge for licensing, the European Commission wants companies to agree on a total licensing fee, which would cover the potential cost of all standard-essential patents under the same standard. At the same time, an independent assessment body will evaluate whether a patent is necessary for the standard.
According to the European Commission’s agenda, the draft will be published on April 26 by Margerethe Vestager, Vice President of the European Commission. The draft still needs to be agreed by the EU countries and the European Parliament before it can become law.
