A fundamental change to SEP licensing related to mobile communications technology is on the verge of being proposed by the European Commission. According to IP Europe – a coalition of IP intensive, R&D companies including Orange, Ericsson and Nokia – plans being championed by the Competition directorate-general would see the Commission endorse a “license to all” policy in place of the currently used “access to all” approach. This could have a dramatic effect on the roll-out of 5G technology, as well as rapidly developing sectors based around the Internet of Things.
“License to all” would mean that all users of a technology within a device would have to take a licence, as opposed to the current “access to all” practice through which a single licence is agreed with the manufacturer of the device in which the relevant patented technology is deployed. One of the effects of the change, IP Europe argues, is that companies that had never previously needed to worry about seeking licences, such as app producers, would in future have to do so.
More generally, says IP Europe, by increasing the number of parties in a value chain required to take a licence, “license to all” would make the licensing process more expensive, more inefficient and much more complex, while potentially slowing down consumer access to the latest technologies. However, it would also reduce royalty costs to end manufacturers, such as big technology companies and car manufacturers. As such, DG Competition’s advocacy of the new policy can be seen as a significant victory for Silicon Valley and Europe’s major auto companies.
Francisco Mingorance, executive secretary of IP Europe, stated in the press release the organisation issued today: “Under massive pressure from the Silicon Valley giants, the ‘license to all, or to any’ concept is actually a ‘license to kill’ innovation in Europe. If adopted, it will remove incentives for innovators to openly share cutting-edge technologies with the marketplace. Open standards will be replaced over time by proprietary connectivity technologies that are controlled by Silicon Valley giants at the expense of European consumers, competitiveness and job creation, with technology and jobs going to Asia and elsewhere.”
As revealed at the end of last month, different directorate-generals inside the European Commission are currently agreeing the wording of an official Communication on the licensing of standard essential patents. Although not legally binding, the document will inevitably prove very influential not only on the way deals are put together, but also in how they are viewed by the courts. Its impact would undoubtedly be felt far beyond Europe.
DG Competition is one of the most powerful branches of the Commission and one that is traditionally sceptical of strong IP rights. It has so far resisted all attempts by other DGs to remove or water down the “license to all” proposals. The Communication is due to be finalised internally by the end of this week and made public on 29th November. It is understood that unless it gets its way, DG Competition will not approve the document. “DG Competition has taken a consistent, persistent and strong line on this, saying it is a small thing and that patent owners get plenty of other benefits,” Mingorance told IAM. “But, in fact, its effects would be dramatic and turn 20 years of practice upside down. It is very concerning.”
Up to now, SEP owners could view Europe as the one part of the world in which their interests are equally as valued as those of the implementers of the technologies their patents underpin. However, should the Communication end up advocating the “license to all” approach, that would no longer be the case; this, in turn, would make it much harder to justify investing huge sums in R&D to enable connectivity. Long-term, such a development serves no-one’s interests - certainly not consumers and not even the device manufacturers, whose ability to offer upgraded products at regular intervals would be hampered by the significant slowdown in the supply of new technology caused by reduced incentives to innovate.