The European Commission’s Directorate-General (“DG”) for Enterprise and Industry has initiated a “Public Consultation on Patents and Standards“, seeking to gather public input on the relationship between the standardization of technical specifications and related intellectual property rights. The comment period is open now through January 31, 2015 . The public consultation seeks comment from any interested party, particularly those having direct experience with standardization involving IPR, patent transfers, patent pools, and patent dispute resolution, and expresses particular interest in comments on the performance of the current framework governing standardization involving patents and how this framework “should evolve to ensure that standardization remains efficient and adapted to the fast-changing economic and technological environment.”

There are eight “key issues” on which feedback is sought followed by more specific questions (see questionnaire), with the eight key issues as follows:

  1. Standardisation involving patents is common in the telecommunication industry and in the consumer electronics industry. Which other fields of standardisation comprise patent-protected technologies or are likely to do so in the future?
  2. A variety of rules and practices govern standardisation involving patents. Which elements of these rules and practices are working well and should be kept and/or expanded? Which elements on the other hand can be improved?
  3. Patent transparency seems particularly important to prevent [sic] achieve efficient licensing and to prevent abusive behaviour. How can patent transparency in standardization be maintained/increased? What specific changes to the patent declaration systems of standard setting organizations would improve transparency regarding standard essential patents at a reasonable cost?
  4. Patents on technologies that are comprised in a standard are sometimes transferred to new owners. What problems arise due to these transfers? What can be done to prevent that such transfers undermine the effectiveness of the rules and practices that govern standardisation involving patents?
  5. Patent pools combine the complementary patents of several patent holders for licensing out under a combined licence. Where and how can patent pools play a positive role in ensuring transparency and an efficient licensing of patents on technologies comprised in standards? What can public authorities and standard setting organizations do to facilitate this role?
  6. Many standard setting organizations require that patents on technologies included in their standards are licensed on “fair”, “reasonable” and “non-discriminatory”(FRAND) terms, without however defining these concepts in detail. What principles and methods do you find useful in order to apply these terms in practice?
  7. In some fields standard essential patents have spurred disputes and litigation. What are the causes and consequences of such disputes? What dispute resolution mechanisms could be used to resolve these patent disputes efficiently?
  8. How can holders of standard essential patents effectively protect themselves against implementers who refuse to pay royalties or unreasonably delay such payment? How can it be ensured that injunctions based on standard essential patents are not used to (a) either exclude companies from implementing a standard or (b) to extract unreasonable, unfair or discriminatory royalties?

The public consultation follows the recent release of a fact-finding study and executive summary thereof that was commissioned by the DG for Enterprise and Industry in 2013 to analyze the rules and practices developed to ensure efficient licensing of standard-related patents. Drawing upon existing literature, practitioner interviews, and qualitative data surrounding SEP disclosures, the study focuses on standardization and licensing practices across the telecommunications, consumer electronics, automotive, and electricity industries in which adopted standards often incorporate patented technologies. In addition to providing an overview of IPR policies and licensing practice among SSOs in these industries, the study addresses various barriers to efficient licensing frameworks — “patent ambushes and submarining, hold-up and reverse hold-up, categorical discrimination against new entrants and unsolicited bundling of SEPs with other patents” — and provides fifteen specific suggestions for improving the current systems, including the following:

  • Improving the patent declaration system to target lack-of-transparency issues (e.g., update at key events, limit blanket disclosures, notice transfer of ownership, SSO database of licenses);
  • Promoting patent pools for licensing bundles of SEPs;
  • Providing efficient dispute resolution mechanisms (e.g., arbitration, mediation, mini-trials and incentives for using them);
  • Clarifying FRAND royalty rates (e.g., economic value, ex ante value) and royalty bases (e.g., final product or component);
  • Strengthening SSO rules that bind subsequent SEP owners to adopt their predecessors’ FRAND obligations or binding commitment to patent itself; and
  • Improving guidance to standards-adopters regarding the inclusion of patented technologies to avoid over-inclusion and complexity of standard

Interested stakeholders are invited to submit comments via a questionnaire available at the DG for Enterprise and Industry’s website. The public consultation is open now through January 31, 2015.