Standard essential patents: how is the proposed EU Regulation progressing?

As we discussed last time, three committees were appointed: the Committee on Legal Affairs (JURI), the Committee on International Trade (INTA) and the Committee for the International Market and Consumer Protection (IMCO), with JURI being the committee responsible.  

In January 2024, JURI voted on the changes that had been put together and these were passed (by 13 votes in favour and 10 abstentions). The EU Parliament then voted on this version in February 2024 and it was approved (with 454-to-83 to adopt the legislation, with 78 abstentions).  

As with the Regulation in its original form, if the Regulation was adopted in the latest form, this would severely curtail a patent holder’s rights in the EU. A SEP holder would be unable to enforce its patent rights if the SEP involved was not registered with the EUIPO. In addition, a FRAND determination must have been initiated before the EUIPO before a SEP holder is able to start infringement proceedings before a court.

The key areas of interest in the version approved by Parliament are:

Subject matter and scope (Article 1 and new Articles 65a, 65b & 65c)

The Regulation has been amended to refer from the outset to existing standards, as well as ones published after the Regulation has come into force.  

The Regulation is said to apply to a patent “that a SEP holder claims to be essential to a standard that has been published by a standard development organisation, after entry into force of this Regulation” (Article 1(2)).  

However Aggregate Royalty Rate determination of Art 17 and 18 and FRAND determination of Art 34 will not apply “where there is sufficient evidence that SEP licensing negotiations on FRAND terms and conditions do not give rise to significant difficulties or inefficiencies affecting the functioning of the internal market as regards identified implementations of certain standards or parts thereof” (Article 1(3)). 

In addition, the Regulation also applies to patents “that a SEP holder claims to be essential to a standard published by a standard development organisation before the entry into force of this Regulation, where the functioning of the internal market is severely distorted due to significant difficulties or inefficiencies in the licensing of SEPs for certain implementations, standards and parts thereof” (Article 1(4)).

New Articles 65a, 65b & 65c provide for a SEP holder or a SEP implementer to submit a reasoned request to the Commission to determine whether there is “sufficient evidence” (for standards published after the Regulation comes into force) or “significant difficulties or inefficiencies in the licensing of SEPs for certain implementations, standards and parts thereof” (for existing standards).  How in practice this is to be determined is an open question, but one that can be expected to take significant time and money.  

Suspension if a SEP holder fails to provide correct information for a SEP registration (Art 22 and Art 23) and effects of absence or suspension of registration (Art 24)

The Regulation sets out a process that starts with the EUIPO creating an entry in the register for a standard and publishing a notice to this effect (Article 19). A SEP holder must then file a request for registration of a patent that is essential for the standard within 6 months of this notice. The SEP holder must also pay a fee (as yet unspecified) (Article 20). 

Article 22(4) as approved by Parliament now gives a SEP holder a grace period of one month to provide “correct and complete information” if, after a check by the EUIPO, the EUIPO considers that the information in the register is not “correct and complete”.  Similarly, Article 23 allows a third party or a court of an EU member state to inform the EUIPO of necessary changes and for the EUIPO to notify the SEP holder of these.  

In either case, if the SEP holder does not provide this information, the result is that the registration will be suspended.    

What constitutes “correct and complete information” (even with reference to Articles 4 and 5) will no doubt lead to much debate..  

Art 24 as approved by Parliament no longer includes the first subsection, which stated that a SEP that is not registered “may not be enforced in relation to the implementation of the standard for which a registration is required”. That is good news.  However, subsections 2 to 5 remain, which mean that a SEP holder cannot bring a claim for infringement until a SEP is registered or while registration of a SEP is suspended.   

The EU Parliament therefore seems to be unconcerned  about this fundamental change to patent holder’s rights in the EU and we wait to see if any challenges come during the EU Council procedure.

Initiation of the FRAND determination (Art 34), suspension of the time barring of claims before a court during FRAND determination (Art 37(2) and Art 56(4)) and allowing for a provisional injunction comprising seizure of goods (Art 34(4))

Art 34 means that a FRAND determination must have been initiated at the EUIPO before a SEP holder is able to start infringement proceedings before a court or an implementer may start proceedings before a court for FRAND rate determination.

Art 56(4) means that a court in the EU is barred from determining FRAND terms and conditions or a SEP infringement claim until it has been served with a notice of termination of the FRAND determination by the EUIPO.  

Articles 34 and 56 further curtail a patent holder’s rights to enforce a patent and represent another fundamental change to patent holder’s rights in the EU. We expected objection from…