Weekly take: SEP owners must hold fire on EU reform excitement

Last week there was a hum of interest among some specialist media outlets and commentators with an interest in standard-essential patents.

For transparency, that includes a report by this publication.

A draft opinion from the European Parliament's Committee on International Trade, which suggested some potentially significant changes to the European Commission’s proposed regulation on SEPs, pricked people’s ears up.

Given the furore that followed the commission's initial proposal this year, it is understandable that subsequent twists and turns would be closely watched.

In short, the EU has proposed that the EUIPO should have the power to set fair, reasonable, and non-discriminatory (FRAND) rates for SEPs.

The office, which has no patent experience, would also be responsible for checking whether a declared patent is truly essential to the standard. SEP owners would not be able to litigate those patents until they had gone through the essentiality and FRAND checks.

The trade committee has now suggested that the commission’s proposal should only apply to future standards and use cases.

The committee further noted that the EU had worries about SEP licensing. However, it said evidence to support these concerns was “inconclusive”.

Unsurprisingly, some predictions of the regulation potentially being watered down followed.

SEP owners might be quietly hopeful that this could signify a climbdown on what has been a controversial proposal, at least from a patent owner perspective.

But there’s more to it than that.

Importance overblown

Now that the dust has settled, it's worth considering what the draft opinion could mean in practice.

Truthfully, the answer is not very much. At least not yet.

In reality, it is doubtful (but of course possible) that this will be a significant moment that favours SEP owners.

The trade committee’s draft opinion, and it is just a draft, is one of the earliest steps in a very long process.

In fact, so far we are merely following standard EU procedure, which allows committees in the parliament to share their own opinions on commission-led proposals.

In fact, another committee, the Committee on the Internal Market and Consumer Protection (IMCO), has also published a draft since the committee's opinion was published.

IMCO opted for a different view, suggesting that the regulation should apply to all SEPs and not just future cases.

You can see we are already on shaky ground as far as securing any concrete changes goes.

As was the case right at the start of this debate, there are plenty of conflicting views.

Also, the committee appears to have made its observations having spoken only to SEP owners, so it is clear there is still scope for more views to be aired.

Common ground

Once the various committees have had their say, it will be up to the Committee on Legal Affairs (JURI), the lead committee for the SEP proposal, to try to find common ground.

But JURI does not have to take any committee views into account.

If I were a SEP owner I would certainly be pleased to see signs of scrutiny, particularly from the trade committee, but I wouldn’t be dancing with delight just yet.

One thing that is clear, however, is that SEP owners are certainly making their feelings known.

A list of the published companies that the trade committee spoke with before forming its view tells a story.

Qualcomm, InterDigital, and Marconi, the parent company of the Avanci-run patent pools, are among those listed.

The views of implementers are conspicuous in their absence.

I'm not taking a side either way, but if an informed view is to be made on a proposed law then the views of both sides should be taken into consideration.

We know, for example, that the commission spoke to both SEP owners and implementers before publishing its draft regulation (though SEP owners may, rightly or wrongly, argue that their views were largely discounted).

I hope that by the time it comes to publishing its final opinion, it will have heard both sides of the debate.

What next?

To sum up, the trade committee and IMCO proposals are likely to be heavily scrutinised. They could end up being adopted, heavily edited, or ignored.

It’s just too early to make any predictions.

And that’s before the EU’s other bodies are given a chance to assess the SEP proposal.

The parliament will hold a first reading of the regulation, either in its current form or with committee-backed changes, before sending a draft to the European Council to conduct its own reading.

The council will then make its own assessment, possibly introduce changes, and then return the text to parliament for a second reading. There are no formal timelines for any of these steps.

It will then be down to the council and parliament to conduct second readings. The commission can also introduce feedback at this stage.

One source familiar with the EU lawmaking process says we are at “the very beginning of a very long process” and suggests it could take years before the regulation is even close to adoption.

Whatever is happening behind the scenes, we are a long way off any concrete changes.