A balanced framework for the licensing of Standard Essential Patents Anne von Zukowski Intellectual Property and Fight against Counterfeiting European Commission, DG GROWTH SBS training IPR-based standardisation – What are the opportunities and challenges for SMEs? Brussels, 29 June 2017

The dilemma at the intersection of IP and standardisation Create incentives and reward for R&D, innovation and contribution of top technology to standards Access to standardised technology at fair terms to ensure wide dissemination of a standard and its technology Need for a framework enabling smooth and efficient process for SEP licensing New environment with the advent of the Internet of Things Clear stance taken in other jurisdictions – need for European vision on the topic

Three key ingredients for balanced and effcient SEP licensing A transparent environment for negotiations between SEP holders and potential licensees Common valuation principles for SEPs technology A balanced and predictable enforcement regime

Imperfections in all three pillars Opaque information about SEP exposure Very high number of declared SEPs Based on self-declaration without scrutiny Increasing number of SEP holders for a single standard Key valuation and licensing principles debated Calculation base for royalty Licensing level in the production chain No transparency on licensing conditions Lack of predictability Compatibility of Open Source and FRAND An evolving enforcement regime Interpretation and development of the Huawei judgement

Room for improvement? Commission Communications on “Digitising European Industries” and “ICT Standardisation Priorities” (April 2016): “The Commission will work in collaboration with stakeholders including ESOs, EPO, industry and research, on the identification, by 2017, of possible measures to improve accessibility and reliability of information on patent scope, including measures to increase the transparency and quality of standard essential patent declarations as well as to clarify core elements of an equitable, effective and enforceable licensing methodology around FRAND principles and to facilitate the efficient and balanced settlement of disputes.” 23/05/2018

Guiding principles Holistic approach across all three pillars Focus on licensing process conditions not on prescribing an outcome Preserve flexibility for evolving business and technology environment Soft law instrument providing signposts for European vision of balanced SEPs licensing environment 23/05/2018

Possible measures suggested in Commission consultations and studies: Transparency Increase precision of declaration Revision at the time of final adoption of the standard Update following litigation Essentiality checks? 23/05/2018

Possible measures: Valuation and licensing principles Mapping of valuation methodologies for FRAND Differentiation according to use case of the implemented technology? Clarify licensing rights along production chain Transfer Role of Patent pools 23/05/2018

Possible measures: Enforcement Some guidance on the Huawei-process Portfolio litigation and damages Enhancing the role of arbitration Proportionality 23/05/2018

SEPs and Open Source In the context of current technology evolution, open source software implementations becomes more and more extended, included for ICT standardisation Integration between open source based solutions and interoperability standards is win-win situation Commission supports OS solutions. FRAND can also accommodate royalty-free concepts Need to clarify the interaction between open source communities projects and SDOs processes 23/05/2018

Next steps Ongoing follow-up discussions with stakeholders in bilateral and multilateral settings Internal work of the Commission Commission Communication scheduled for this year 23/05/2018

Thank you for your attention! anne.von-zukowski@ec.europa.eu https://ec.europa.eu/growth/industry/intellectual-property/patents/standards_de 23/05/2018