The European Commission’s SEPs proposal is an own goal. It should be rejected.

When it was first published, we called the European Commission’s proposed regulation on standard essential patents a solution in search of a problem because we were convinced that the regulation is unnecessary and ill-informed. While we support its goals, the proposal will not deliver on the Commission’s vision of bringing the market greater transparency or predictability in SEP licensing, especially for SMEs.

The provisions represent a one-sided intervention aimed at price-setting and reducing access to justice. The proposal will undermine the Commission’s goals of technology sovereignty and open strategic autonomy as it will reduce incentives to invest in the development of open standards.

Having seen the report of the legal affairs committee (JURI) of the European Parliament, we believe the result will be much worse than the Commission’s original, flawed proposal if the Parliament were to adopt this report. It would be a disastrous ‘own goal’ for the Parliament, the Commission and the European Union as a whole and is in fact a foul against the European research organisations and private companies that contribute to the development of global open standards for everything from cellular telephony to audio and video compression.

The report adopted by JURI was not supported by 10 of 23 voting MEPs and ignored many of more than 1,000 amendments that would have reduced some of the proposal’s negative impact. It appears that the file is being pushed through the Parliament in record time and in defiance of a chorus of expert critics who have raised concerns and flagged that the Commission proposal is fundamentally flawed.

It appears that the interest is to get a deal—any deal—done before the European elections. It appears that there is no interest in taking the necessary time to understand how open standards and SEPs licensing work, nor how both the Commission proposal and amendments adopted in the JURI report would, rather than facilitate licence negotiations, actually make things worse.

Nor is it being considered how this will negatively impact Europe’s capacity to develop critical technologies, remain competitive and achieve strategic autonomy. These are EU goals that we believe should be supported rather than scorned.

The Parliament’s rush contrasts with a very different pace in the Council, where EU Member States have asked the Commission hundreds of detailed questions (for which they are still waiting for answers), are holding expert hearings, are inviting comments, and are prepared to fully assess the potential impact of the regulation before proceeding to any sort of inter-institutional discussions.

IP Europe welcomes the Council’s more measured approach, which reflects a deeper concern for the potential threat to the EU’s leadership in the development of global technology standards. The Council is also paying more attention to issues around technology sovereignty and security concerns—issues that the Commission and JURI so far strangely seem to have ignored or under-estimated. 

IP Europe has called on the Parliament to reject the Commission proposal and the JURI report altogether as the report does not address the many concerns and structural flaws of the proposal.

Ahead of next wednesday's plenary vote in Parliament and a later, more measured deliberation in Council, we continue to reach out to members of the European Parliament and national governments to explain why this proposed regulation would be so disastrous not only for those who contribute to open standards development in Europe, but for Europe and its competitiveness and technology sovereignty.

We are encouraged that many other organisations and their leaders are also speaking out against the Commission proposal. They include the President of the Intellectual Property Judges’ Association; the President of the European Patent Office; senior judges at the recently inaugurated Unified Patent Court, the European Economic and Social Committee; the European Association of Research and Technology Organisations (EARTO); as well as 15 prominent European scientists including Karlheinz Brandenburg and Bernhard Grill, two of the main co-inventors of MP3.

In a letter to MEPs late last year, the scientists wrote that licensing revenue is the main incentive for R&D-intensive organisations to invest resources in the development of new global technical standards, and that the Commission’s proposal would severely erode that incentive: “We are convinced that this proposal would undermine Europe’s technological competitiveness and would weaken its innovative potential and thereby undermine the competitiveness of the European Union,” they said.

Private companies agree, arguing that increased costs, bureaucracy and denial of access to courts would disincentivise participation in the development of open standards, potentially leading to proprietary standards instead, with the inevitable frustration that this would entail for consumers.

The EU can still prevent an own goal. The open standards system and market-based solutions work and the Commission, until it made this proposal, used to support them. We urge all MEPs and EU Member-States to consult broadly, assess the potential negative impact on European innovation, competitiveness and technological sovereignty, reject the JURI report and invite the Commission to rethink its proposal in its entirety.