The European Parliament will soon take a position on the proposed EU Regulation on Standard-Essential Patents (SEPs), which aims to address imbalances, inefficiencies and uncertainties in the existing SEP licensing ecosystem. The implementation of such an impactful regulation for EU innovation begs on vital question — does the EU regulation on SEPs support the fundamental right to intellectual property (IP)? The answer is clear, yes.
While EU law protects the fundamental right to property, including IP (see Article 17 of the EU Charter of Fundamental Rights), such protection is not without limits. Indeed, that very same provision recognizes that “the use of property may be regulated by law in so far as is necessary for the general interest”. And this is exactly what the proposed EU regulation does, namely providing some safeguards aimed at making the SEP licensing ecosystem more transparent and fairer in the interest of competition and consumers, while still respecting the right of SEP owners to enforce their IP rights against infringers, although subject to specific procedural requirements.
The requirements under the proposed regulation support fundamental rights, especially the right to IP.
In other words, IP is not an absolute right and introducing limits to IP consistent with voluntary promises made by IP holders satisfies important public interests including the protection of competition and consumers’ interests in strategic markets (in our case, that of standardized technologies). Such limits do not amount to a total denial of IP rights. As has been noted, “Article 17(2) protects rights and not the system. It is not an immunity from legislative change”.
Another fundamental right, the right of access to courts (Article 47 of the EU Charter), is also not absolute as long as the restrictive measure does not impair the essence of the right and is proportionate to the aim it purports to achieve. The proposed SEP Regulation would impose a non-binding, yet compulsory out-of-court proceeding to determine FRAND conditions before litigation can be initiated by SEP owners.
For example, in the case Rosalba Alassini v. Telecom Italia SpA, the Court of Justice of the European Union (CJEU) debated over a compulsory condition for parties to have to attempt to settle disputes (over universal service and users’ rights relating to electronic communications networks and services) through out-of-court mechanisms before approaching a national court. It was held that the aims of such a measure was legitimate and not disproportionate to the aims.
The new regime will also offer patent owners more opportunities to reach the market.
This line of reasoning was also used in the seminal SEP case Huawei v. ZTE, where the CJEU held that while the irrevocable commitment to grant licenses on FRAND terms by SEP owners cannot deny their rights, it nevertheless justifies the imposition on them of an obligation to comply with specific requirements when going to courts and asking for injunctions and other remedies.
Considering the above, the requirements under the proposed regulation support fundamental rights, especially the right to IP, while introducing proportionate limits to SEPs holders’ enforcement rights in the interest of healthy competition. The new regime will also offer patent owners more opportunities to reach the market by giving them access to a broader pool of standards users and downstream innovators, triggering and maintaining a spiral of continued innovation.
