EU Proposes New Anti-Competitive “Reforms”

The European Commission (EC) has proposed a new regulation on standard-essential patents (SEPs) to ensure fair access to these patents. However, critics argue that this regulation would harm small and medium businesses (SMEs) vital to the European economy by eroding their protections.

Under the proposed regulation, SEP holders must license their patents to interested parties on fair, reasonable, and non-discriminatory (FRAND) terms. This would create a central repository of SEPs where licensing terms must be published. The regulation seeks to address the importance of intellectual property (IP) in the EU economy, as it contributes significantly to GDP and exports.

IP is essential to the European Union economy, the backbone of most of Europe’s wealth. The industry comprises “almost half of all GDP” in the EU and “over 90% of all EU exports.” From 2017 to 2019, robust patent protections generated approximately 76% of all internal EU trade.

However, a key concern with the proposed regulation is the lack of a clear definition of FRAND, which could lead to different interpretations by SEP holders and implementers. Another issue is establishing a new dispute resolution system administered by a European agency, which could be more expensive and slower than the current private negotiation-based system. This would make it harder for SEP holders to enforce their patents, potentially reducing innovation and discouraging investment in research and development.

Moreover, the proposed regulation is expected to increase market concentration, as SMEs unable to access SEPs would be less likely to enter the market. This concentration could have negative consequences, such as increased litigation costs and reduced competition.

Critics argue that the current system of private negotiations has been effective and should be maintained to support economic growth and technological advancement. They highlight the importance of SMEs and SEPs in driving innovation and dynamic growth in Europe.

Considering these concerns, stakeholders recommend that the EC withdraw the proposed regulation and collaborate with all parties to develop a more effective solution. They argue that the EU’s pursuit of this regulation, which aims to relinquish private ownership of SEPs, would ultimately harm the economy. Instead, they suggest continuing the existing system of secret negotiations, where two parties work towards a reasonable price.

The proposed EU regulation on SEPs has faced criticism for potentially harming SMEs, increasing litigation costs, reducing innovation and promoting market concentration. Critics argue for preserving the current system and urge the EC to reconsider the proposed regulation to support economic growth and technological development.