A reinterpretation of the 2011 Horizontal Cooperation Guidelines through a Communication on 5G and IoT is unwarranted, and will have global effects stalling all licensing negotiations, triggering more patent hold-out and litigation, while high-tech jobs leave Europe.

[Brussels: Thursday, 9th November 2017] The inclusion of a ‘license to all, or any’ provision in the ‘Communication on SEPs licensing’ will have calamitous implications for innovation in 5G and Internet of Things (IoT) connectivity technology. ‘License to all’ would essentially stall licensing negotiations and drive high-tech jobs from Europe – such as those developing new technologies for standardisation. This is a stark contrast with the stated goals of the European Commission: to “promote the roll out of 5G and IoT, the licensing and enforcement of patents essential to ICT standards need both to be balanced, predictable and to facilitate access to the technology while preserving its fair value”.

The move towards ‘License to all’ is based on an out of context misinterpretation of the Horizontal Cooperation Guidelines which, in effect supports the industry’s longstanding and proven ‘access to all’ licensing model.

This artificial reframing of the Standard Essential Patent licensing system is out of touch with the industry practice of ‘access for all’ on which the success of the global mobile telephony is premised. It will have global effects and lead to the collapse of incentives for innovators including universities, research institutes, SMEs, and some of Europe’s leading technology brands, to participate in open standards development. This is predicted to create an innovation freeze in 5G and IoT technologies worse than that witnessed in the US Wi-Fi standard. EARTO, the European Association of Research and Technology Organisations, voices similar concerns and says that “there is no focus on the European innovation ecosystem and protecting European knowledge – based economy and interests”[1]

In 2015 changes were imposed on a US standards body (IEEE) by Silicon Valley giants in a ‘coup d’état’, resulting in its flagship Wi-Fi standard not being updated for some time. New research[2] has now revealed the extent of the innovation freeze in that organisation:

• Three quarters (73%) of IP rights holders (have refused to grant access to their latest Wi-Fi innovations under the terms of new IEEE policy (although they are still available under the old terms)[i]
• Nearly half (47%) of IP rights holders have refused to grant access to their latest innovations under the new policy when all IEEE’s standards (not just Wi-Fi) are considered.[ii]

Disastrous economic impacts would be another result of the policy change. According to recent research, imposing an IEEE IP Rights policy change on Europe would precipitate[3]:

• A decline in overall European R&D of 8%
• A reduction in GDP of 0.5% in the long term
• An economic cost of €465 billion at 2016 rates

Francisco Mingorance, Executive Secretary of IP Europe said: “It is naïve to believe that the destruction of the system of open standards will result in lower prices for consumers and businesses. The opposite will be the case. The replacement of open standards with proprietary technologies, controlled by the same Silicon Valley gatekeepers that regulators are struggling to control today, will create de facto 5G and IoT monopolies, decreasing competition, driving high-tech jobs out of Europe, and driving up prices for European consumers and businesses. Is this what the European Commission really wants?”

[1] https://www.earto.eu/fileadmin/content/03_Publications/2017/EARTO_Paper_on_the_European_Licencing_Framework_for_SEPs_-_final.pdf

[2] KEITH MALLINSON, DEVELOPMENT OF INNNOVATIVE NEW STANDARDS JEOPARDISED BY IEEE PATENT POLICY, September 2017 [available here]

[3] IAN CORDEN, TIM MILLER, SARONGRAT WONGSAROJ, SAM WOOD, 2017: COMMERCIAL AND ECONOMIC IMPACTS FROM IPR POLICY CHANGES

[i] 73% of ‘letters of assurance’ received by the IEEE from contributors to their WiFi standard were negative in the 18 months to June 2017: this indicates the refusal of the IP rights holders to provide access to their technology under the IEEE’s new terms.

[ii] 47% of all LOAs posted on the IEEE website over the same period are negative.

-Ends-

For more information, contact: 

Laura Lichinski
laural@europa-insights.com
+32 493298882

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