As the European Parliament and European Union Member States start reviewing the European Commission’s recent proposal on standard-essential patents (SEPs), the first question on most people’s minds is: What is a standard-essential patent anyway? More importantly, why should I care? And what have SEPs done for me lately?
We have already tried to answer the first question here. This article and infographics are our latest attempt to try to answer the second and third questions. We thought pictures might help.
In fact, modern mobile phones and connected vehicles offer lots of transformative functionalities that most people take for granted. For smartphones, examples include fast, stable cellular connectivity, along with fast, efficient audio and video transmission, not to mention Wi-Fi connectivity and wireless charging. And they work everywhere in the world, because they’re based on global standards.
For connected automobiles, the examples include over-the-air software and traffic updates, mobile hotspots, remote monitoring and automatic collision notification to emergency services. Next up: vehicle-to-vehicle communication.
In most cases, these functionalities were not invented by the company that made your mobile phone or the automobile. Rather, they are the result of many companies coming together to collaborate on global technical standards. These global open standards, including 4G, 5G, Wi-Fi, video codecs and now 3D audio, enable interoperability and backward compatibility. That means the products of any brand in the world can communicate with another company’s products.
Standards enable consumer choice, because any company implementing a standard will have the same base technology. And that technology keeps getting even better because the best minds in the world are working on it together. That way, the huge R&D investment can also be shared. Each company, SME, research organisation or university contributing to the development of a standard can protect its contributions through patents, copyright and know-how. There are all types of IP in standardised technology. ‘Standard-essential patents’, or SEPs, represent patented technologies that are needed for the standardised technology to work.
So why should you care? Because the ecosystem that produces this innovation that you and almost everyone else take for granted is not based on magic! It has taken decades and billions in resources to develop. And it is under threat.
The so-called “open innovation ecosystem” is based on billions of euros of investments over many years by engineers and others collaborating in international standards organisations. Some companies (including many IP Europe members) elect to contribute proprietary technologies to the development of global technology standards and, in exchange, voluntarily commit to license their patented technologies on Fair, Reasonable and Non-Discriminatory (FRAND) terms and conditions.
You, the end user, indirectly pay a small fee for the use of these technologies — about 15 euros per 4G smartphone license or 30 euros per 5G automobile license, respectively–over the entire life of the product. The mobile companies and automakers pass this fee, which is included in the price you pay them, back to the standards developers that invented the technologies. From there, those standards developers reinvest income into more R&D for even better, cooler services down the road.
The problem is, the European Commission wants to change all this and heavily regulate rights relating to European SEPs. Why did the Commission think this was a good idea, while the rest of the world watches on with a combination of fear and surprise? For one thing, the Commission did not do its homework properly. It does not appear to understand global markets, and it chose to ignore its own research that advised against interference. Other flawed conclusions, heavy lobbying by mobile phone and automobile manufacturers, and plain old politics also played a role. If adopted as written, the result would be a disaster for Europe and global innovation. You can read why here and here and here.
In the meantime, let’s celebrate all the cool things you can do with your mobile phone and your favourite vehicle (many of the same services that apply to connected automobiles also apply to electric bicycles and e-scooters.) thanks to global open standards and standard-essential patents. Cool things which in many cases were not the result of any innovation by the companies which made your mobile phone or automobile, but by engineers working in global standards committees.
You can download the infographics above and more via the links below: