European Commission IP Action Plan: input to the roadmap

IP Europe commends the European Commission’s efforts to support EU innovators of all sizes, which includes creating the conditions for them to use Intellectual Property Rights (IPR) to drive investments in R&D. European innovation will be the engine to rebuild our economy post-COVID-19 and to enhance the strategic autonomy of the European Union.

The open standards development model: our best and greenest voluntary IP sharing tool

IP Europe welcomes the Commission’s focus on IP and its importance in “promoting a greener and digital economy” and its recognition that “well-calibrated and balanced IP policies can build up resilience and boost Europe’s industrial competitiveness.” We also note the Commission’s desire to “promote better licensing and sharing of IP-protected assets.”

Voluntary sharing of intellectual property - through fair licensing practices and most notably through the use of standards essential patents (SEPs) - is an important part of promoting a greener economy and the Digital Single Market. It is only through processes that enable IPR sharing - including standardisation - that these goals can be met in ways that reflect EU values of openness while using our current industrial competitive advantages and achieving the critical scale required.

Incentivising innovation in Europe and globally

For the last two decades, the voluntary sharing of IP through standards has incentivised the creation of global technology standards. Many of these standards, particularly those for cellular mobile communications (e.g. 4G/LTE and 5G/NR) have been created with European know-how and technical expertise. EU companies have shared their best technologies and IPR to support global standardisation efforts and innovation in this critical field.

If the Commission wants to promote a model that enables voluntary IP sharing and preserves incentives for innovators to continue investing in high-risk R&D, it can look to this proven model, itself firmly rooted in the European success story of the 2G/GSM standard. Created by European industry, through open standardisation and FRAND licensing, this system provides much of the efficiency and predictability sought by the Commission while enabling the flexibility for each market to determine what economic model works best for it. It has enabled healthy global competition among large and small companies, who are all equally able to contribute to and use open standards.

No enforcement double standards: unlicensed use is IP theft

The IP Action Plan is an opportunity to underpin EU global competitiveness and technological sovereignty in a critical industrial area. However, while the plan uses terms, such as “IP theft”, when it comes to counterfeiting, no such similar terminology is used for patent infringement - which should be of at least equal concern. Some major players are still refusing or holding out from taking a licence for SEPs. Unlicensed use of SEPs is “IP theft”. Even patent pools, which are encouraged by the Commission, are currently facing this issue. Measures of IP protection and enforcement need to be made consistent across all areas and treated equally. There should be no double standards in play when it comes to copyright and trademarks: with voluntary IP sharing enabled via the standardisation process, SEPs are no different from any other IPR.

Treatment of SEPs under the IP Action Plan and Europe’s strategic autonomy in 5G/6G

The IP Action Plan presents a unique opportunity for the Commission to promote predictability, transparency and legal certainty, and so sustain continued high levels of R&D investments in open cellular technology standards by European companies. Indeed, Council Conclusions on “Shaping Europe’s Digital Future” of 9 June 2020 recognise that strong IP protection is a prerequisite “to incentivize R&D investments for the continued participation of EU industry in the development of key technologies in 5G/6G.”

Encouraging the multi-billion EUR annual investments by EU companies needed to support Europe’s strategic autonomy in 5G and 6G can be furthered by a recognition in the IP Action Plan that the existing European FRAND-based open standards development model is sound.

In this regard, the 28 July 2020 recognition by the U.S. Department of Justice (DOJ) business review letter to Avanci that end device cellular patent licensing is pro-competitive for both users and technology developers, echoes the evaluation in the European Commission ‘comfort letter’ 1 to the 3G Patent Platform in 2002. Both re-affirm the validity of end device cellular patent licensing as does the very recent decision from the US Court of Appeals for the 9 th Circuit in FTC v. Qualcomm.

Enforcement and UPC inspired measures to benefit SMEs

We believe that the current enforcement framework remains fit for purpose and we welcome the Commission’s intention to continue to monitor its implementation.

Rather than fixingsomething that is not broken, the Commission shouldconsider the introduction of measures enabling effective IPR enforcement by SMEs. These measures could be based onthe framework that already exist in therulesfor the planned UPCand which offer a carefully balanced solution reflecting the fundamental principles of proportionality, flexibility, fairness and equity embodied in European laws.

A myriad of smaller innovative companiesanduniversities engaged in R&D canbe incentivised to invest and innovate more,if obtainingremedies against the infringement of their patentsremainsaffordable. SMEs must have fair access to justice.

A positive way forward

Directly inspired by the successful open standards development model, please see the Annex attached: Principles and guidance for licensing Standard Essential Patents in 5G and the Internet of Things (IoT), including the Industrial Internet2(CWA17431). We believe wide support for these positive principles will help provide the transparency and predictability sought by the Commission.As noted in the CWA17431, “more accessible and better information about standardisation, SEPs and licensing would enable wider participation, and quicker and easier transaction. This would aid those implementing 5G and IoT standards and, in turn, help promote the development of new products and services for consumers. [...] it would be useful if a new entrant could readily findinformation about the licensing environment in one place. New entrants may then understand what aspects of 5G and the IoT they may need to license and from whom andplan their product development accordingly. [...] a useful next step would be to explore the establishment of a gateway, to determine the information needed and work to provide such information.”

By recognising these issues and providing the clarity needed, the IP Action Plan and the Commission itself can avoid a situation where the licensing and sharing of telecommunications technologies becomes increasingly less transparent, less efficient and more unpredictable. Appropriate policy and clarifications willinstead enable Europe to continue fulfilling its digital potential and support the global competitiveness of the EU economy by capitalising on a precious and unique asset: the IP of Europe’s innovators.

About IP Europe

IP Europe is a coalition of research and development-intensive organisations headquartered in Europe, whose inventions are protected by intellectual property rights. From global technology leaders and research institutes creating the technologies that underpin the 5G cellular standard, to innovative SMEs which rely on their patent portfolios to grow, IP Europe gives a voice to organisations that recognise the value of IP in fostering innovation, growth and jobs. Our goal is to promote the vital importance of IPR to the European digital and knowledge-based economy and to ensure that EU policies support a world-leading innovation ecosystem. Today in the EU, 40% of economic activity and 35% of employment –spanning 77 million jobs –are generated by IPR-intensive companies.