European Union: European Commission Communication On Enforcement Of IPRs And On Standard Essential Patents

On 29 November 2017, the European Commission presented an intricate set of policy documents designed to increase the level of protection afforded by intellectual property rights ("IPRs") in the European Union. The Commission's initiatives focus on (i) the fight against counterfeiting and piracy; (ii) the enforcement of IPRs; and (iii) Standard Essential Patents ("SEPs"). All of these initiatives are discussed in a Communication entitled "A balanced IP enforcement system responding to today's societal challenges" (COM (2017) 707 final) (the "IPR Communication") while some aspects of the Commission's policy package are explained in greater detail in additional, distinct documents.

Fight against Counterfeiting and Piracy

The main measures under this heading can be summarised as follows:

  • The Commission will step up its "follow the money" efforts and deprive large scale IPR infringers of the revenues associated with their counterfeiting and piracy activities.
  • Emulating the example of the 2011 Memorandum of Understanding on the Sale of Counterfeit Goods via the Internet, the Commission will support further industry initiatives to combat IPR infringements. It is currently working on similar MoU's for the online advertising and payment services industries.
  • The Commission will increase cooperation with third countries; offer more targeted assistance to national customs authorities; and enhance administrative cooperation in the anti-counterfeiting fight.

Enforcement of IPRs

The Commission also published a Communication offering "Guidance on specific aspects of Directive 2004/48/EC on the enforcement of IPRs" (COM (2017) 708 final) (the "Enforcement Guidance"). The Enforcement Guidance is accompanied by a Staff Working Document that evaluates Directive 2004/48/EC ("IPRED")(SWD (2017) 431 final).

The Enforcement Guidance seeks to assist judicial authorities and other parties involved in enforcing IPRs in interpreting and applying the IPRED. It focuses on a range of aspects of the IPRED, including its scope; the entitlement to apply for relief, including injunctions and corrective measures; the presumption of authorship and ownership; the rules on obtaining and preserving evidence; the right of information; damages; and legal costs.

The Staff Working Document evaluates the IPRED while relying on external studies, various stakeholder consultations and desk research. Significantly, it lists a range of weighty issues that currently fall outside the scope of the IPRED but may have to be addressed in any revision of that Directive. The Staff Working Document cites, for example, the lack of harmonisation of substantive IPR rules which hampers cross-border enforcement; the disparities between national criminal sanctions; and the tensions with rules that form part of the E-commerce regulatory framework.

SEPs

The most anticipated Commission document was the Communication "setting out the EU approach to Standard Essential Patents" (COM (2017) 712 final) (the "SEP Communication"). The SEP Communication promised to be controversial, pitting right holders against IPR users. However, in the end, the Commission chose not to take a position on the most contentious issues while establishing key principles with regard to SEPs. The Commission thus pursued a double objective: (i) stimulating the development and inclusion of high-end technologies in standards, by guaranteeing right holders a fair and adequate return for their contributions; and (ii) ensuring a wide and friction-free dissemination of the resulting standardised technologies.

The key points of the SEP Communication are as follows:

  • The Commission advocates increased transparency of the system of declaration of technology (in practice, mostly patent applications that may still evolve before and if they become patents) and a more user-friendly accessibility to databases of standard developing organisations.
  • The Commission is in favour of a higher degree of scrutiny on essentiality claims, with scrutiny being performed by an independent party. The Commission adds that this would have to be balanced against the cost.
  • The Commission would still seem to allow for flexibility in how fair, reasonable and non-discriminatory ("FRAND") rates are established. IPR valuation should focus on the value of the patented technology as such, rather than the value derived from the fact that the technology has become part of a standard. Neither should value be affected by the market success of the product unrelated to the patented technology. Furthermore, individual SEPs should not be considered in isolation, but assessed against the overall added value of the technology.
  • Non-discrimination between "similarly situated" licensees is fundamental.
  • Patent pools within the scope of EU competition law should be encouraged. This is conducive to the development of the Internet of Things and will help SMEs.
  • Avoiding taking a position on a hotly debated issue, the Commission does not mandate "use-based" licensing, but at the same time does not rule it out. It advocates a case-by-case approach dependent on sector and business models. The Commission encourages "sectoral discussions with a view to establishing common licensing practices".
  • Patent Assertion Entities are subject to the same rules as other SEP holders. Still, the Commission adds a word of caution when discussing injunctive relief for these entities: "The application of the proportionality principle by courts provides yet another safeguard. The Commission will closely monitor the ongoing impact of these market players on the SEP licensing market in Europe, in particular once the EU unitary patent is operational."
  • Proportionality remains critical when it comes to injunctive relief generally. The Commission indicates that the "relative relevance of the disputed technology for the application in question and the potential spill-over effects of an injunction on third parties" should be taken into account and refers to Article 3(2) of the IPRED.

The IPR Communication can be found here, the link to the Enforcement Guidance can be accessed here and, finally, the SEP Communication is available here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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