Standard Essential Patents And Their Role In Green Tech Evolution

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Potter Clarkson

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Potter Clarkson is one of Europe’s leading full-service IP law firms. Our IP attorneys and solicitors maximise the value of our clients' innovation by providing the experience, vision and clarity required to create, protect, leverage and defend their ideas in the most commercial and strategic ways all over the world.
Digital communication and telecoms technologies have benefited greatly from standard essential patents, reflected in their rapid development and market adoption.
UK Intellectual Property
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Digital communication and telecoms technologies have benefited greatly from standard essential patents, reflected in their rapid development and market adoption.

In this article, we explore the potential for standard essential patents to accelerate innovation in green technologies, in turn helping to shape a more sustainable global economy.

HOW DO STANDARD ESSENTIAL PATENTS SUPPORT INNOVATION?

A standard essential patent (SEP) is a patent to an invention whose inclusion in a particular technology is necessary to comply with industry standards. Broad industry adoption of a standard not only establishes SEP innovations as fundamental to future developments but also positions holders of SEPs strategically in the market. By committing resources to developing standards and patenting these developments, innovators can play a crucial role in shaping and advancing globally-deployed technologies. In return, they future-proof their tech, benefitting from potential revenue streams through licensing agreements while establishing an environment of (at least, in principle) equitable access for competitors.

SEPs don't just benefit holders. For potential tech collaborators and integrators, SEP publications provide intellectual transparency and foster a competitive market in which third parties can contribute to, and benefit from, standards innovation. For end users, implementation of standards ensures interoperability among products and services, promoting a more cohesive and interconnected tech ecosystem.

Balancing the interests of SEP holders, third-parties, and end-users requires SEP holders in Europe to commit to fair, reasonable, and non-discriminatory (FRAND) licensing. At its best, the SEP system encourages R&D efficiency, prevents duplication of labour, and accelerates innovation, incentivising companies to focus on improving and redeveloping standardised technologies rather than reinventing them wholesale.

SEPs undoubtedly play a pivotal role in innovation and market competition around the world. It is therefore unsurprising that SEPs are emerging as catalysts for evolution in industries key to the transition towards sustainability.

HOW HAVE SEPs SPURRED GROWTH IN THE COMMUNICATIONS AND INTERCONNECTIVITY SECTOR?

No industry has more clearly benefitted from the SEP ecosystem, at least in terms of speed of innovation and consumer adoption, than wireless communications. Companies leading in 5G patent grants, such as Ericsson, not only enjoy strong investor confidence and solidified commercial positioning, but become key decision makers in plotting the roadmap for global connectivity. It is widely recognised that building network infrastructure which facilitates green tech objectives, for example by ensuring interconnectivity and compatibility between green tech infrastructures being developed in tandem, is vital to their success.

HOW COULD SEPs IMPACT SMART AND ELECTRIC VEHICLE DEVELOPMENT?

Communications SEPs also underpin the development of smart vehicles. Early integration of connectivity standards is likely to improve commercial viability and accelerate wider-spread adoption of connected and smart vehicles. However, the need for standardised technologies in connected vehicles poses economic risks for supply chain manufacturers lacking access to SEP licences; unlike most telecoms manufacturers, many EV supply chain players are, at least for the time being, inexperienced in SEP licencing and ownership. While automotive patents are typically licensed vertically, communication industry SEP licensing focuses on end devices, leading to potentially higher royalties owed to licensors.

Understandably, then, there is growing interest among communications SEP owners in asserting their rights against auto manufacturers. This, coupled with the unpredictability of FRAND agreements, poses a somewhat unknown risk to manufacturers, which in turn threatens to slow development. A lack of concrete guidelines on setting FRAND terms, along with discrepancies in case law interpretation, continues to be a concern for vehicle manufacturers, particularly in in the key market of Germany, where infringing manufacturers may be liable for security payments even before court proceedings.

Charging protocols and battery systems are key technical bottlenecks in the adoption of eco-friendly vehicles, so will play a long-term role in the decarbonisation of the transport sector. Two standards for EV charging and billing already govern the EV industry, with the patents essential to their implementation relating to fast and wireless charging, as well as smart grid integration. Though the sustainable transport industry as a whole is not yet SEP-driven, this may change in the future given the need for interoperability and compatibility of systems.

WHAT ROLE MIGHT SEPs PLAY IN DEVELOPING DECARBONISED ENERGY AND POWER SYSTEMS?

The transformative potential of clean tech to reshape both urban and rural energy landscapes, and to achieve global decarbonisation goals, is yet to be fully realised. SEPs play a role in the integration of renewable energy sources and improvement of energy efficiencies, key for the redevelopment of energy infrastructure.

As the global wind industry grows, so too will the importance of technology standards in rotor blades, station equipment, noise regulations, offshore structures, construction/demolition operations, and systems interoperability.

European smart grid projects aim to standardise solutions, enabling the integrated deployment of renewables, storage and EV innovations in both existing and future power systems. The diversity of approaches among international smart grid standards organisations, while unsurprising given the different commercial goals and histories of the many industries straddled by smart grid technology, is a cause for concern amongst smart-grid implementers. Standardised technologies present in smart generation and grid-connection solutions are therefore relevant to the most globally-adopted renewables, including solar technology. Real-time monitoring, advanced metering, demand response, and smart distribution in grid systems rely on interoperability and data sharing. Continued improvement of PV conversion efficiency, for example, will only be able to help less infrastructurally developed countries meet demand sooner if capacity and connectivity issues in existing grid systems are overcome.

COULD SEPs ACCELERATE THE SUSTAINABLE AGRICULTURE REVOLUTION?

The rise of smart farms is a key period in the agricultural sector's evolution towards sustainability in meeting increasing demands. SEPs are likely to influence the ways in which agriculture can adapt to reduce its environmental impact, while growing to meet the increasing caloric needs of the global population. Standardised technologies are already being implemented in sensor technology and data analysis tools used in smart agritech.

The growing penetration of high-tech solutions in farming can be seen in precision irrigation, yield monitoring, forecasting, variable rate application, and crop scouting technologies, which constitute more than 72% of the global smart farming market. Precision crop farming alone represents over 31% of the smart farming market. While America leads the global smart agriculture market, governments of fast-growing agricultural markets, including China, Japan, and Mexico, are recognising the importance of smart farming technologies in the global adoption of precision agriculture. It's likely that standardised technologies will increasingly be adopted, or new standards organisations established, in the sustainable farming revolution. By helping reorient agriculture to prioritise sustainability and efficiency, SEP-driven technologies could strengthen the industry's historically weak position in the climate conversation.

WHAT IS THE OUTLOOK FOR SEPs IN THE UK?

As discussed in our previous article, the UK courts have become a key forum for resolving SEP disputes, and in particular FRAND determinations, in high-profile cases including Unwired Planet v Huawei, Interdigital v Lenovo, Optis v Apple, and Nokia v Oppo. These landmark cases have seen the UK courts establish themselves as an experienced national authority in navigating the complexities of FRAND licensing. The debate continues, however, as to whether a national court should determine licenses which concern foreign patents.

The UK Intellectual Property Office (IPO) recently released a report outlining its 2024 objectives with regard to SEPs. In the report, the IPO emphasised the need for better implementer understanding of FRAND licensing, greater industry transparency in pricing, and more efficient dispute resolution.

While the UK courts remain an attractive forum, there are concerns regarding the duration and costs of its FRAND proceedings. As per in the IPO's report, calls have been made for a more streamlined approach to encourage SEP investment and solidify the UK's position as a FRAND authority for years to come. To this end, UK judges are showing increasing eagerness to manage FRAND cases in a timely and cost-effective manner, including quicker scheduling of FRAND trials, the most crucial period of proceedings.

SUMMARY

SEPs could play an important role in co-ordinating green tech evolution, and environmentally-minded standards could help shape global infrastructure. As industries continue to transition towards climate-focussed solutions, standards developing organisations - responsible for determining the "essential" status of patents, and for setting FRAND guidelines - will continue to be tasked with balancing fair access to essential technologies and incentivising development, while steering solutions in a sustainable direction.

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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