SEP expert group report : a look into the IoT future of SEP licensing

Abstract

The EU Institutions have been interested in improving the predictability, reliability and transparency of the standard-essential patent (“SEP”) licensing framework, as evidenced by several reports and communications over the recent years. In 2017, the European Commission committed to setting up an expert group (“EG”) to monitor SEP licensing markets and gather information on the internet of things (“IoT”) industries practices. In January 2021, the EG published a Report examining the challenges of SEP licensing in the IoT. The EG members failed to reach a consensus on how SEP licensing markers should evolve, and the Report contains a large number (79) of proposals with different degrees of support. As the EG noted, its main objective is to “generate ideas for a further debate.” This paper focuses on the three areas where the EG strongly recommends departing from traditional competition law prohibitions of collective price-fixing and industry coordination.4 After introducing the IoT SEP licensing issues that prompted the EG (Section 1), the analysis of the Report notes a major shift towards greater collective industry actions – from choosing the supply chains levels for licensing SEPs (Section 2), agreeing on the aggregate royalty rates for a standard for different product categories (Section 3), to forming patent pools and implementer licensing platforms (Section 4). Overall, these recommendations call on competition authorities to recognise the efficiency of industry-wide coordination to simplify SEP licensing. Still, as the conclusion underlines, challenges remain about their proper implementation in practice and placing the necessary safeguards to prevent cartelisation on technology sellers or users sides.