The European Commission has today (27 April 2023) published proposals for changes impacting on patents in the EU in relation to compulsory licensing of patents in crisis situations, reforms to the Standard Essential Patents (SEPs) system (including the EUIPO being able to set SEPs licence fees worldwide) and the introduction of a Supplementary Protection Certificate (SPC) for the new unitary patent right (UP) and a centralised SPC application procedure for this and national SPC rights. At the same time a 2023 EU SME Fund was announced making available new voucher services for European patents and plant varieties "allowing SMEs to save up to €1,500 on their patent registration costs and €225 on the registration of new plant varieties per application" said the Commission.
The proposals are aimed at helping SMEs capitalise on their innovations and leverage new technologies, thereby contributing to the EU's "competitiveness and technological sovereignty" said the Commission's press release. The Commission recognises IP as a key driver for economic growth, helping companies gain value from their intangible assets. The press statement comments that "IP-intensive industries account for almost half of all GDP and over 90% of all EU exports. In the period 2017–2019, nearly 76% of intra-EU trade was generated by patent-intensive industries". Many of today's announcements were initiated in the EU's Action Plan on Intellectual Property which we reported on here.
We will comment on each of these proposals in more detail in further blog posts, but for now here is a summary of the main features of each.
Compulsory licensing in crisis situations
The Proposal for a regulation of the European Parliament and of the Council on compulsory licensing for crisis management and amending Regulation (EC) 816/2006 (COM(2023)224) proposes a new EU-wide compulsory licensing instrument relating to patents, utility models and SPCs, that the Commission says would complement other EU crisis instruments (such as the Single Market Emergency Instrument, HERA regulations and the Chips Act). The proposed measures would ensure access to key patented products and technologies in crises, should voluntary agreements be inadequate or not be available. EU Member States currently each have their own compulsory licensing regimes, producing a "patchwork" effect. Compulsory licensing is described as "a last resort in times of crisis" but the Commission acknowledges that there is legal uncertainty over these measures currently "for both rights holders and users of IP rights".
The proposal is for non-exclusive, non-assignable compulsory licences that would have a scope and duration limited to the purpose for which they were granted (and that of the relevant crisis) and would be strictly limited to "crisis-relevant products" and to the territory of the Union.
SPCs for unitary patents and a centralised application process for national SPCs
An SPC provides an extension term for a patent of up to five years, for a human or veterinary pharmaceutical product, or a plant protection product, that has been authorised by regulatory authorities. It provides a compensatory extension of the monopoly to allow for the time it takes to get products to market via the regulatory system. SPCs are awarded at a national level – individually for each territory, as European patents are currently also, although currently without the sort of centralised system for the grant of SPCs which is available for patents via the EPO. This has led to some variation in application of the criteria for awarding SPCs, creating some legal uncertainty and many referrals to the CJEU. It had also been a source of concern for stakeholders that in respect of the new European patent with unitary effect (the unitary patent (UP) which will become available as a option at grant for European patents from 1 June 2023 when the UPC comes into effect) as no SPC right had been proposed to accompany the new unitary patent right.
The Proposal for a regulation of the European Parliament and of the Council on the unitary supplementary certificate for medicinal products (COM(2023)222) and the Proposal for a regulation of the European Parliament and of the Council on the supplementary protection certificate for medicinal products (recast) (COM(2023)231) introduce a unitary SPC for unitary patents and attempt to resolve problems encountered owing to the variation in approach of national patent offices in their assessment of SPC applications, by introducing a centralised examination procedure for all SPCs via the EUIPO, whether SPC applications are based on national or unitary patents,. The Commission's press release reported that:
"Under this regime a single application will be subjected to a single examination process that, if positive, will result in the granting of national SPCs for each of the Member States designated in the application. The same procedure may also result in the grant of a unitary SPC".
Changes to the EU SEPs system
Standard essential patents (SEPs) are patents that relate to a particular recognised area of technology that has been identified as essential for the implementation of a technical standard adopted by a standard developing organisation (SDO). 5G technology is one such example. In order to comply with that standard any manufacturer (implementer) will need to use those SEPs. The SEPs holders must, however, licence their use on fair, reasonable and non-discriminatory (FRAND) terms. There have been many disputes over what is FRAND and the obligations of implementers to take a licence on terms that they do not recognise as FRAND. Courts all over the world have been dealing with the determination of whether terms are FRAND or not and what a FRAND licence fee would be; some, like the UK Courts, have even determined terms for such global licences between specific parties.
The European Commission recognises that connectivity standards are only likely to increase with the advent of the Internet of Things and wishes to ensure that the EU's system for dealing with SEPs runs smoothly. The Proposal for a regulation of the European Parliament and of the Council on standard essential patents and amending Regulation (EU) 2017/1001 (COM(2023)232) aims to create a balanced system for SEPs licensing in the EU "setting a global benchmark for SEP transparency, reduction of conflicts and efficient negotiations". Its main objectives are to ensure that both EU SEP owners and implementers innovate in the EU, make and sell products in the EU and are competitive on global markets; and that end users, including SMEs and consumers, benefit from products based on the latest standardised technologies at fair and reasonable prices.
The proposals would introduce a SEP register, database and essentiality checks; expert opinions on SEP aggregate royalty; FRAND determination by means of conciliation in lieu of litigation; SME support measures; and the establishment of a 'Competence centre' at the European Union Intellectual Property Office (EUIPO).
"The proposed Regulation will apply to all standards that will be published after its entry into force. However, the Commission will determine which of the standards, their implementations or use cases would be excluded from the aggregate royalty setting and FRAND conciliation process, in situations where the respective SEP licensing does not pose significant difficulties or inefficiencies affecting the functioning of the internal market. Conversely, standards published before the entry into force of the Regulation will not be subject it, unless specific market distortions due to inefficiencies in the licensing of SEPs lead the Commission to include them within its scope of application."
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