EU sets out patent rules for smart technology to limit law suits

In an effort to limit litigation, the European Commission on Thursday proposed regulations to control patents, which are becoming more and more in demand for technologies used in smart gadgets like drones, linked cars, and mobile phones.

The Commission claimed that self-regulation had failed and that the system for so-called standard-essential patents (SEPs) was fragmented, opaque, and caused protracted legal challenges.

Technology like 5G, Wi-Fi, or Bluetooth that is required by equipment manufacturers to adhere to international standards is protected by SEPs.

Mobile technology led to a lot of patent disputes during the past ten years, including companies like Apple Inc. (AAPL.O), Microsoft (MSFT.O), HTC Corp. (2498.TW), Motorola (MSI.N), Samsung Electronics (005930.KS), and Nokia.

According to the European Union executive’s plans, owners of key patents in the areas of telecommunications, computers, payment terminals, and other smart technologies will need to register them with the EU Intellectual Property Office (EUIPO).

The process to determine fair, reasonable, and non-discriminatory (FRAND) royalties will subsequently be overseen by EUIPO and should be finished in nine months.

While the two sides are negotiating, each party to a disagreement could approach a court for a provincial injunction involving possible royalties.

Injunction recipients claim that they serve to defend their rights, while detractors claim that they can drive up royalties and impede competition.

The proposal, according to lobbying organization IP Europe, whose members include Nokia and Qualcomm, places a number of barriers in the way of patent holders, including a nine-month delay. The group claims that this would impede rather than advance the research being done by European businesses.

Mercedes and Volkswagen, two automakers, praised the proposed structure for providing more fairness and transparency in licensing discussions.

A legal dispute in Germany concerning the use of technologies by automakers was resolved in 2021 when Mercedes parent company Daimler agreed to pay Nokia licensing fees for using its patents.

A new supplemental protection certificate to extend a patent for pharmaceutical or plant protection products by five years is also included in the EU proposal. This would support the June 1 launch of the EU unitary patent.

In the event of an emergency, like as the need for medical technology during the COVID-19 pandemic, another component of the proposal would let governments to authorize the use of a patented invention without the patent holder’s consent.

The People’s vaccination Alliance, a global organization that advocates for vaccination access, said the idea demonstrated that the EU now acknowledges that intellectual property (IP) laws are a barrier to getting medicines and encouraged it to “end its hypocrisy” and assist in developing a global mechanism to suspend IP laws in times of public health emergency.

Before becoming law and having the ability to be changed, the proposal must be accepted by all EU member states as well as the European Parliament.