Proposed new patent rules in the European Union

Analysis of the European Union legislative proposals for the review of standard essential patents and supplementary protection certificates, and the creation of compulsory licenses

On April 27, the European Commission presented three new legislative proposals to help European Union (“EU”) companies optimize the use of their inventions. These new proposals aim to develop a more transparent and effective legal framework for industrial property rights.

More specifically, they aim to:

1.    streamline the licensing process for “standard essential patents” (“SEPs”);

2.    carry out a legislative review of the applicable regime for “supplementary protection certificates” (“SPCs”); and

3.    facilitate the compulsory licensing of certain patents in crisis scenarios.

• SEP licenses

As regards SEP licenses (Proposal COM (2023)232), the term “standard” refers to a technical specification that is widely adopted and accepted by players within a given sector, specifically by standard development organizations (“SDOs”). One notable example is the mobile telecommunications industry, which relies heavily on standards. Specifically, the functioning of networks such as 2G (GSM), 3G (UMTS), 4G (LTE), 5G, and Wi-Fi relies on thousands of proprietary technologies.

SEPs are patents that protect a technology included in a particular standard. This technology is considered “essential” because it is crucial for creating or using the standard in question. To ensure the development of SEPs, SDOs require that persons or companies seeking to include their patented technology in a given standard must agree to license it on fair, reasonable, and non-discriminatory (“FRAND”) terms and conditions to those who want to implement it.

Therefore, the aim of this proposal is to provide comprehensive information on SEPs, raise stakeholder awareness about the importance of licensing these patents, and create an alternative dispute resolution mechanism for establishing FRAND terms and conditions. More specifically, it proposes the creation of a ‘competence center’ tasked with setting up an electronic SEP database, developing a system to assess the ‘essential’ nature of each SEP, and implementing a procedure to determine FRAND terms and conditions.

• SPCs

As regards the proposals for SPCs, the criteria for granting these certificates are consistent across all EU Member States. However, applicants typically submit their applications to the national industrial property office of each Member State (e.g., in Portugal, the National Industrial Property Institute (“INPI”)), and the protection given is at the national level only.

Therefore, the European Commission proposes to establish a centralized system for national SPCs (Proposal COM (2023)223 and Proposal COM (2023)231). The objective of this proposal is to enable the submission of one single SPC application directly to the European Union Intellectual Property Office. In collaboration with national industrial property offices, the examination and approval of this application will enable national SPCs to be granted simultaneously in all the EU Member States specified in the application.

The European Commission has also proposed two additional regulations to facilitate the parallel implementation of unitary SPCs (Proposal COM (2023)221 and Proposal COM (2023)222). The system proposed is similar to the one established in the previous proposals, with the distinction that SPCs will automatically be valid in the 17 Member States that have ratified the Unified Patent Court Agreement. Combining a unitary SPC with a national SPC application submitted in Member States not covered by the Unified Patent Court Agreement will also be possible. This will ensure comprehensive protection at the EU level.

• Compulsory licensing

Lastly, Proposal COM(2023)224 aims to strengthen the compulsory licensing mechanism in specific crisis scenarios, and it enables the European Commission to authorize third parties to use certain patents, utility models, or SPCs without the consent of the rightsholders. This proposal establishes the general conditions, the remuneration, and the procedural aspects of these licenses. It also sets out the circumstances in which this mechanism can be applied, specifically during public health emergencies. 

The European Commission will receive assistance and advice from an advisory board regarding the feasibility of granting compulsory licenses. The advisory board will do this by issuing non-binding opinions to the European Commission.

• Next steps

These proposals aim to supplement the unitary patent system, which will start operating on June 1, 2023.

For the proposed texts to be adopted and come into effect, they must first be debated and approved by the European Parliament and the Council of the European Union.