What next for standard essential patents (SEPs) in the UK – responses to the UKIPO's Call for Views

We previously reported on the UK Intellectual Property Office's (UKIPO) consultation on standard essential patents (SEPs) when it was launched in December 2021 (see here). The responses have now been published and the full report is available here.

There were a mix of views – with some respondents happy with the current system, while others complaining that it favours either SEP holders or implementers. A number of proposals were made for potential reforms to the system, including:

• Changing legislation to restrict the use of injunctions in SEP litigation.
• Establishing a tribunal to determine FRAND royalty rates.
• Changes to the competition regime, including investigations by the Competition and Markets Authority (CMA).

The issue of "over-declaration" of SEPs was raised, with respondents pointing to the policies of standard setting organisations as a potential cause. For example, ETSI requires the disclosure of patents which have the potential to be essential to a standard. Some respondents argued that independent third party essentiality checks are required to address this – a proposal that has been mooted previously by the EU commission as well.

The report also discusses how the framework for SEPs should apply in the context of emerging technologies, such as in relation to the Internet of Things. Many respondents suggested that patent pools are a means to improve efficiency of SEP licensing. However, some suggested that patent pools could raise costs for smaller SEP holders or licensees.

In relation to SEP litigation, some respondents said that the UK Supreme Court decision in Unwired Planet, confirming that a global licence can be FRAND, was problematic and an "extra-territorial judicial over-reach." Some called for government intervention in relation to this precedent. However, others stated that "the court was not forcing a potential licensee to accept a global licence. Rather they had the option to accept a UK limited injunction instead."

The role of alternative dispute resolution methods (ADR), such as mediation or arbitration, were raised as a means to resolve licensing disputes. The UK judiciary has also promoted arbitration as an alternative to court proceedings. Most respondents who commented said that ADR should not be mandatory, and some proposed incentivising voluntary use of existing ADR mechanisms.

The UKIPO noted that "both SEP holders and implementers reported problems related to the efficiency or effectiveness of the ecosystem around SEPs. However, there was little consensus on the nature, extent, causes, and impact of problems in this area, with SEP holders and implementers often advancing opposing arguments in response to the questions posed."

Given the divergence of views, the UKIPO will now undertake a further period of assessment and report their findings to the government in 2023. It will be interesting to see whether there are significant policy proposals arising out of this process.

For more on FRAND and SEPs, see our other blog posts here. 

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