Parliament and Council Can Still Prevent an Own Goal on SEPs [Promoted content]

“Own goal” 

• In sport, if someone scores an own goal, they accidentally score a goal for the team they are playing against.

• If a course of action that someone takes harms their own interests, you can refer to it as an own goal. (Collins Dictionary) 

Patrick McCutcheon is the Managing Director of IP Europe.

The European Parliament and Member States can still prevent an unnecessary own goal in a high-stakes game that is heading towards a regrettable outcome. 

The own-goal-in-the-making concerns European technology leadership in international technical standards. This leadership has benefited European inventors, consumers and economies for decades. Just think MPEG, GSM, 4G and 5G and any future 6G. But those days are numbered unless the European Parliament and European Member States completely rethink the European Commission’s ill-considered proposal. 

Hundreds of European research organisations, companies and individual researchers have contributed to the development of global “open” standards such as MPEG, 4G, 5G and Wi-Fi. The purpose of these open standards is to create a level playing field that lets people choose between devices and services such as mobile phones, streaming music and video services and essentially any device that uses a Wi-Fi or cellular signal to connect to the Internet. People can be confident that whatever device or service they choose, it is likely to work with compatible devices and networks anywhere in the world—thanks to those international and interoperable open standards, the level playing field. 

To continue the football analogy, the field and the goalposts are designed according to open standards, and the service-providers—the players—can easily work together as a team or as competitors. Everyone has a fair chance of scoring. Independent referees keep everybody honest.

Where such open standards are absent, the game is rigged: the field might be tilted, the goalposts become a brick wall, you find yourself playing football with a tennis racquet, and the referees are all working to make sure the other team wins. 

This scenario isn’t as far-fetched as you think. Exactly this situation exists in the tech and automotive worlds today where proprietary standards prevail over open standards. For example, Meta’s WhatsApp isn’t compatible with Apple’s Messages service; apps in the Google Play Store won’t work on Apple devices (and vice-versa); Microsoft’s Teams teleconferencing software isn’t compatible with Zoom; and automakers often only allow you to use their own expensive services in their vehicles. The result is a skewed playing field that favours large tech giants or automakers that first succeed in hooking people on their own proprietary standards. Access to proprietary standards is often on onerous terms. Think of the high commission that app developers pay to platforms such as app stores or to use proprietary map services. 

The game now being played out in Brussels is the result of years of advocacy by powerful automakers and large tech companies complaining that the terms and conditions on which they had to license international open standards were unfair. Never mind that they are among the most successful companies in the world, that they have struggled to convince any courts of the merits of their arguments, or that, by law, patent owners must license any patented technologies included in an open standard on “fair, reasonable and non-discriminatory” terms. The automakers and Big Tech wanted more—and they wanted to pay less. 

The European Commission, without sufficiently consulting patent experts, including at the European Patent Office or the EU’s then-brand new Unified Patent Court, proposed a new Regulation on Standard-Essential Patents (SEPs) that would radically change the rules of the game. With commendable objectives of transparency and supporting European small- and medium-sized businesses, it would instead create a whole new EU bureaucracy to regulate SEPs.

The problem with this game plan is that the proposed regulation would not achieve its objectives. It would also dramatically reduce the incentives for research-intensive technology companies and scientific organisations to contribute to the development of open standards in the first place. They already invest millions of euros up-front in risky research and development of new technologies that they hope will become part of a successful standard, over alternatives offered by others — and be included in equally successful products. But there’s no up-front guarantee of success, and even when a patented technology does become part of a widely adopted open standard the inventors might still have to chase companies making money with their technology to seek a (fair) share of the revenues years after they started using it. 

The harder it becomes for innovators to earn a return on their investment, the less interest they will have in playing the game, and so developing new standards. 

IP Europe represents organisations active in European innovation that recognise the value of patents and open standards in driving growth, job creation, and economic and social progress. 

We believe that the adoption of the European Commission’s SEPs proposal would inevitably result in new technology standards being made elsewhere. Europe would still use those standards, mind you. We would just no longer have any say in their development or any reward for helping develop them. In turn, the skills and knowledge in developing them will move elsewhere. That would be an unnecessary and tragic own goal by Europe against Europe and its citizens.