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

The European Commission proposed rules on Thursday to govern patents increasingly in demand for technologies used in smart devices such as drones, connected cars and mobile phones, to try to reduce litigation.

The Commission said the system for what are known as standard-essential patents (SEPs), was fragmented, lacked transparency, led to lengthy disputes and that self-regulation had not worked.

SEPs protect technology such as for 5G, Wi-Fi or Bluetooth that is needed by equipment producers to comply with international standards.

In the last decade, mobile technology generated extensive patent litigation, involving Apple Inc. (AAPL.O), Microsoft (MSFT.O), HTC Corp (2498.TW), Motorola (MSI.N), Samsung Electronics (005930.KS) and Nokia.

Under the proposals from the European Union executive, patent holders in the fields of telecoms, computers, payment terminals and other smart technology, will be required to register their essential patents with the EU Intellectual Property Office (EUIPO).

EUIPO will then oversee the process to determine fair, reasonable and non-discriminatory (FRAND) royalties, which should be concluded within nine months.

Either party in a dispute would be able to ask a court for a provincial injunction regarding potential royalties even while the two sides negotiate.

Those awarded injunctions say they help to protect their rights while opponents say they can inflate royalties and stifle competition.

The EU proposal also includes a new supplementary protection certificate to extend a patent by five years for pharmaceutical or plant protection products. This would complement the EU unitary patent that will be launched on June 1.

Another element of the proposal would allow governments to authorize the use of a patented invention without the patent holder's consent in the case of an emergency, such as for medical technology during the COVID-19 pandemic.

The rules need to be agreed with EU countries and the European Parliament before they can become law and may be amended.



Reuters