Leaked ETSI letter asks EC to stall SEP proposals
Draft regulations focus on setting ‘fair’ royalties for SEPs through licensing on fair, reasonable, non-discriminatory terms | Suggested delays to proposals criticised by Apple, the Fair Standards Alliance and The App Association.
The European Commission is facing opposition from the European Telecommunications Standards Institute (ETSI) over its radical proposals to regulate standard-essential patents (SEPs).
The leaked document, issued on April 14, is directed towards senior cabinet-level EC officials, in a dramatic development first reported by FOSS Patents.
The proposal, drafted by the Commission's directorate-general for the Internal Market, Industry, Entrepreneurship and SMEs is due to be formally reviewed on April 26.
The draft regulations will focus on setting “fair” royalties for SEPs through licensing on fair, reasonable and non-discriminatory (FRAND) terms.
According to the EC, the framework is aimed at improving transparency and efficiency, and resolving disputes between SEP holders and companies using international technology standards, such as 5G and WiFi.
In his FOSS Patents blog, Florian Mueller, partner at Bain, wrote that it was hard “to overstate the significance of the ETSI’s letter, given that ETSI is essentially a creation, or brainchild, of the EC”.
The letter, signed by ETSI's director general Luis Jorge Romero Saro, is directed to Anthony Whelan, the EC President Ursula von der Leyen's digital adviser.
In it, Romero expressed concerns that the draft regulation would impose an obligation upon it to provide certain information to the EU Intellectual Property Office, including confidential data regarding implementers.
“We are wary that the creation of a second register in the EUIPO would only confuse and possibly disincentivise innovators to disclose their SEPs in Europe,” wrote the ETSI director general.
“At a time when the EU ambitions to lead in a series of digital domains, including connectivity, mobility and services, we believe that the proposed creation of, inter alia, a register in an EU agency risks damaging EU’s leadership in digital standardisation and the associated loss of competitiveness for Europe.”
ETSI has requested that the EC delay the publication of the proposal so it can in place “an in-depth dialogue to find a modus operandi to keep European innovation capability at its best”.
In tandem with the ETSI, The European Center for International Political Economy (ECIPE) has also faulted the Commission’s draft, suggesting that it would be bad for technological development and Europe, in its current form.
Apple wades in
However, ETSI’s actions have attracted critics, most notably from tech giant, Apple.
According to FOSS Patents, Apple’s senior patent counsel, Helene Plotka Workman has formally objected to ETSI's letter to the Commission.
In the letter, she wrote: “I’m concerned that the ETSI director general commented on a leaked draft that is not even an officially released proposal and that it purports to express ETSI’s views on this topic without consultation of the Board, ETSI IPR SC or the general ETSI membership.
“Accordingly, I am respectfully requesting that the ETSI Secretariat retract the letter and provide the Board with an explanation as to how this letter was developed and who was involved.”
In another observation, Mueller noted that Apple only spends around 1-2% on the price on an iPhone and consequently stands to benefit from the proposal if it is implemented.
“What Apple wants is a political statement that will weaken patent rights and which Apple's lobbyists around the globe would use to push for similar (and potentially more well-thought-out) initiatives in other jurisdictions,” wrote Mueller.
However, the Commission has drawn strong support from SEP implementors, including bodies such as the Fair Standards Alliance, The European Automobile Manufacturers’ Association and The App Association, which have co-signed a multi-association letter in support of the draft regulations, in which the organisations urged the EC not to deviate from its plans.
“We urge you to maintain the objectives of the legislative proposal and further build upon them. We understand that there is a strong push from a small group of stakeholders to shelve this proposal. We believe this would be a mistake. We encourage the Commission to move ahead with this proposal,” the letter said.
It went on to emphasise the benefits of the proposal.
“We believe that the key elements of the proposed regulation are important to strike a good balance between the interests of patent holders and licensees. It is important that the regulation is fair for all, and that it promotes innovation and competition in the market.”
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