UK Government publishes proposals to improve the Standard Essential Patent process

Photo by George Ciobra on Unsplash

The UK Government has published its response to its consultation on Standard Essential Patents (SEPs), as international debate on multiple issues surrounding SEPs, Fair, Reasonable And Non-Discriminatory (FRAND) licensing rates, and which international jurisdictions get to set those rates, intensifies.

SEPs are patents which protect innovations essential to technical standards, enabling products and services to connect, communicate and operate across borders. Without SEPs, technologies and devices such as smartphones, Wi-Fi, connected vehicles, medical technology and advanced manufacturing would be a quagmire of competing patents.

If a company has an SEP, then the licensing rate it is supposed to charge should be governed by FRAND rules. This is not always the case.

The challenge is that different countries are disputing which has the right to set global FRAND rates, including the UK, USA, EU (via the Unified Patent Court, or UPC), and China.

As the UK Government statement says, “Their [SEPs] importance is set to grow as declared SEPs increase worldwide, and new technical standards develop for emerging technologies such as 6G and artificial intelligence.”

The UK proposals include a package of measures the UK Government says are targeted and practical and should “improve transparency, make dispute resolution more efficient and support better-informed licensing negotiations for SEPs.”

The measures the UK intends to adopt include:

Improving SEP dispute resolution by supporting more efficient and lower cost resolution of disputes

• the government will work with the judiciary to explore the introduction of a court-anchored early FRAND (fair, reasonable and non-discriminatory) determination process within existing England and Wales court proceedings

• the government will develop FRAND licensing guidelines setting out how parties should engage with that pathway, and any IPO-led FRAND opinion service; and

• the government will undertake a call for evidence on the feasibility and design of a voluntary [UK Intellectual Property Office] IPO-led FRAND opinion service to give parties an early view on whether a proposed SEP licence offer lies within a FRAND range

Improving access to SEP information

• the government will develop a voluntary route for rightsholders to provide standard-related patent information at the IPO

• this will include working with industry to develop a workable approach that makes it easier for businesses to identify relevant SEPs

Improving pre-litigation conduct

• the government will support more constructive engagement before disputes reach court, helping parties understand expected behaviours, including more effective pre-action information exchange, and clearer signposting to existing alternative dispute resolution services

Making practical licensing guidance available

• the government will develop practical guidance in collaboration with industry for good-faith SEP licensing negotiations, particularly to support businesses with limited SEP licensing experience

Supporting better ‘essentiality assessment’

• the government will work with industry to improve transparency, encouraging better-quality information around existing services, and explore non-binding best practice principles for essentiality assessments and reporting

• consultation evidence did not establish a clear case for an IPO-run essentiality checking service at this stage

Improving wider support and international engagement 

• the government will improve awareness of existing alternative dispute resolution options, expand the IPO’s SEP Resource Hub and continue its international collaboration to help businesses navigate SEP licensing across global markets

The UK Government statement adds:

“A balanced and efficient SEP licensing environment helps businesses access the standardised technologies they need, while ensuring innovators receive a fair return on research and development. This matters for major UK sectors that rely on SEP-dependent technologies, including telecommunications, which contributes more than £40 billion a year to GDP. This environment will become increasingly important as new technical standards develop in areas such as AI, quantum, advanced connectivity and semiconductors.”

In the immediate term, the Intellectual Property Office will begin further technical assessments of the feasibility and design of a potential FRAND Opinion Service. As part of this work, it will invite evidence and views from businesses, professional advisers, academics and other interested parties.

In July 2024, the IPO launched the world’s first SEPs resource hub. The hub is a collection of guidance and signposting to help UK businesses navigate the SEPs ecosystem more confidently. The measures announced in the consultation response include expanding the hub so all businesses can access clearer practical information and support on SEP licensing.

The Intellectual Property Office’s CEO Adam Williams says:

“These targeted measures are about supporting the SEP ecosystem function more effectively - removing unnecessary friction, encouraging better licensing negotiations and helping businesses access standardised technologies while ensuring innovation is rewarded. Improving transparency and supporting earlier resolution of disputes will help ensure the UK’s SEP ecosystem works for businesses of all sizes, providing a more transparent and predictable environment that supports innovation and investment in the UK.”

The UK government will continue to engage stakeholders as measures are developed and implemented.

It is unlikely that the UK Government announcements will immediately end the current trend for ‘venue shopping’ on SEP and FRAND rates, and friction between different international jurisdictions will continue for some time until and unless a global agreement can be reached.

For example, a recent decision in the UK High Court saw Mr Justice Meade in a dispute between Samsung and ZTE set a global 4G/5G FRAND lump-sum licensing fee of US$392 million for a five-year global licence. Samsung was arguing for no more than $200m, while ZTE was claiming that $731m was fair under FRAND criteria. Mr Justice Meade used a previous licensing agreement between ZTE and Apple in 2020 as a benchmark.

As IP website Juve Patent observes in a story on that ruling:

“At the heart of the dispute is the conflicting case law in the UK and China, which is hindering a quick resolution of the conflict. Meade criticises this in the ruling: “As Arnold L J has observed on a number of occasions, this profusion of litigation is a symptom of a dysfunctional system, whose critical problem is the lack of a dispute resolution mechanism within the ETSI [European Telecommunications Standards Institute or ETSI] rules. It is especially unfortunate that all this litigation has been seen by the parties as necessary when they have been in a previous consensual licence relationship, agree that there should be a renewal, and agree on almost everything but price.”

Juve Patent adds:

“Whether this decision by the UK High Court will now lead to an end to the dispute is uncertain. What is clear, however, is that with this ruling the UK court has gone further than other courts in SEP cases. It obtained and analysed a great deal of information and issued a FRAND rate on this basis. Other courts, in particular the UPC and German national courts, have not yet carried out a comparably in-depth collection of information.”

Only the day before the UK High Court ruling in the Samsung vs ZTE case, as Juve Patent observes, “the Munich Regional Court gave ZTE a sharp sword the day before when it granted an injunction against Samsung. Simultaneously, a Chinese court also ruled in favour of ZTE.”