European Commission Announces Guidance On Copyright Enforcement, SEP Licensing

The European Commission today announced plans to ratchet up the fight against counterfeiting and piracy, and to introduce more clarity in licensing standard-essential patents (SEPs). The first involves guidance on the 2004 EU directive on the enforcement of intellectual property rights (IPRED); the second recommendations for making the relationship between patent owners and technology users more “balanced and efficient.”

Telecom network operators and high-tech companies welcomed the copyright enforcement initiative. But one digital rights activist questioned the efficacy of the IPRED guidance given that the EC is in the process of reforming copyright rules.

The EC memo on both initiatives is here: http://europa.eu/rapid/press-release_MEMO-17-4943_en.htm.

With 5 percent of all imports into the EU counterfeit and pirated, amounting to an estimated 85 billion euros in illegal trade, the EC wants a more efficient and predictable judicial enforcement regime, it said. Under its new approach, it will deprive commercial-scale IP infringers, the “big fish,” of their revenue flows, it said. The guidance will also clarify interpretation issues that have arisen since the 2004 directive, which the EC said remains effective. The EC also intends to support industry-led initiatives to combat IP infringements, and boost efforts to fight infringement at a global scale by engaging more closely with non-EU countries, it said.

The plan also includes setting up, in collaboration with the European Observatory on Infringements of Intellectual Property Rights, an “IP market watch list” to identify online and physical markets outside the EU that are reportedly engaging in or facilitating substantial       IPR breaches.

On SEPs – patents which cover technologies essential to implement a specific standard or technical specification needed to enable industry players to create interoperable products such as mobile phones or other devices – the EC said Europe’s potential to lead in global technological innovation and to take advantage of the possibilities of 5G are “being held back by a lack of transparency and predictability about the conditions under which SEPs are to be declared, licensed and enforced.”

The system presents several challenges, the EC said. First, the declaration process of SEPs in some standard-determining organisations doesn’t guarantee sufficient access to information, nor is there enough scrutiny on what patents should deemed essential to a standard and why. In addition, there are divergent views as to what fair, reasonable and non-discriminatory (FRAND) means in the context of the terms under which patent owners of SEPs commit to make their technology available to product developers, it said. A third problem is that there isn’t enough legal certainty about how to enforce SEPs against alleged infringers, it said.

The EC is now adopting a “holistic approach” to SEP licensing with three prongs, it said. It wants a more transparent environment for negotiations between SEP holders and potential licensees; basic valuation principles for SEPs; and a balanced and predictable enforcement regime.

There is a fine balance to strike between patent holders and technology users, Internal Market, Industry, Entrepreneurship and SMEs Commissioner Elżbieta Biénkowska said at a press briefing today. The EC believes that the parties are the ones to discuss fair licensing conditions but the guidance is there to help in case the market doesn’t get it right, she said. The commission is neutral on a licensing solution, she said. The EC is positioning Europe as the global frontrunner for 5G and IoT, she added.

The EC will now create an expert group to gather information on licensing practices, sound IP valuation and FRAND determination, it said. It also intends to launch a pilot project on evaluating the essentiality of SEPs.

Cheers and Jeers for IPRED Guidance

The IPRED communication “provides needed guidance for a harmonized interpretation” of the directive across the EU, Computer & Communications Industry Association Senior Policy Manager Maud Sacquet said. CCIA praised the EC statement that online intermediaries cannot be required to put in place “expensive and overly broad filtering mechanisms,” but said it’s “unfortunate” that the proposal for a directive on copyright in the digital single market “runs counter to this longstanding principle of EU law.”

“We agree with the Commission assessment” that the IPRED directive remains fit for purpose “but it will benefit from a proportionate and innovation-friendly guidance on its harmonised implementation in digital times,” said the European Telecommunications Network Operators Association. “The notion of intermediary, as suggested in the Communication, should be in line with innovation and with the development of new services,” and the EC should make a distinction between the different players in the value chain, some of which are mere passive conduits, such as network access providers, it said.

European Digital Rights Executive Director Joe McNamee, however, said the EC is trying to change the intermediary liability regime, so “this non-binding statement that this is not happening is irrelevant.” More importantly, he told Intellectual Property Watch, IPRED’s concept of “commercial scale” was “inadequate as a “roadmap” for progress in 2012 and the roadmap has since disappeared from the EC website.