The European Commission (DG GROW) has commissioned a study to a consortium led by Dr. Tim Pohlmann and his IPlytics team in cooperation with lead researcher Dr. Justus Baron from Northwestern University. The consortium further includes Dr. Pere Arque-Castells from the University of Groningen, Dr. Amandine Leonard from the University of Edinburgh, and Dr. Eric Sergheraert from Universite de Lille, as well as Darts-ip, part of Clarivate. The consortium is supported by an advisory group that includes industry practitioners, subject matter experts, legal experts as well as judges and academics.
The purpose of this study is to support the EU Commission with providing relevant economic analysis necessary for an Impact Assessment concerning the potential reform of the framework for valuation and licensing of Standard Essential Patents (“SEPs”). The objectives of the initiative are to (i) increase transparency and predictability in the SEP ecosystem; (ii) create conditions for a more efficient SEP licensing; (iii) foster stakeholder-led solutions; (iv) safeguard the level playing field among EU and non-EU stakeholders. This initiative includes actions to (i) enhance transparency regarding SEPs; (ii) introduce a system for independent third-party essentiality assessments under the control of a supervisory body; (iii) provide clarity on various aspects of FRAND; (iv) improve enforcement of SEPs; and (v) designate an Observatory or competence centers to conduct a number of tasks that may be necessary to implement the aforementioned actions.

The study will cover the following topics (among others):

  1. range of costs per license per relevant standard (could be based on case studies) – with identification of the costliest consuming elements (including essentiality and validity and FRAND)
  2. time to negotiate per license per standard (could be based on case studies) – with identification of the most time-consuming elements (including discussions on non-disclosure agreements, essentiality, validity, and FRAND)

    The two points mentioned above (1 & 2) would also cover:

    • for implementers: search and information costs to investigate for which SEPs they need a license, from whom to get this license and under which FRAND terms and conditions;
    • for SEP holders: costs to identify the implementers, the applications and the patents that are likely infringed by implementers and the determination of the FRAND terms and conditions
    • for both implementers and SEP owners: costs related to the examination of essentiality and validity
    • for both implementers and SEP owners: litigation costs, including lawyer fees and expert opinions for the determination of the FRAND terms and conditions
  4. number of litigations per initiator (holder/user, specifying plaintiff/defendant), including per jurisdiction, per market sector and per year for the past 10 years, subject matter (essentiality, validity, injunction, FRAND determination), outcome of the litigation.
  5. administrative burden for SEP holders to comply with transparency obligations such as additional disclosure and reporting requirements, provision of claim charts, disclosure of FRAND terms and conditions, the conduct of essentiality checks for one SEP per family or for a selected number of SEPs by an independent third party. The additional disclosure and reporting requirements may, for example, include current patent owner, patent validity, relevant sections of the standard, high-level claim charts, results of essentiality checks, and the licensing programs/terms and conditions.
  6. administrative burden for implementers to comply with transparency obligations related to the use of a standard and licensing obligations, namely, to report to the SDO that it is implementing a specific part of a standard for its products, and/or that it wants a license for these products
  7. analysis as to how these administrative burdens would impact the costs per license and the time to negotiate for both SEP holders and implementers
  8. analysis of the potential impact of the proposed combination of actions on costs for SEPs negotiation and litigation and on the licensing revenue of SEP holders. The combined actions may include a combination of transparency obligations and principles and rules that will clarify the FRAND concept and the enforcement rules to create more predictability and legal certainty in the market
  9. analysis of the potential impact of the proposed combination of actions on the ability and willingness of SEP holders to keep contributing to standardization and the ability and willingness of the implementers to use the standardized technology and to innovate

The consortium has started the work in early December that will be published in a publicly available report next year.

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