Krista Rantasaari
University Lecturer, Postdoctoral ResearcherLaw School, University of Eastern Finland
Finland
krista.rantasaari@uef.fi
The EU (European Union) and the US (United States) have closely cooperated to address global technology and trade challenges. In 2021, they established the EU-US Trade and Technology Council (TTC), a platform for coordinating efforts to address essential trade and technology issues and enhance transatlantic cooperation. A significant focus of the TTC’s work centers around standards and Intellectual Property (IP). This essay delves more deeply into one such standard, Standard Essential Patents (SEPs).
A Strategic Standardization Information (SSI) mechanism was established during one of the early TTC meetings, building on the tech standards working group to support TTC’s work. The importance of this work was reaffirmed at the 2022 Paris Summit and further discussed at the TTC meeting in Sweden in 2023. The overarching goal is to safeguard technology and standards interests more effectively of both Europe and America.
Technology transfer plays a pivotal role in driving economic growth through promoting innovation and adopting advanced technologies. It enables countries and organizations to harness the knowledge and expertise of others, resulting in increased productivity and competitiveness. Technical standards and patents are interdependent. Patents play a crucial role in encouraging research and development and enabling the transfer of innovations. Simultaneously, standards are vital for rapidly disseminating technologies and ensuring product compatibility. Many standards are built upon patented technologies. Organizations involved in the standard setting have developed rules and practices to streamline the licensing of patents that are SEPs. A smooth licensing environment is crucial for the success of a standard, facilitating widespread and rapid innovation dissemination while ensuring that patent holders receive a fair return on their research and development investments. Furthermore, it provides all standard users with equitable access at a reasonable cost.
In the early days, two dominant players in the cellular tech industry – were Nokia and Ericsson. Cellular technology represented a significant portion of the SEP market. However, the cellular technology market has since become more globalized and diversified. The scope of SEPs has expanded beyond cellular technology; for example, the automotive industry, the electricity grid sector, and consumer electronics have become high-tech and rely on technical standards like 4G and 5G connectivity. SEPs are not essential only for big technology companies. Small and medium-size companies (SMEs) may be involved in SEP licensing both as SEP holders and implementers. In Europe also various technology contributors and patent holders essential to standards exist. To make this more complex today, many SEP licensees function as both licensors and licensees.
In the realm of SEPs, the interests of the EU, the US, and other global players are at the forefront. Notably, China's use of anti-suit injunctions has cast a shadow over patent disputes in both the US and Europe, triggering responses such as the European Union's complaint at the World Trade Organization. These developments underscore the increasingly global nature of patent, standard, and SEP dynamics. China's pursuit of more significant influence in these areas, particularly in terms of SEP licenses and patent access, reflects its ambition to shape the global patent landscape according to its terms. The decisions made in SEP issues will also have far-reaching implications for the global technological and trade landscape.
Transatlantic cooperation within the framework of TTC’s provides an excellent platform to address issues related SEPs. However, it is noteworthy that the European Commission has taken an independent course of action by introducing a new regulation in 2023 specifically addressing SEPs. The Commission’s proposal appears to be underpinned by a desire to exercise greater political control over SEPs, and to reconfigure the distribution of revenues from SEP holders to SEP implementers. On a less favorable note, the US has expressed reservations regarding this proposal. The primary argument against it centers on the belief that this should be treated as a global concern, and Europe’s approach is perceived as similar to that of China. On a positive note, the proposal heightened focus on start-ups and SMEs. One of its key objectives is to streamline SEP licensing processes for SMEs and alleviate the financial burden they face. During the 2022 Paris meeting, TTC’s Standard Working Group demonstrated its commitment to enhancing the position of small and medium-sized enterprises and fostering the participation of non-industrial stakeholder participation in international standardization organizations, ensuring their access to standards. At the 2023 Summit, TTC issued a joint statement affirming that SMEs will have a significant role, increased access to, and active involvement in international standardization activities.
In conclusion, the evolving role of SMEs in shaping trade policies and objectives is evident. The challenge lies in striking a delicate balance between diverse interests and translating objectives into action. The global nature of innovation and technology necessitates cross-border collaboration among regions, with the standardization efforts playing a pivotal role. However, the issue of SEP licensing has introduced conflicts within the TTC's standardization work, and its ultimate impact remains uncertain. It's essential to note that the European Commission's SEP legislation is still in the proposal stage. Nevertheless, amidst these challenges, it is encouraging to see progress in other crucial areas, particularly in the standardization of critical and emerging technologies. As the trade and technology continues to evolve, the dynamics between SMEs, standards, and SEPs will continue to shape the future. The path forward may be challenging, but it is marked by opportunities for collaboration, innovation, and growth.