Friday, March 24, 2023

UK patent office declines to base standard-essential patent policy on 'anecdotal evidence from bodies representing smaller businesses'

The ink is barely dry on Justice Mellor's InterDigital v. Lenovo ruling, and there is more news from the United Kingdom concerning standard-essential patents (SEPs). The UK Intellectual Property Office (IPO) is seriously contemplating some policy-making (potentially legislative) initiative related to SEPs. But it wants to see hard evidence that intervention is needed to protect small and medium-sized enterprises (SMEs). To put it bluntly, the IPO is not going to be fooled by lobbyists claiming to represent SMEs while actually working on behalf of large implementers who want to bring down their patent licensing costs.

A few months ago, I was--frankly--shocked that a senior IPO official had accepted an invitation to speak at an ACT | The App(le) Association event, but also relieved to find out from the Office that they were absolutely aware of the fact that Apple funds ACT. I wish the European Commission could wake up and acknowledge this problem, too. The EC allowed ACT and its Google-controlled equivalent called Developers Alliance to participate in a Digital Markets Act workshop earlier this month, claiming to represent small app developers while actually lobbying for the abusive behemoths, a highly problematic practice called astroturfing.

On Tuesday, the UKIPO started a new consultation--though it had already called for views on SEP policy last year--with a questionnaire that will be available until April 24. The UKIPO's website reflects a profound understanding of the topic. What I particularly like is the following statement by the IPO's Acting Director of Business and International Policy, Sarah Whitehead, in an explanatory video:

"However, although we have some anecdotal evidence from bodies representing smaller businesses, we did not hear sufficient evidence directly from UK SMEs, small-cap and mid-cap businesses, including their experiences of interacting or using technical standards when innovating." (emphasis mine)

That is so spot-on.

The system of industry standards--and the licensing ecosystem built around it--is too important to intervene just on the basis of what lobbyists and (especially) astroturfers say.

Apple has not been an SME for about 45 years, much less a UK SME.

There are two "phenomena" in SEP policy debates in the Western hemisphere. Huawei, despite being a large-scale innovator and very reasonable licensor (that also knows the licensee's perspective), is often used as a bogeyman. And on the other end of the spectrum, there are those claims of SMEs--which policy-makers instinctively seek to shield from abuse--being on the receiving end of SEP abuse. I urge skepticism, and I commend the UKIPO for setting a reasonably high evidentiary standard. There cannot be responsible policy-making without it, but again, as the European Commission's recent DMA workshop showed, deceptive lobbying is rampant and some policy makers just don't have the guts to reject dishonest input.

I trust that the IPO will carefully analyze whatever stories it will be told, and will insist on hard evidence. For instance, the Save Our Standards campaign sponsored an interview by an IoT blogger with a U.S. SME, and for me it was easy to figure out that the SME in question never actually had to license SEPs (and not even the customer for which it developed the app they primarily discussed in that interview).

It's great that the UKIPO finds anecdotal evidence from those representing (or, more accurately, claiming to represent) SMEs unreliable. In the next step it's going to be key to scrutinize whatever input will be given by actual SMEs. If those SMEs are just service providers, their input is meaningless. If they make actual products, what issues are they really facing? And do they really need government intervention or would there be reasonably acceptable solutions under the existing framework?

On LinkedIn I raised the following question:

"If SMEs have such a huge problem with SEPs, where are all the SEP enforcement actions against SMEs? Maybe that's (one of) the first question(s) policy makers should ask when they launch consultations on this topic."

I'm a litigation watcher. If SMEs got sued over SEPs all the time, I'm sure I'd have noticed. The relatively smallest company I've recently seen on the receiving end of SEP enforcement is the German WiFi router market leader (70% share!), and the Munich I Regional Court has identified it as an unwilling licensee.

In 2019 I organized a SEP licensing conference in Brussels. The relatively smallest companies who participated and talked about SEP licensing issues were Nordic Semiconductor, AirTies, and Kamstrup. Now, let's put that into perspective:

I would argue that each of those three companies has the resources and the sophistication to respond to SEP royalty demands. As does AVM, that German WiFi router maker I mentioned.

Why is SEP litigation against SMEs so hard to come by? Because enforcement against them is not profitable. But only widespread litigation would be hard evidence of an issue serious enough to warrant legislative intervention.

I hope the UKIPO will remain skeptical of the input that it's now going to receive, knowing that some of it will be orchestrated by Apple-funded lobbying entities. And I would encourage the European Commission to do the same.