Monday, July 17, 2023

EU policy makers should have listened to judges before standard-essential patent proposal that is 'wholly bad idea' for lack of 'extraordinary care'

The separation of powers obviously rules out that the judiciary makes the laws it is meant to interpret. That bedrock principle, however, does not preclude European policy makers from drawing on judicial expertise when drafting legislative proposals. Case in point, the German justice ministry invited almost as many judges as industry representatives to a May 2019 roundtable labeled as an "expert talk" while contemplating a statutory amendment relating to patent injunctions.

Even if the reason for a legislative measure is policy makers' disagreement with jurisprudence, judges can provide valuable feedback to draft statutes and do not have the interests of particular companies in mind.

The problem with the "consultations" conducted by the European Commission's Directorate-General for the Internal Market (DG GROW) relating to the proposed regulation on standard-essential patents (SEPs) is not that they didn't talk to, and solicit input from, stakeholders over an extended period of time. It's that they didn't request feedback to specific proposals (and that they didn't make more of an effort to have industry provide researchers with confidential information). That webinar series, for instance, was pretty good, and I gladly contributed to one particular part of it, but there was nothing that set those webinars apart from what the likes of Concurrences organize all the time. By contrast, the UKIPO has just recently stated the right way to go about it:

"Any significant policy recommendations/interventions subject to public consultation."

"Significant" would actually be an understatement for the incisive measure proposed by DG GROW.

That's why I support IP Europe's call for a do-over: it would be an opportunity to arrive at a well-considered and balanced proposal, giving the European Parliament and the EU Council a far more reasonable basis for their legislative work.

I am unaware of a single European judge having commented favorably on the EU proposal. I do know that many of them are reluctant to speak out publicly and decline any related invitations. To the extent that anything has been said by judges, it has been not only negative but damning.

In early June I mentioned what the President of the Unified Patent Court's Court of Appeal, Judge Dr. Klaus Grabinski, said at his court's inaugural event:

  • He voiced concern over "access to justice" issues, given that the right to request a judicial review of certain types of decisions is "a core fundamental right" under the EU's own charter. In fact, access-to-justice deficiencies were also among the first problems about the proposal that I highlighted (based on a leaked draft).

  • Judge Dr. Grabinski urged DG GROW to rethink the plan.

The UPC has just received its first SEP infringement complaint(s), but some people in Brussels don't want to give the new court the chance to develop its jurisprudence without legislative intervention--and try to sideline the UPC's dispute resolution center, too.

Judge Dr. Grabinski was, in fact, among those invited by the German government to the 2019 roundtable I mentioned further above. But apparently no EU policy maker cared to ask for his opinion on the proposal before it was formally submitted.

While Huawei v. ZTE is still "good law" in the UK (though there is a potential for future deviation), the EU SEP Regulation won't apply there at all. That makes it even easier for British judges to share their views. At a recent Concurrences event (to which I contributed as well), Mr Justice Marcus Smith--the President of the Competition Appeal Tribunal who also presides over High Court of Justice patent cases such as Optis v. Apple--didn't mince words:

  • He called the proposal a "wholly bad idea" (which sums it up nicely).

  • Like his country's patent office, he says that any regulation in this complicated area "needs to be treated or regarded with extraordinary care."

While not specifically related to the EU proposal, I'd also like to quote the former Chief Judge of the United States Court of Appeals for the Federal Circuit, Randall R. Rader. He said the following at Huawei's Innovation & Intellectual Property event last week:

"The marketplace works quietly, silently, and voluntarily. Indeed, most of the use and benefit of intellectual property comes through voluntary agreements. Licenses. Those licenses by definition are beneficial to both parties because they have both voluntarily entered them. Now, we're accustomed to perceiving intellectual property in terms of legal conflicts but in fact the story of intellectual property is the story of a system that enhances cooperation, coordination, joint efforts to improve human situations."

The fact that most agreements fall into place without litigation doesn't mean that the SEP dispute resolution system couldn't be improved. But there is no urgent need for massive intervention, and especially not with respect to small and medium-sized enterprises (SMEs). The impact assessment accompanying the EU proposal has no hard evidence for actual SEP enforcement against SMEs to offer. All that one can find there amounts to unverifiable and partly rather dubious anecdotes.

If DG GROW gave this another try, they might also want to ask the judges whether SMEs are frequent targets of SEP assertions. The smallest defendant I've ever seen in European SEP litigation is the dominant market leader (70% market share) in the German WiFi router market. That one is not even an SME by EU standards.