Apr. 24, 2023

Have More Confidence, EU – You’re a Net Exporter of Standards Technology Innovation by Brian Pomper

Much has been said about the leaked European Commission (EC) draft regulation on standard-essential patents (“SEPs”) that is supposed to be formally introduced on April 26, 2023—ironically, World Intellectual Property Day. The regulation would create an unprecedented patent price control scheme for standards technologies that will certainly be imitated by China and starve the most innovative companies in both Europe and the United States of the revenues they need to maintain their technological leadership. Commentators from across the Atlantic and veteran U.S. regulators spanning multiple administrations of both parties have forcefully criticized the regulation for being unnecessary, unwise, and unbalanced, largely favoring technology users, i.e., “implementers,” over innovators.  Yet, the EC seems set to barrel forward with this self-defeating regulation.

Why do I call it self-defeating? The EC’s actions seem to be based on the false belief that the European Union (EU) is a region of implementers rather than innovators, and it should therefore favor policies that benefit technology users.  This is demonstrably false. When it comes to the most licensed standardized technologies, the EU is a net exporter of innovation. A regulation that introduces imbalance in the SEPs system is going to harm both the EU and the United States, but it will surely benefit China. Let me explain.

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