Vestager Seeks Patents Overhaul Amid Court Fights Over Cars

(Bloomberg) -- The European Union will seek to overhaul the system for key patents such as those that have fueled legal battles between car makers and technology companies, the EU’s technology chief said Wednesday.

Margrethe Vestager promised that regulators will weigh reforms to improve the framework in place for so-called standard-essential patents and work on industry-led initiatives “to reduce frictions and litigation.”

The EU move could help avoid repeats of lengthy legal battles such as Nokia Oyj’s effort to get Daimler AG to pay more for mobile technology used in cars. While Daimler wants the underlying patents be licensed to its various component suppliers, Nokia wants to charge per car at a much higher price.

Companies often seek court help to determine whether certain technology patents are valid and how much should be paid for licensing technology seen as essential for an industry. The EU has frequently been asked to weigh in on how much is fair for key technology.

“There’s quite a lot of litigation back and forth and in the short-term we would want to push for industry to figure out how to set up foras to enable discussions and mediation so that maybe to a bigger degree it can be solved out of court,” Vestager said.

The current system to set up so-called standard essential patents deemed key to certain technology “is not very transparent,” she said. “This is why we will consider a very close consultation with anyone involved whether we should set up a third-party essential ‘reality check’ so someone outside of your business” can rule on whether a patent is really important or not.

It’s important that there’s broad agreement in an industry on what are standard essential patents, she added.

The EU laid out broader plans to reform outmoded intellectual property rights protections on Wednesday to ensure EU industries from health care to mobile technology can unlock more of their world-leading potential. It will target a range of measures from designs and patents to fighting counterfeits -- aiming to make systems less fragmented or costly and upgrading them for the digital age.

The European Commission, the EU’s regulatory arm, cited key challenges including the lack of a joint patent system after decades of discussions, or fast access to critical technology in times of crises like the Covid-19 pandemic.

To ease access to key innovations in emergency situations such as the current pandemic, the action plan suggests “measures to facilitate the sharing of critical IP in times of crisis, whilst ensuring return on investment,” according to the commission.

The EU urged governments to rapidly roll out the bloc’s first-ever unified patent system. Without further setbacks, the so-called unitary patent, which would provide companies for the first time with a single protection and enforcement of their inventions across 25 of the EU’s 27 member nations, could start operating in 2022, the commission said.

©2020 Bloomberg L.P.