A Human Right to Ever-Stronger Protection?

IIC https://doi.org/10.1007/s40319-023-01393-w EDITORIAL A Human Right to Ever-Stronger Protection? Martin Husovec Ó Max Planck Institute for Innovation and Competition, Munich 2023 On April 27, 2023, the European Commission published the proposal for the Standard Essential Patents Regulation.1 The Regulation aims to improve the licensing of patents that are declared by patent holders as essential to technical standards, and committed to be offered on fair, reasonable and non-discriminatory (FRAND) terms to the implementers. The proposed mechanism envisages a new role for the European Union Intellectual Property Office (EUIPO), which should register declared SEPs, undertake a review of their essentiality, and help in ratesetting. To make the registration mechanism robust and credible, any failure of holders of relevant patents to register their SEPs on time is punished by their temporary inability to enforce such rights before the courts.2 For the period of such failure, patent owners are not entitled to receive any compensation for infringements.3 If they remedy the lack of registration, the patent holders regain their enforcement rights going forward.4 Finally, if implementers and patent holders cannot agree on FRAND royalties, before enforcing the rights in courts, patent holders are obliged to attempt to sort their differences before EUIPO’s conciliator.5 If they cannot settle, the conciliator issues a non-binding determination of a FRAND rate.6 During this 1 Proposal for a regulation of the European Parliament and of the Council on standard essential patents and amending Regulation (EU) 2017/1001 COM(2023)232. 2 Article 24(1) of the Proposal. 3 Article 24(2) of the Proposal. 4 Article 24(2) of the Proposal. 5 Article 34(1) of the Proposal. 6 Article 56 of the Proposal. M. Husovec (&) Ph.D.; Associate Professor of Law, LSE Law School, London School of Economics and Political Science, London, UK e-mail: 123 M. Husovec procedure, which must end within nine months, the patent holders are barred from enforcing their patents in European courts.7 Some scholars, commentators and institutions have started questioning the constitutionality of the proposal. They deem the proposal unreasonalble, especially the restrictions that are imposed on patent remedies.8 Article 17(2) of the EU Charter is argued to be violated because conditional unavailability of the remedy violates the very essence of rights or disproportionately limits the right to property. I think the framing is mostly wrong. Can a remedy regime into which a patent holder first needs to opt-in through a patent declaration made after the law enters into force9 be in violation of Art. 17(2)? Can the legislative redesign of the future framework be even unconstitutional due to the European property clause? The question is fundamental. If the critics are correct, and purely prospective changes must be justified as ‘‘the least intrusive’’ policy interventions against the background of Art. 17(2), then practically any legislated IP right is truly only a one-way ticket to ever-stronger protection. It is an evidentiary rachet. If the European legislature can cut back on its future IP promises only subject to high evidential thresholds, any reform, even on the margins, can be torpedoed by those who oppose such policies before the judiciary. The law becomes even harder to reform.10 To be sure, critics are correct to demand that retrospective changes require compliance with Art. 17(2). If the legislature promised rewards for inventions, and individuals relied on such promises by obtaining patents, they must enjoy protection against arbitrary changes to those promises, including remedies. In such a case, proportionality is a key component of any reform. However, if the reform targets exclusively those who were not promised anything specific but only hoped for continuity with today’s laws, no individual promises are affected. Article 17(2) protects rights and not the system. It is not an immunity from legislative change. The SEP Regulation’s general mechanism is not a retrospective change of remedies, i.e. where the legislature cuts back on its pre-existing promises to the peril of those who relied on them. On the contrary, affected SEP holders are proposed to have two years after the adoption of the law to consider if they really want to 7 Article 37(2) of the Proposal. 8 https://www.aipla.org/docs/default-source/advocacy/aipla-comments-to-eu-on-proposed-sep-regulation -8.10.23.pdf?sfvrsn=f5e8fe80_1 p. 8; https://ipeurope.org/press-release/ip-europe-regrets-europeancommission-patents-proposal-calls-on-parliament-and-council-to-support-european-ip-leadership/; Mohammad Ataul Karim, The Proposed EU SEP Regulation: Checking Balancing Incentives, and compatibility with EU Fundamental Rights, and the TRIPS Regime, available at https://www.4ipcouncil. com/application/files/9816/8847/8735/2023.07.04_final_Draft_SEP_Regulation_paper_.pdf; Florian Mueller, EU Commission contradicts itself in attempted justification of SEP regulation in light of EU Charter of Fundamental Rights: ‘‘uniform and predictable outcome’’ but ‘‘not ultimately binding’’?, available at http://www.fosspatents.com/2023/04/eu-commission-contradicts-itself-in.html. 9 Article 1(2) and Art. 72 of the Proposal. 10 See on the general institutional problems, Martin Husovec, ‘‘The Fundamental Right to Property and the Protection of Investment: How Difficult Is It to Repeal New Intellectual Property Rights?’’ (May 21, 2019). Forthcoming, in Christophe Geiger (ed), Research Handbook on Intellectual Property and Investment Law (Edward Elgar 2019). 123 A Human Right to Ever-Stronger Protection? include their patents in standardisation efforts and continue to commit them under the FRAND regime. They have a clear and free choice. Article 17(2) is thus not even engaged. The change might affect companies’ business plans or profit margins but those are not constitutionally protected as property. The only provision that could theoretically lead to retrospective changes concerns pre-existing technical standards.11 However, the Commission’s proposal does not explicitly state whether pre-existing standards can be made subject to similar limits on remedies. It only envisages a future delegate act that would select existing standards and specify extent to which they are to be treated as future standards. If the Commissions treats the pre-existing standards the same way as future standards, then with respect to them, it must justify its actions against Art. 17(2). In those cases, the Commission must adopt new law, and prove that ‘‘the functioning of the internal market is severely distorted due to inefficiencies in the licensing of SEPs’’. Thus, again, there is nothing in the SEP Regulation itself that would already engage the property clause. Accepting the argument that any prospective changes to IP policy must be measured against the tenets of Art. 17(2) i (...truncated)