PIN-SME

After Google’s loss to the Apple led "Rockstar Bidco" consortium in the Nortel patent auction, Vice President and General Counsel Kent Walker calls for patent reform in the U.S., characterising patents as "government-granted monopolies" that block innovation.

The proposal for a regulation for a “community patent”, now referred to as “EU patent” under the Lisbon treaty, was proposed by the European Commission more than a decade ago. A unitary patent protection would allow a company to establish in one member state a patent that would be valid in all EU countries and that could be obtained with a single application.  The process was however considerably slowed down because of linguistic issues.

In December 2009, Member States unanimously adopted conclusions on an enhanced patent system in Europe foreseeing the establishment of a unitary patents protection system as well as a new patent court in the EU. In 2010, the Commission attempted to solve the linguistic disputes that had blocked the proposal through a Regulation on translation requirements for the EU Patent. The proposal suggested that English, French and German could be the official languages providing legal value throughout the EU for an EU patent.

As the EU's Council of Ministers did not provide unanimous support to the Commission’s proposal, twelve member states in favour of the proposal opted for the “enhanced cooperation” process which allows nine or more countries to move forward if no agreement can be reached by the EU as a whole within a reasonable period, while other Member States can opt to join at a later stage. The Commission responded favourably to this request on the December 14th, 2010.

A unitary patents protection system through an enhanced cooperation nvolving 12 member states was a long call from the original idea of a single patents protection system valid throughout the 27 member states of the EU. While a single system would have entailed a significant reduction of cost and red tape for SMEs willing to file a patent application valid throughout the EU, a system valid only in 12 member states would offer only limited simplification of the system.

However, subsequently to the opening of the “enhanced cooperation” process, all other Member States, except for Italy and Spain, have indicated their intention to join the enhanced cooperation for a unitary patent protection. This development brings the enhanced cooperation from 12 to 25 member states, while Italy and Spain remain able to join at a later stage.

On February 15th, during the European Parliament’s plenary session, MEPs approved the enhanced cooperation procedure. The proposal is expected to be adopted by Member states during the Competitiveness Council meeting of March 10th; if the Council approves the proposal, the Commission will present the legislative proposals necessary to implement the enhanced cooperation.

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As in other sectors, SMEs represent the essential part of the European ICT industry. However, while accounting for 50% of the EU’s productivity growth in all sectors, the ICT sector strongly differs in nature and dynamics: the lifecycle of software based service solutions is often shorter than in other sectors and the large majority of standards used in the ICT industry are “de facto” standards rather than formal standards – developed and adopted by the industry rather than by formal standards setting organisations. Fora and consortia hereby already play a decisive role, as the Commission pointed out in a White Paper specifically dedicated to the revamp of the European standardisation practices for ICT.In early 2011, both private and public stakeholders agree on the inclusion of fora and consortia deliverables inside the formal European ICT standardisation process, but concerns remain on the right way to do it.

This was at the heart of the discussion that took place in Sofia Antipolis, France, in the premises of the World Wide Web Consortium (W3C), during the last meeting of the ICT Steering Committee, bringing together representatives from the European Commission, the public sector, the ICT industry, societal stakeholders and the formal and non-formal standardisation organisations.

The debate stemmed from the ongoing efforts of the European Commission to propose a governance structure for the selection and evaluation of proposed fora and consortia technical specifications, to process the latter through the formal standardisation system in order to allow public referencing. NORMAPME representatives, including PIN-SME standard expert Mr. Prager and Mr. Orth, argued that the process should be kept practical and market driven; in order to allow for both efficiency and transparency of the selection and evaluation process, the structure had to be kept restricted in layers and in complexity.

Mr. Orth also advised that an expert group mandated to evaluate and advise on fora and consortia deliverables should have a balanced and inclusive composition, such that the group would reflect the reality of the industry rather than that of the standards setting organisations. Mr. Prager also advised against “shortcuts” in the assessment process; finally, NORMAPME representatives advised that such a group should maintain the list of referenced fora and consortia ICT standards manageable. A list of fora and consortia ICT standards referenced should not grow beyond manageability for procurement managers, instead it should be kept useful – in the sense of “market driven”.

The White Paper published by the European Commission in July 2009, prior to the consultation on the revision of the standardisation system noted that “alongside the traditional standard setting organisations, specialised and mostly global fora and consortia have become more active and several have emerged as world-leading ICT standards development bodies, such as those responsible for the standards covering the internet and the world wide web.” That development, the paper added, had not been reflected in the EU standardisation policy, making those informal standards originating from fora and consortia impossible to reference in public procurement.

The paper therefore aimed at proposing options to address what it considered to be an issue hampering the global competitiveness of the European industry. Later on, the European Commission launched a consultation on the revision of the standardisation system, which clearly differentiated between ICT standardisation and other sectors in considering referencing documents developed by fora and consortia in legislation and policies.

On November 22nd, the European Commission and the European Patent Office organised a conference to try to address the tensions between intellectual property rights (IPR) and standardisation. Panels included representatives from the institutions, the industry and the European Standardisation Organisations.

Certainty as to the availability of IP rights for licensing was at the centre of an essential panel debate. The continuation of given licensing commitments can be highly important for the standardisation process; such rights are sometimes sold or transferred in mergers and acquisitions, or belong to "third parties" who are not part of the respective standardisation project. Panel participants discussed the opportunity of mechanisms that would ensure certainty of continued adherence to fair, reasonable and non-discriminatory terms and royalty free commitments by any subsequent owner. 

Ex-ante commitments to licensing terms were lengthily discussed at a dedicated panel, which included representatives of the ICT industry, of the telecoms industry and of the SMEs. During the development of a standard, and after identification of an essential patent in the latter, it is common to ask the patent owner to commit to license the patent on fair, reasonable and non-discriminatory terms ("FRAND"); it is then left to implementers of the standard to address the exact licensing conditions for such a declared essential patent, after the standard has been finalized and published – “ex post”. 

Practices that entail greater attention to an essential patent's implications before finalization and publication of a standard have become known as "ex ante" practices. The panel participants representing the ICT industry agreed that it was very useful to have an understanding, during the actual development process itself, of what specific fees or other license terms will be required in order to comply with the standard: in comparison, a FRAND commitment provides fewer criteria for choice among different technologies.

Martin Prager, PIN-SME standards expert and NORMAPME expert in e-health, intervened in the debate by asking whether support should be given to protection on cease and desist requests (injunction suit), if the IPR is tabled after the publication of standard in the case of the IPR belonging either to a member of the standardization Working Group, or to somebody outside of the standardization Working Group, but usually involved in standardization, or to somebody completely outside of the standardization.

Other discussions focused on critical issues such as the need for standards-related patent registers or the role of open source in ensuring interoperability in standards.

More information on the event and presentations can be found here.

Re-invigorating the European digital single market is the first action area listed in the roadmap for the next 5 years of European ICT policy – the Digital Agenda. According to the European Commission, public authorities have an essential role to play for Europe to achieve a vibrant digital single market: “governments can stimulate content markets by making public sector information available on transparent, effective, non discriminatory terms. This is an important source of potential growth of innovative online services.”

Public bodies produce and collect vast amounts of information, including legal, geographic, financial, meteorological and traffic data. Most of it has potential for re-use in new products (car navigation systems, insurance and credit rating services, weather forecasts, legal databases...).

On December 31^st 2003, the Official Journal of the European Commission published a directive on public sector information which scope included “facilitating re-use of existing documents held by public sector bodies of the Member States”. 

In June 2008, the Organisation for Economic Co-operation and Development (OECD) published a Recommendation for Enhanced Access and More Effective Use of PSI. The recommendation included maximizing openness and transparency of the conditions of re-use of PSI and when the information is not free, costs charged to any user not exceeding marginal costs of maintenance and distribution.

Despite the directive, the national policies in terms of pricing and accessibility of public information for re-use have been very disparate. The Digital Agenda released earlier this year acknowledges that the current harmonization of the re-use of PSI as partial, and considers the need to enforce what has remained a principle: “public bodies must be obliged to open up data resources for cross-border applications and services”. This announced the revision of the PSI directive, notably of its scope and principles on charging for access and use, and taking into account the OECD’s 2008 Recommendation.

The review of the directive is foreseen to be accomplished by 2012; a public consultation is currently open on possible policy options that should be considered for the review. You can participate in the consultation at the following e-address: http://ec.europa.eu/yourvoice/ipm/forms/dispatch?form=psidirective2010

On the 24^th of September, PIN-SME and UEAPME organised an event to showcase the success stories of three European ICT SMEs. The event, powered by Google, was a welcome opportunity to bridge enthusiastic national ICT entrepreneurs with EU ICT policy makers- ensuring the latter actually talked to ICT SMEs rather than about.

Simon Hampton from Google kick-started the event, stating the vital importance of internet for SMEs. Andrea Benassi, Secretary General of horizontal association of SMEs UEAPME took the floor to describe ICT as a “diamond sector” for SMEs, and the micro-enterprise mindset as the key to innovativeness in enterprise – even for larger companies.

Mrs. Joanna Drake, European Commission Director for the Promotion of SME’s competitiveness, directly addressed the entrepreneurs present in the meeting: “I’m addressing this message to you, ICT-SME entrepreneurs, business multipliers, and ICT professionals.”

Recognising ICT SMEs as essential ICT and e-skills enablers of the European industry, she continued: “Your role is instrumental in providing smart, easy-to-use, affordable technology and ensuring speedy, innovative action throughout the SME community.”  “Joining forces and coordinating smart policy actions is the only way to achieve the breakthroughs needed (...).”

The first ICT SME to present its success story was Spreaker, from Italy. Mrs. Tonia Maffreo presented the company’s product, a “social web radio” combining the radio user experience with the social networks interactivity and content generation.

Mr. Thomas Einwaller, one of the founders of Austrian ICT SME Troii, presented the “time-tracking revolution”, the Timr software.  The story of Troii is that of three university classmates who experienced the typical Large Enterprise environment software development, and dreamed of creating a product that would allow them to reach new customers around the world through the Internet. Their ambition was achieved through the creation of “Timr”, a “software as a service” time tracking tool available on multiple smart phone platforms; Troii now has clients all over the world.

Despite the formidable enabling opportunities that ICT and internet provided to his business, Mr.Einwaller noted that they were still facing legal and technical challenges, including discrepancies in access to bandwidth between regions and general uncertainty relating to tax laws outside the EU.

Mr. Juan Martinez Climent, CEO of Agroterra, also had a best practice example on how to efficiently tap into the enabling power of internet. Agroterra is an online agro-trading system allowing buyers and suppliers of agro-goods and services to shop and advertise for free: Mr. Mike Lee, who is running the UK version of the Spanish service, further explained that Agroterra lets clients sell their products without intermediary costs or commissions.

Agroterra has been present in Spain for 11 years, and in the UK since 2010; 3.9 million customers looking for agro-products pay 6.4 million visits per year to the website.

After those exciting success stories, Mr. Martin Prager took the floor as PIN-SME standards expert to list some tangible concerns of ICT SMEs that must be addressed at EU level, namely access to finance, tax harmonisation shortcomings that hampered the digital single market, and the policy providing the framework for the next-generation networks, which he warned was likely to support monopolistic structures. All in all, European policy now has to move beyond lip service for ICT SMEs.

The event ended on a practical workshop by Google on how to improve business visibility on internet in a few clicks.

For more information on Spreaker: http://www.spreaker.com/

For more information on Troii & Timr: http://troii.com , http://timr.com

For more information on Agroterra Spain and UK: http://www.agroterra.com , http://www.agroterra.co.uk