LONDON, UK – ACT | The App Association welcomes the opportunity to provide input to the United Kingdom Intellectual Property Office (IPO) on standard-essential patent (SEPs) licensing issues that impact the small business innovator community and needed policy changes to address them. Technical standards underpin the internet of things (IoT) ecosystem which is expected to generate £4.1-9.3 trillion for the global economy by 2030. To utilise standards, small technology developers must have certainty that they can license patented technologies essential to the standard on fair, reasonable, and non-discriminatory (FRAND) terms.

In its announcement, the IPO correctly assessed the central problems plaguing the SEP licensing ecosystem include:

  • Persistent information asymmetries
  • Lack of transparency
  • Excessive litigation costs

These barriers disproportionately impact startups, scaleups, and small and medium-sized enterprises (SMEs), stifling innovation, slowing job creation, and damaging the UK economy.

‘The SME tech companies of today are the big tech companies of tomorrow’, said Stephen Tulip, United Kingdom country manager for ACT | The App Association. ‘Unfortunately, SME companies like our members aren’t able to get the FRAND licenses they need to create the next generation of smart devices. The IPO’s consultation represents a promising step towards building a pro-SME policy environment that will drive invention and stop abusive SEP owners from disregarding their voluntary FRAND promises and extracting unfair licensing terms from SMEs’.

In addition to the App Association’s submission on behalf of our members, nine individual member companies submitted their own comments. These comments emphasise the importance of standards and creating a fair and transparency SEP licensing system in the UK to ensure SMEs’ ability to create new technology and compete with larger companies.

‘I am grateful to ACT | The App Association for bringing together small business owners like me and achieving this consultation on SEPs’, said Lawrence Archard, founder of Factoree and member of the App Association. ‘As a startup, an unpredictable SEP licensing landscape makes it harder to plan, gain investors, and compete. For small businesses like mine, the IPO’s proposed reforms are a critical step towards a SEP licensing environment where innovation can actually thrive. In responding to the consultation, I’m optimistic that we’re helping the UKIPO apply some much-needed grease to the wheels of the UK IoT economy by enabling the superb small innovators I serve to operate in a fairer environment’.

The App Association agrees with the IPO’s objectives of enhancing transparency and fairness in the SEP licensing ecosystem. However, to ensure the success of its proposed rate determination track (RDT), we propose five reforms the IPO should first enact to build a strong foundation:

  1. Develop and Publish an Aggregate Royalty Benchmark: The IPO should set an administratively determined aggregate royalty for each standard. A clear and fair benchmark would enhance transparency, allow licensees to forecast costs with confidence, reduce the need to re-litigate aggregate royalties in every case, and curb incentives for predatory licensing strategies that target smaller companies.
  2. Improve Transparency: The IPO should create a centralised database consolidating declared SEPs for standards that are widely licensed and integrate available independent essentiality studies. SEP holders should also be required to disclose the portfolios they intend to license, with representative samples that could be reviewed by third parties. This approach would provide licensees a baseline to assess essentiality at a fraction of the cost of a government-led patent-by-patent essentiality check.
  3. Create a FRAND Guidance Service: The IPO should establish a FRAND guidance service to support companies—especially smaller manufacturers and product developers—approached by SEP holders. Initially, the service would provide informal, confidential guidance on whether an offer falls within a plausible FRAND range, in view of the aggregate benchmark noted above, and the SEP holder’s share of SEPs for the relevant standard. Over time, once other transparency reforms are in place, it could issue formal assessments that courts might recognise as evidence in litigation. This service should be offered as a precursor to the streamlined RDT court process.
  4. Mandate SEP Holder Disclosures in Licensing Demands: SEP holders making licensing demands that cover UK sales should be required to provide standardised disclosures, including their patent list, claimed stack share, the implied aggregate royalty, and relevant IPO benchmarks. They should also attach an IPO informational document outlining licensee rights and available support services. Pre-action protocols can be used as a lever to ensure disclosure.
  5. Clarify that SEP Injunctions are Only Appropriate in Rare and Extreme Circumstances: IPO should protect the interests of innovative SMEs, and to ensure that standards fulfil their intended role in fostering innovation and competition, by setting a clear policy stating that injunctions should not be sought by SEP holders or allowed for FRAND-committed SEPs except in rare circumstances where monetary remedies are not available.

The App Association and our members thank the IPO for the opportunity to submit these comments and suggestions. We remain ready and available to continue to work with the IPO to build a fairer SEP licensing regime.

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