Imagine a world that is not only smarter but greener—where rural and urban landscapes alike are seamlessly integrated with technology to optimise energy consumption, reduce carbon footprints, and enhance residents’ quality of life. This vision of a green, tech-driven smart world is becoming a reality through the convergence of the Internet of Things (IoT) and sustainable technology.
A critical aspect of this transformation is technology standardisation and the licensing framework for the standard-essential patents (SEPs) that cover them. Understanding and navigating this complex domain is crucial for micro-, small-, and medium-sized enterprises (MSMEs) striving to innovate in the renewable tech sector. This blog in our “Decoding SEP Licensing” series explores the relationship between SEP licensing, IoT, and sustainable tech solutions while highlighting policymakers’ need to ensure fair and transparent SEP licensing to support MSMEs in their journey towards a greener, more connected future.
Are you curious about the other blogs in this series? You can find “Part One: Decoding SEP Licensing: A Comprehensive Guide for the IoT and AI Revolutions” here.
Environmentally-conscious IoT
Smart cities leverage IoT solutions to enhance quality of life, exemplifying how interconnected systems drive sustainability. Innovations like smart grids, automated traffic management, and energy-efficient buildings highlight the symbiotic relationship between IoT and environmentally-conscious solutions. Devices like smart meters, carbon footprint trackers, and advanced sensors are pivotal in optimising energy use and resource management. These interconnected technologies are essential to the success of green tech initiatives, significantly reducing carbon emissions and promoting eco-friendly practices across various industries.
MSMEs, like App Association member companies Greenly and BlueMaestro, play a crucial role in this ecosystem by developing and deploying cutting-edge solutions that drive smart innovations, advancing the green transition. Their agility, entrepreneurial spirit, and close connection to local communities enable them to swiftly identify and address market needs with innovative technologies. However, the path to achieving these advancements is fraught with challenges, particularly in the realm of SEP licensing.
SEP licensing and sustainable SME innovation
As we defined in our glossary, a SEP is a patent that is voluntarily contributed to a technical standard and is critical to the use of the standard, placing the holder of that SEP as a gatekeeper to its use. In other words, if a developer wants to use the standard as a baseline for their innovations, they need a license from the relevant SEP holders. Standards development organisations check the possibility of SEP holder abuses of this position by having them commit to provide licenses to their SEPs on fair, reasonable, and non-discriminatory (FRAND) terms. In a perfect world, every SEP holder would honor their commitment to licensing their SEPs on FRAND terms. However, too often, some SEP licensors exploit the lack of clarity in the law and in SDO policies to abuse their dominant position, and the process becomes prohibitive for MSMEs simply looking for FRAND licenses on the SEPs they need in order to create standards-based innovations.
As we have most recently seen in the automotive sector, among others, the current SEP licensing framework too often fails to ensure transparency and fairness, particularly for MSMEs. Failing to address the well-known SEP-related abuses is, at this point, doing the same thing over and over while expecting different results—exposing new AI and green tech markets to the same abuses long suffered in existing markets—is the definition of insanity. By ensuring a level playing field in the SEP licensing landscape, SEP licensing reform would allow enterprises of all sizes to develop and deploy groundbreaking green tech solutions, create high-skilled jobs, and contribute to the global effort to combat climate change.
SEP licensing reform
To address some of these challenges, policymakers in the European Union (EU) and the United Kingdom (UK) are working towards regulatory reforms aimed at improving the SEP licensing framework. Proposed measures from the European Commission (EC) include creating a SEP database, conducting essentiality checks, facilitating an industry-led determination for market royalty rates, and establishing a non-binding conciliation process for parties to reach a fair and amicable licensing agreement. The UK Intellectual Property Office (IPO) has also discussed plans to create a repository of tools, guidance, and other material designed to help SMEs navigate the SEP ecosystem, which should be released later in 2024.
However, EU and UK policymakers cannot be the only leaders acting against SEP licensing abuses. As a sampling of our U.S. members recently outlined to Congress, regulators and policymakers everywhere must recognise the critical role SMEs play in driving sustainable technologies and take decisive steps to address well-known anticompetitive practices by appropriately confronting SEP licensing abuses.
Conclusion
The intersection of SEP licensing and the IoT universe represents a powerful catalyst for conservational innovation. The vision of a world seamlessly integrated with technology to optimise energy consumption and enhance the quality of life is only possible if SMEs are at the forefront of this revolution. As we strive to achieve global sustainability initiatives, policymakers must prioritise SEP licensing reform to help create a fair and transparent SEP licensing landscape for all players driving our global app economy.