Consultation outcome

SEPs questionnaire for SME, small-cap and mid-cap businesses: Summary of Responses

Updated 5 July 2023

Introduction

In December 2021, the Intellectual Property Office (IPO) led a call for views to better understand whether the current framework for Standard Essential Patents (SEPs) is functioning to support innovation, and to establish whether change is needed.

In its August 2022 Summary of Responses, the Government committed to further evidence-gathering and analysis, and for this reason the IPO published a questionnaire on 21st March 2023 to supplement the Call for Views. The questionnaire was aimed at small and mid-cap businesses that are involved in standardisation and licensing of SEPs, and ran for 6 weeks.

Standard Essential Patents (SEPs) SME questionnaire: Analysis of responses

47 responses were received, of which 40 responses passed validation. 7 invalid responses were removed from analysis. 1 respondent did not meet the criteria of an SME (250 or fewer employees) or a small-cap or mid-cap company (market capitalisation below $10 billion). The remaining 6 respondents could not be found on the Companies House register, or did not have a company website, and furthermore provided answers to free text questions that were unrelated to the topic of the survey.

Full analysis of the 40 validated questionnaire responses is set out below.

Next Steps

The IPO will consider the responses as part of its policy development and present its overall findings to Ministers later this year. Any options for intervention will be subject to public consultation.

The Government wants to ensure all those within the SEPs ecosystem have an ongoing opportunity to submit views. Anyone wishing to contact the IPO concerning these matters, please continue to use the dedicated mailbox [email protected].

1. Profile of respondents and involvement in standardisation

Question 1 - What is your position within your company?

Of the 40 questionnaire respondents:

• 11 respondents (28%) are directors of a company
• 10 respondents (25%) are the CEO or founder of a company
• 4 respondents (10%) provide legal counsel for a company
• 3 respondents (8%) provide IP counsel for a company
• 2 respondents (5%) provide general counsel for a company
• 2 respondents (5%) are the CTO (Chief Technology Officer) of a company
• 1 respondent (3%) from each of the positions of barrister, business development manager, managing partner of a consultancy company, consultant, contractor, CFO, and managing partner, answered
• 1 respondent (3%) chose not to identify their position

Question 2 - Is your company headquartered in the UK?

28 of the 40 questionnaire respondents (70%) have company headquarters located in the UK.

Question 3 - Where is the location of your company headquarters?

Of the 12 respondents with company headquarters located outside of the UK, 10 are in Europe, 1 is in China and 1 is in the US.

Question 4 - Is your company a subsidiary/branch of a larger company?

All 40 respondents to the questionnaire answered ‘No’, their company is not a subsidiary/branch of a larger company.

Question 5 - What is the size of your company?

34 of the 40 questionnaire respondents (85%) are SMEs. 27 respondents (68%) represent micro companies (1 – 9 employee(s)), 2 respondents (5%) represent small companies (10 – 49 employees), and 5 respondents (13%) represent medium-sized companies (50 – 249 employees).

6 respondents (15%) represent large companies (250 or more employees), all of which are micro-cap or small-cap companies (market capitalisation below $2 billion).

No responses were received from mid-cap companies (market capitalisation between $2 billion and $10 billion).

Question 6 - In which industry does your business operate?

Respondents could select multiple industries to describe the operations of their business. The 40 questionnaire respondents gave a total of 82 responses to this question.

18 respondents (45%) operate in the information communication technology (ICT) industry, of which half (9 respondents) operate solely in this industry. 6 respondents (15%) operate in the healthcare industry, of which 2 operate solely in this industry. 6 respondents (15%) operate in the industrial connected machinery industry, all of which operate in multiple industries.

The industry category ‘Other’ received 23 responses, of which the most popular were:

• 4 respondents (10%) operate in the mobile phone industry
• 2 respondents (5%) operate in the marine industry
• 2 respondents (5%) operate in the transport industry
• 2 respondents (5%) operate in the construction industry

2. Licensing of Standard Essential Patents

Question 7 - How do you rate your understanding of technical standards?

Most respondents rated their understanding of technical standards to be ‘very good’ (13 respondents, 33%) or ‘good’ (17 respondents, 43%). Fewer respondents rated their understanding to be ‘fair’ (5 respondents, 13%) or ‘poor’ (5 respondents, 13%). No respondents said that they had no understanding of technical standards.

Question 8 - How do you rate your understanding of standard essential patents (SEPs)?

Most respondents rated their understanding of standard essential patents (SEPs) to be either ‘very good’ (11 respondents, 28%), ‘good’ (9 respondents, 23%) or ‘fair’ (10 respondents, 25%). 8 respondents (20%) rated their understanding to be ‘poor’, and 2 respondents (5%) have no understanding of SEPs.

Question 9 - Are you involved with technical standards?

29 of the 40 questionnaire respondents (73%) are involved with technical standards.

11 respondents (28%) answered that they have no involvement with technical standards and were taken directly to section 4 of the questionnaire

The chart below shows the 29 respondents involved with technical standards by company size .

Micro companies were least likely to report involvement with technical standards, with 18 out of 27 respondents (67%) of this size reporting involvement. All small companies (2 respondents), 4 out of 5 respondents (80%) from medium-sized companies, and 5 out of 6 (83%) respondents from large companies reported involvement with technical standards.

The 29 respondents involved with technical standards have operations across 61 industries. The chart below shows the proportion of questionnaire respondents with operations in a given industry that are involved with technical standards.

Respondents could select multiple industries to describe the operations of their business.

The ICT industry has the largest number of questionnaire respondents reporting involvement with technical standards (16 / 18 respondents, 89%).

All respondents with operations in defence (3 respondents), security (1 respondent), smart cities (3 respondents) and smart meters (3 respondents) are involved with technical standards. Other industries with a high percentage of respondents involved with technical standards include industrial connected machinery (5 / 6 respondents, 83%), automotive (3 / 4 respondents, 75%), space / aeronautical (2 / 3 respondents, 67%), utilities (2 / 3 respondents, 67%), and robotics (2 / 3 respondents, 67%).

Half of respondents with operations in the industries of medical devices (2 / 4 respondents), smart homes (1 / 2 respondents) and healthcare (3 / 6 respondents) are involved with technical standards.

Of the 23 questionnaire respondents with operations in ‘other’ industries, 15 (65%) are involved with technical standards. Mobile phone products (4 respondents) and cellular (2 respondents) were most reported of the ‘other’ industries with involvement in technical standards.

Question 10 - Which technical standard(s) or SDO(s) (standard developing organisation(s)) are you involved with?

Respondents could provide multiple responses to this question. Of the 29 respondents involved with technical standards, 21 provided valid responses, including:

Technical standards:

• 7 respondents (24%) are involved with the Bluetooth standard
• 5 respondents (21%) are involved with the Wi-Fi standard
• 5 respondents (21%) are involved with the 2G, 3G, 4G or 5G cellular standards.
• 4 respondents (14%) are involved with the High Efficiency Video Coding (HEVC) standard
• 3 respondents (10%) are involved with each of these standards: AAC, AMR-WB, AV1, AVC, DVB, IEC, IP68, VP9 and USB

SDO(s):

• 6 respondents (21%) are involved with the SDO, the Institute of Electrical and Electronics Engineers (IEEE)
• 4 respondents (14%) are involved with the SDO, the 3rd Generation Partnership Project (3GPP)
• 3 respondents (10%) are involved with the SDO, the European Telecommunications Standard Institute (ETSI)

Involvement in the following technical standard(s) and SDO(s) were reported by 1 respondent each:

Technical standards:

• NB- IoT
• LoRA
• PLC-G3
• O-RAN

SDOs:

• IETF
• Small Cell Forum
• NMEA

Question 11 - In what capacity are you involved with technical standards?

Respondents could provide multiple answers to this question. 53 answers were provided by the 29 respondents involved with technical standards:

• 18 respondents (62%) use technical standards. 2 respondents (7%) selected this as their only answer. Out of those 18 respondents, 12 (41%) both use technical standards and innovate on technical standards. 9 respondents (31%) both use technical standards and develop standards
• 18 respondents (62%) innovate on standards. 4 respondents (14%) selected this as their only answer
• 13 respondents (45%) are involved in developing standards. 2 respondents (7%) selected this as their only answer. 11 respondents (38%) both develop standards, and also use or innovate on standards
• 12 respondents (41%) are monitoring the development of a live standard. 3 respondents (10%) selected this as their only answer. 9 respondents (31%) are both monitoring the development of a live standard and also use or innovate on standards. 5 respondents (17%) are both monitoring the development of a live standard and also develop standards
• 3 respondents (10%) gave ‘other’ answers, which included researching for the standard, educating trade association members of standards, and writing standards (1 answer per category)

Question 12 - Are you involved in SEP licensing or negotiation of a SEP licence?

Of the 29 respondents involved with technical standards, 13 respondents (45%) are also involved in SEP licensing or negotiation of a SEP licence.

The chart below shows the 13 respondents involved in SEP licensing or negotiation of a SEP licence by company size.

Micro companies were least likely to report involvement in SEP licensing or negotiation of a SEP licence, with 4 out of 27 respondents (15%) reporting involvement.

1 out of 2 small companies (50%), and 3 out of 5 medium-sized companies (60%) that responded to the questionnaire reported involvement in SEP licensing or negotiation of a SEP licence.

Large companies were most likely to report involvement in SEP licensing or negotiation of a SEP licence, with 5 out of 6 (83%) reporting involvement.

The 13 respondents involved in SEP licensing have operations across 28 industries. The chart below shows the proportion of questionnaire respondents with operations in a given industry that are involved in SEP licensing.

Respondents could select multiple industries to describe the operations of their business.

A high proportion of questionnaire respondents that operate in the industries of smart meters (3 / 3 respondents, 100%), smart cities (2 / 3 respondents, 67%), utilities (2 / 3 respondents, 67%) and smart homes (1 / 2 respondents, 50%) are involved in SEP licensing.

Of the 18 questionnaire respondents that operate in the ICT industry, 7 (45%) are involved in SEP licensing.

A lower proportion of questionnaire respondents that operate in the industries of healthcare (2 / 6 respondents, 33%), industrial connected machinery (2 / 6 respondents, 33%), automotive (1 / 4 respondents, 25%), and medical devices (1 / 4 respondents, 25%) are involved in SEP licensing.

Of the 23 questionnaire respondents with operations in ‘other’ industries, 7 (30%) are involved in SEP licensing. These ‘other’ industries included mobile phone products (3 respondents), cellular (2 respondents), new technology (1 respondent), and a small business trade association (1 respondent).

None of the questionnaire respondents with operations in the defence, robotics, security or space / aeronautical industries reported involvement in SEP licensing.

Question 13 - Please indicate why you are not involved with SEP licensing

Of the 29 respondents involved with technical standards, 16 are not involved in SEP licensing, and gave the following reasons:

• 3 respondents (19%) believe they do not require a licence
• 2 respondents (13%) see the cost of obtaining a licence as prohibitive

10 respondents provided ‘other’ reasons, of which they were able to list more than one, including:

• being unclear on the licensing process and who to approach for a licence (4 respondents, 25%)
• being at an early stage of product development (3 respondents, 19%)
• not requiring a licence, as SEP licensing takes place at another point in the value chain: by the respondent’s customers (1 respondent, 6%), or by the respondent’s module supplier who provides a warranty (1 respondent, 6%)
• not requiring a licence, as a trade association (1 respondent, 6%) or consultant (1 respondent, 6%)
• not knowing what a SEP licence is (1 respondent, 6%)
• using an occupational safety and health standard, as opposed to a technical standard (1 respondent, 6%)

1 respondent preferred not to answer this question.

Question 14 - Please indicate how you are involved in SEP licensing.

Respondents could provide multiple answers to this question. The 13 respondents involved in SEP licensing gave 19 answers in total.

• 9 respondents (69%) licence SEPs to use in the technology / product that they develop / produce. 5 respondents (38%) selected this as their only answer
• 5 respondents (38%) don’t know if they need a licence, of which 3 respondents license SEPs to use in the technology / product that they develop / produce
• 2 respondents (15%) are the holder of a SEP that they license out, both of whom also license SEPs to use in the technology / product that they develop / produce

3 respondents (23%) gave an ‘other’ involvement in SEP licensing:

• 1 respondent holds SEPs for defensive purposes and is both a licensor and licensee of SEPs
• 1 respondent acts as a small business trade association whose members are involved in SEP licensing. It answers the questions that follow on behalf of its members
• 1 respondent provides consultancy advice on SEP licensing. The questions that follow are not applicable to this respondent.
  

The following questions apply to 12 of the 13 respondents involved in SEP licensing. As above, 1 respondent, a consultant without direct SEP licensing experience, was removed.

Question 15 - How did you know that you may need a licence to a SEP for use of the technology?

Of the 12 respondents involved in SEP licensing, to which this question is applicable:

• 7 respondents (58%) were approached by a SEP holder/licensor
• 1 respondent (8%) reached out to a third party
• 1 respondent (8%) reached out to the SEP holder / licensor
• 3 respondents (25%) gave ‘other’ ways in which they found out they may need a licence, including general awareness that such technologies have licensing requirements (1 respondent), reaching out to SEP holders for a licence (1 respondent), and through injunction threats (1 respondent)

Question 16 - Do you have sufficient information on how your innovation relates to the SEP that you are being offered or have taken a licence for?

Of the 12 respondents involved in SEP licensing, to which this question is applicable:

3 respondents (25%) have sufficient information on how their innovation relates to the SEP they have been offered or taken a licence for, 4 respondents (33%) do not, 3 respondents (25%) do not know, and 2 respondents (17%) prefer not to say.

Of the 4 respondents that answered that they do not have sufficient information, 2 are medium-sized, 1 is micro and 1 is large.

Question 17 - (Optional) Please provide additional information on your answer.

5 of the 12 respondents (42%) that answered the previous question chose to provide additional information:

• 4 respondents (33%) (2 that answered ‘no’ and 2 that answered ‘don’t know’ to having sufficient information) gave the same answer: the components used in their products (chipsets) come without IP rights, so they lack information on how their innovation relates to the SEP
• 1 respondent (9%) (who answered ‘yes’ to having sufficient information) explained that they design their wireless products including a chip, so know the technology application well

Question 18 - Do you have sufficient information on pricing of SEPs that you license or may license in future?

Of the 12 respondents involved in SEP licensing, to which this question is applicable:

10 respondents (83%) said that they do not have sufficient information on pricing of SEPs that they licence or may licence in the future. These 10 respondents included all 5 large companies, all 3 medium-sized companies, and 1 micro company involved in SEP licensing. 2 respondents (17%), both micro companies, answered ‘don’t know’. No respondents answered that they have sufficient information on pricing of SEPs that they license or may license in future.

Question 19 - (Optional) Please provide additional information on your answer.

8 of the 12 respondents to the previous question chose to provide additional information. All had answered ‘no’ to the previous question, and gave multiple reasons for why they have insufficient information on SEP pricing:

• there is lack of transparency on rates agreed by a SEP holder with their other licensees (3 respondents, 25%)
• licensors do not disclose calculations of valuation (2 respondents,17%), or their investment in creating the technology (1 respondent, 9%)
• nearly impossible to get, for a given standard, an accurate view of all potential licensors (1 respondent, 9%)
• patent holders wait for standard adoption/deployment before asking for royalties (1 respondent, 9%)
• no central place to determine licence rates (1 respondent, 9%)
• use of lump sum demands by a SEP holder, that varied so drastically that they could not be aligned with economic value. Some SEP holders use threat of injunction to extract higher rates. (1 respondent, 9%)
• SEP holders offer supra-FRAND royalty rates, extracting value from the licensee’s innovation unrelated to the SEP (1 respondent, 9%)

Question 20 - Do you believe you were offered a licence on FRAND (Fair, Reasonable And Non Discriminatory) terms?

Of the 12 respondents involved in SEP licensing, to which this question is applicable:

10 respondents (83%) answered ‘no’ they do not believe they were offered a licence on FRAND terms. 1 respondent (8%) answered ‘don’t know’, and 1 respondent (8%) answered ‘yes’, they believe they were offered a licence on FRAND terms.

Question 21 - (Optional) Please provide additional information on your answer.

8 of the 12 respondents to the previous question chose to provide additional information.

7 respondents had answered ‘no’ to the previous question, and detailed:

• refusal of SEP holders to disclose comparable rates makes it hard to determine whether licensing terms are FRAND (2 respondents,17%)
• SEP holders use discriminatory pricing; volume discounts are reserved for larger licensees and can’t be attained by SMEs (1 respondent, 9%)
• SEP holders extract value from licensee innovations unrelated to the SEP (1 respondent, 9%)
• one SEP holder’s published royalty rates exceed the average royalty rate collected by larger licensors, despite their portfolio of alleged essential patents being smaller and less valuable (1 respondent, 9%)
• resorting to litigation on multiple occasions when a non-FRAND licence has been offered (1 respondent, 9%)
• being too early in discussions to have come to FRAND agreement (1 respondent, 9%)

1 respondent answered ‘don’t know’ to the previous question and explained that SMEs have insufficient resource to research and understand licensing requirements or consider whether terms are FRAND.

Question 22 - How was your experience of the SEP licensing process?

Of the 12 respondents involved in SEP licensing, to which this question is applicable: 9 respondents chose to provide their experiences of the SEP licensing process, which included:

• abandoning innovation products due to lacking resource to understand licensing requirements (1 respondent, 9%) or being refused a licence at the modular level (1 respondent, 9%)
• facing unpredictability in the SEP licensing process (2 respondents, 17%)
• lacking resources to understand the strength of a SEP portfolio (2 respondents, 17%)
• having products unlawfully seized at customs (1 respondent, 9%)
• facing litigation by a SEP holder before receiving a licensing offer or any information on their patents (1 respondent, 9%)
• facing discriminatory royalty rates, as an SME innovator (1 respondent, 9%)

3. Licensing disagreement and dispute resolution

These questions were applicable to 12 of the 13 respondents that answered they are involved in SEP licensing. The answers of 1 respondent, a consultant, were removed, given the respondent does not participate in SEP licensing.

Question 23 - Have you disagreed with the terms of a licence or the rate that has been offered to you for a licence?

Of the 12 respondents involved in SEP licensing, 9 respondents (75%) have disagreed with the terms of a licence or the rate that has been offered to them for a licence. 1 respondent (8%) did not disagree, and 2 respondents (17%) preferred not to say.

Of the 9 respondents that have experienced a licensing disagreement, 7 operate in the ICT or mobile phone industry. 4 are large companies, 3 are medium-sized companies and 2 are micro companies.

Question 24 - Has the licensing disagreement been resolved?

Of the 9 respondents that have experienced a licensing disagreement, only a third (33%) have had their licensing disagreement resolved.

Of the 6 respondents with unresolved licensing disagreements, 5 operate in the ICT or mobile phone industry. 3 are large companies, 2 are medium-sized companies and 1 is a micro company.

Question 25 - Has the licensing disagreement been resolved? - If No, please provide detail (Optional)

5 respondents (55%), all of whom answered ‘no’ to the previous question, chose to provide additional detail on why their licence disagreement has not been resolved:

• 2 respondents (22%) believe they are overpaying and being discriminated against as smaller licensees
• 1 respondent (11%) requested clarity from a licensor that their customers already have a licence, which has not yet been provided
• 1 respondent (11%) has appealed injunctions on the grounds of a SEP holder refusing to negotiate in good faith
• 1 respondent (11%) has customers that are refused licences at module level, sometimes leading to litigation

Question 26 - In the process of resolving a licensing disagreement, have you or your business experienced any of the following?

Respondents could provide multiple answers to this question. Of the 9 respondents that have experienced a licensing disagreement:

• 6 respondents (67%) have resolved their dispute directly with the licensor. 2 respondents selected this as their only answer
• 6 respondents (67%) have had their dispute lead to court litigation. 2 respondents selected this as their only answer. 4 respondents (44%) that have experienced court litigation resolved their dispute directly with the licensor.
• none of the respondents have participated in alternative dispute resolution (ADR) procedure(s)
• 1 respondent (11%) has not experienced any of the above’

Of the 6 respondents that have experienced court litigation, 5 operate in the ICT or mobile phone industry, half (3 respondents) are large companies, 2 are medium-sized companies, and 1 is a micro company.

Question 27 - Is there sufficient information on whether the patent you are licensing is essential to the technical standard you rely on?

Of the 9 respondents that have experienced a licensing disagreement, none answered that there is sufficient information on whether the patent they are licensing is essential to the technical standard they rely on. 7 respondents (78%) believe there is insufficient information, and 2 respondents (22%), both micro-sized companies, do not know.

Question 28 - Is there sufficient information on whether the patent you are licensing is essential to the technical standard you rely on? Please provide more detail below (Optional).

2 large European companies chose to provide additional information on why they answered ‘No’ to the previous question. 1 answered that over-declaration is a problem, and SEP holders rarely provide claim charts with sufficient sampling to give a view of essentiality of the overall portfolio of SEPs offered. 1 answered that ‘excessive standardisation’ is an issue and prevents use of alternative technologies in the telecoms space that may be preferable.

No comments were made on court-imposed injunctions involving UK business operations.

Question 29 - Is the threat of a court-imposed injunction a concern for you or your business when agreeing a SEP licence?

All 9 respondents that have experienced a licensing disagreement answered that the threat of a court-imposed injunction is a concern for them or their business when agreeing a SEP licence.

Question 30 - Have you ever had to remove a product from the UK market as a result of legal action against you for infringement of a patent that is essential to a technical standard?

Of the 9 respondents that have experienced a licensing disagreement, none reported ever having to remove their product from the UK market as a result of legal action against them for infringement of a patent that is essential to a technical standard. 8 respondents (89%) confirmed they have never experienced this, and 1 respondent (11%) does not know if they have experienced this.

1 respondent, had to remove products from European markets where they have received court-ordered injunctions. They state that they cannot exclude the possibility that an injunction will be sought by the SEP holders they are in litigation with that will remove their products from the UK market in future.

4. Interventions to the SEPs licensing framework

All 40 questionnaire respondents were invited to answer the questions in this section.

All questions in this section were open, meaning respondents could provide multiple answers in free text. Similar answers have been grouped where possible, to show how many respondents raised each view or suggestion.

Question 31 - Are you aware of any limitations to your company’s success in the current SEPs licensing framework?

Of the 33 respondents that answered this question: 22 detailed limitations to their company’s success in the current SEPs licensing framework; 11 were not aware of any limitations.

Respondents identified the following limitations, which have been grouped to show the number of respondents that identified similar limitations (in brackets):

• the cost and complexity of obtaining a FRAND license leaves SMEs uncertain of the SEPs framework (4 respondents) and may impact on the ability to obtain investment in smaller businesses (1 respondent)
• smaller companies face financial risk entering SEPs licensing, as they don’t have the fees for a litigation process or to hire lawyers (7 respondents)
• uncertainty around financial liabilities associated with SEPs may influence the areas SMEs invest in (3 respondents)
• smaller businesses face difficulty pricing products due to uncertainty around whether SEP holders will make claims (3 respondents)
• SMEs lack understanding of how SEPs are priced and have limited resources to learn (4 respondents)
• excessive SEPs pricing means smaller businesses must raise their product prices excessively, leading to loss of domestic and international sales and competitiveness (3 respondents)
• discriminatory pricing means SMEs pay more for SEP licences than larger competitors (3 respondents)
• SMEs lack information to determine which SEPs are truly essential to the standard they use (3 respondents) and lack resources to challenge essentiality (1 respondent)
• small companies face challenges getting their IP accepted into standards (1 respondent)
• there is not a resource that allows SEP licence rates to be checked and compared (2 respondents)
• UK legislation allows SEP holders to seek injunctions against licensees, making European companies trading in the UK an easy target compared to Asian competitors (3 respondents)
• SMEs trading in the UK are not exempt from SEP fees. This should be considered in UK regulation, following the European Commission’s proposal for SEP Regulation (3 respondents)

Question 32 - What, if anything, could improve transparency in SEPs licensing, or otherwise make SEPs licensing more efficient? (Optional) please provide detail in the box below.

Of the 34 respondents that answered this question: 28 gave suggestions to improve transparency in SEPs licensing; 3 did not know how transparency could be improved; 2 gave answers unrelated to the question; and 1 stated they have never used SEP licensing.

Respondents made the following suggestions to improve transparency in SEPs licensing. These have been grouped to show the number of respondents that made similar suggestions (in brackets):

Suggestions to improve transparency in SEPs pricing:

• information on pricing of SEPs, including determination of FRAND terms, should be made publicly available (8 respondents)
• access to comparable licences (data on who has taken a licence and what they paid), that may otherwise be hidden behind NDAs (5 respondents). The IPO could establish a register for SEP licence agreements to support transparency around comparable licences (1 respondent)
• provision of guidelines to clarify the definition of FRAND and FRAND obligations (3 respondents)
• setting an aggregate royalty rate for a given technology (4 respondents), to be reviewed every 3-5 years (1 respondent)
• licence pricing should take place at the level of the smallest element implementing the standard (SSPPU) (1 respondent), and should be decided ex-ante, before the standard is published (1 respondent)
• FRAND licences should be determined by a panel of experts rather than court determinations. This could be achieved by simple applications under CPR Rule 23 (1 respondent)
• amendment to the Patents Act, clarifying that the FRAND obligation transfers with ownership (1 respondent)
• provisions for prototyping and low-volume use in final products. SEP licences should be charged on a per unit basis, so if you pay for a chip, you’ve paid for the right to use it (1 respondent)

Suggestions to improve transparency of essentiality:

• accurate information on the essentiality of patents declared to the standard (6 respondents); SDOs to require justification from SEP owners on relevance to standard and validity (1 respondent)
• essentiality checks do not need to cover all SEPs in a portfolio, but a sufficiently large number (1 respondent)
• for each standard, publication of patents for which access is required (2 respondents). This will help to ensure that compliance is achieved by implementers (1 respondent)

Suggestions for use of frameworks to improve transparency:

• injunctions should be denied as disproportionate (4 respondents), or available only in limited circumstances (1 respondent). Damages are always an adequate remedy for SEPs (3 respondents)
• use of patent pools (4 respondents), with greater transparency on the pool’s shares and divisions (3 respondents)
• government provision of resources to support SMEs if a claim is brought against them, such as IP insurance or an advice system (1 respondent)
• some respondents saw a role for the Competition and Markets Authority (CMA):
  • The Competition Market Authority to enforce (FRAND) obligations and to mandate “licence to all” (4 respondents)
  • to look at ‘refusal to licence’ at certain levels leading to market exclusion, including the use of ‘not to sue’ clauses (3 respondents)
  • looking at arrangements between SEP holders not to grant licenses in certain parts of the value chain (3 respondents)
  • Competition Law should determine FRAND interpretation (1 respondent)

Question 33 - What, if anything, could increase SMEs’ participation in standard development? (optional) please provide further detail.

Of the 29 respondents that answered this question: 27 gave suggestions to increase SME participation in standard development; 1 did not know how participation could be improved; and 1 gave an answer unrelated to the question.

Respondents made the following suggestions to increase SME participation in standard development. These have been grouped to show the number of respondents that made similar suggestions (in brackets):

• greater collaboration between SMEs and SDOs (6 respondents), which could include SDOs consulting with SME trade associations (1 respondent)
• providing education and training programs to help SMEs understand the standards development process (6 respondents), including how to engage and contribute effectively (1 respondent)
• generally improving transparency of the standard development process (2 respondents)
• government provision of financial support to reduce cost barriers to standard development participation (5 respondents)
• reducing the costs of SDO membership for SMEs, or providing SMEs with free membership that includes voting rights (3 respondents)
• reducing the complexity of briefing documentation (2 respondents), and otherwise simplifying procedures and requirements for participation (1 respondent)
• the current standard development process favours larger companies who have lobbying resources and many representatives; SME participation would increase if the process did not require competition with large players (1 respondent)
• providing recognition and awards for SMEs participation in standard development process which can bolster SMEs motivation and highlight their contributions (1 respondent)
• utilising technology to encourage SME participation especially for those who have barriers such as location or logistical barriers which prevents them from being present in the standard development process (1 respondent)
• a centralised register of initiatives that link to both standards and standard organisations could help promote the creation of a market for the “newly hatched” IP. This would be important for SME’s that lack the ability to market their ideas and initiatives compared to larger international organisations (1 respondent)
• embedding teaching of SEPs, and patent licensing within university course offerings (1 respondent)
• funding should be made available for collaboration between SMEs and UK Universities to ensure IP is accepted into standard development, including the development of 6G standards (1 respondent)
• SME membership of larger associations (1 respondent)
• insight into future costs of standard development so SMEs have the ability to plan (1 respondent)

Any further comments you wish to share with us

10 respondents provided additional comments:

• educational resources from the UK Government would improve SMEs’ understanding of the SEPs framework (3 respondents)
• the current SEPs licensing framework has a negative impact on the ability of SMEs to innovate, attract investment and grow in the UK (1 respondent)
• lack of transparency around licence pricing hinders and possibly deters product development (1 respondent)
• not sure how relevant technical standards are in my attempts to exploit my recent patent (1 respondent)
• SMEs are unaware of the legal risks of using unlicensed modules in their devices, and lack resources to make informed legal decisions (1 respondent)
• the practice of setting an annual cap on royalties’ payable tends to discriminate against SMEs. The practice of not requiring any royalty payment below a certain minimum annual volume is helpful to SMEs (1 respondent)
• SEPs should be valued to balance a reasonable return on investment for both SEP holders and product developers, using objective data and criteria. This requires government guidance and intervention (1 respondent)
• transparency in royalty pricing and distribution of SEP ownership within a standard could increase SMEs’ ability to negotiate FRAND terms (1 respondent)
• SMEs would be encouraged to participate in standard development if SDOs maintain a truly open and consensus-based process, including the SME industry perspective (1 respondent)
• subsidies would improve SME participation in the standardisation process (1 respondent)