The UK manufacturing industry is expanding electric car manufacturing in Sunderland in North East England. With the announcement of a major build-up of electric vehicle (EV) production and a new battery factory, Japanese carmaker Nissan is helping the UK transition towards a greener, more sustainable, and Net Zero economy.

While ACT | The App Association welcomes this development, we want to highlight some potential issues that lay ahead. Serious challenges could emerge if UK patent law is not accurately prepared for this transition. In particular, standard-essential patent (SEPs) licensing abuse, already plaguing the telecom and auto sectors, could cause significant roadblocks. With standardised technologies for connectivity increasingly being included in cars, EV manufacturing could very well be the next battleground of SEP litigation.

SEPs are patents that are included in standardised technologies we use every day, such as Bluetooth, Wi-Fi, and 4G and 5G wireless connectivity. They are considered “essential” to the standards when the owner of the SEP voluntarily contributes it during the standarisation process and declares that one cannot use the standard without also using that patented technology. By contributing their technologies to a standard, SEP holders agree to make their patents available to all implementers who want to license the technology on fair, reasonable, and non-discriminatory (FRAND) terms. Despite this voluntary agreement, that’s not always what happens in reality. Abuses of power, leading to devastating impacts to the industry, have increasingly become a common challenge in SEP licensing disputes.

Car connectivity has already become a must-have feature, and quickly SEP licensing became a hot-button issue as these capabilities have become the norm. SEP licensing abuses are impacting automakers and their suppliers today because of their need to build in wireless connectivity, and these abuses stand poised to undermine growth for EV innovators. Because this development begs the question: what would happen if the industry standards for EV technologies are leveraged by SEP holders to subject manufacturers to abusive SEP licensing practices? Could this hamper our road towards sustainable mobility? And could this put a damper on regional levelling up – for example, in Sunderland where the new plant is set to create 1,650 local jobs?

If patent law in the UK doesn’t change, the answer is likely ‘yes’. The recent UK Supreme Court decision in Unwired Planet v. Huawei (UKSC 2018/0214) has enabled SEP holders to seek injunctions unless the prospective licensee/standards user agrees to a licence for all of the SEP holder’s declared SEPs worldwide (not just those registered in the UK). This interpretation by the UK Supreme Court has upended needed balance in the SEP licensing ecosystem and has enabled SEP holders to demand unreasonably high global licensing rates for their SEPs that a licensee must agree with or face exclusion from the UK market, an outcome that is particularly untenable when a licensee only needs access to the UK market.

Although this issue is quite technical, it’s of interest to many businesses around the UK. While the App Association has long been an advocate for strong intellectual property rights and fully supports the rights of patent holders to profit from their inventions, it’s essential that the returns of innovation are distributed proportionately among all the inventors and innovators involved. The beauty of the FRAND commitment is that it enables SEP holders to do just that while also ensuring that anyone who wants to use standardised technologies to innovate can also do just that. For this reason, we are advocating to end abusive SEP licensing practices, and a course correction for UK law in light of the Unwired Planet decision. The SEP abuses that App Association members face, which range from demands for unjustifiably high licensing rates to flat-out refusals to even provide a license, are roadblocks to both the uptake of technologies and the realisation of their full economic potential. It is not hard to see how SEP licensing abuses do not just affect the car industry but the whole innovation economy as new consumer and enterprise use cases leveraging IoT capabilities.

If you would like to stay up to date with the latest SEP news, or to have a free conversation with an expert about how to make your business resilient to SEP issues, contact Stephen Tulip on stulip@actonline.org or visit www.actonline.org