FORTUNATELY ,

GOVERNMENTS AROUND THE WORLD ARE

CONSIDERING ACTION TO

CHANGE THE SEP LICENSING

LANDSCAPE FOR THE BENEFIT OF SMALLER INNOVATORS . potentially include demands for excessive royalties from SEP holders by way of threat to seek injunctions against the innovator ’ s product . SMEs are often targets for excessive royalties because they are vulnerable and cannot afford to endure costly infringement suits even if they succeed . For example , a recent judgement in the UK on a case between InterDigital and Lenovo found that InterDigital , the SEP holder , was routinely charging higher rates to SMEs to inflate the value of the SEP .

Will the situation for SMEs change ?

Creating standards can be an expensive and time-consuming business , and it ’ s appropriate for companies that create and own SEPs to be able to profit from them . However , the ability to make a profit should not be at the expense of SMEs seeking to enter the IoT market with innovative new products . SMEs should not face unnecessary barriers to market because they lack the expertise and resources to fight complex IP legal battles . The standards ecosystem needs to work for everyone , not just the large international companies that own the rights to SEPs .

Fortunately , governments around the world are considering action to change the SEP licensing landscape for the benefit of smaller innovators . The UK Intellectual Property Office is currently examining the SEP ecosystem , while the European Union has gone further , proposing legislation . The courts will continue to review SEP cases , and based on recent rulings , we may see a shift in the current status quo that provides SMEs a fairer SEP licensing process ( InterDigital v . Lenovo 2023 ).

Next steps

In the short-term , businesses that use off-theshelf IoT solutions should discuss and agree with their supplier where the SEP licensing liability sits in the supply chain and ensure that they understand their liabilities related to the use of standards and SEPs . Companies want to avoid facing a giant , unexpected royalty bill or spiralling legal costs to fight it .

In the long-term , a definitive solution to this problem would be legislators clarifying that a SEP holder cannot discriminate and must offer FRAND licences to all willing licensees , regardless of where they sit in a supply chain . This would enable licences to be taken at the most appropriate point in that supply chain . After all , this is the essence of the ‘ non-discriminatory ’ part of FRAND terms . Companies using technology standards to innovate new IoT products should be able to do so without fear of inflated bills or legal headaches .

It can be hard for SMEs to follow and engage with SEP licensing due to its complex and ever-changing nature . That ’ s why membership bodies like ACT | The App Association are working to ensure that the SME voice is heard in these critical discussions . SMEs exploring IoT are strongly advised to speak with their relevant trade bodies about standards and standard-essential patents while the window of political influence is open . �

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