The UKIPO (the patent office of the United Kingdom) has published the results of a survey among small and medium-sized enterprises (SMEs) concerning standard-essential patents (SEPs), warranting this follow-up to my very recent post on plausibility issues with the anecdotal SME evidence in the impact assessment accompanying the proposed EU SEP Regulation as well as to my late-March post on the UKIPO's more skeptical stance on submissions by lobbying fronts claiming to represent SMEs.
I just wish to add two points to the previous commentary:
The UKIPO's approach to SEP policy continues to be more deliberate than what we've seen lately from the European Commission's Directorate-General for the Internal Market (DG GROW).
This sentence speaks volumes:
"Any options for intervention will be subject to public consultation."
That is precisely what DG GROW did not do. They engaged in "consultation" that in their understanding included online polls among the participants in a webinar series (to which I also contributed as a speaker), asking general questions about companies' grievances as opposed to collecting feedback to specific types of intervention, such as a mandatory SEP register or EUIPO-led FRAND determinations (for entire standards as well as party-to-party relationships).
Prior to publishing the results of that SME survey on the web, the UKIPO already presented the results to ETSI's IPR Standing Committee. The final bullet point of the final slide said this:
"Any significant policy recommendations/interventions subject to public consultation."
Conducting some general "are you all happy?" kind of consultation without specific proposals on the table cannot be a basis for impactful legislation.
I was on a Concurrences webinar panel yesterday that was keynoted by Pierre Régibeau, the Chief Economist of the European Commission's Directorate-General for Competition (DG COMP). I very much appreciated his reference to this blog. And no one can blame him as DG COMP was not involved with the consultation process. It is, however, always interesting to hear his perspective on SEP policy, and Dr. Régibeau is right that a perfect SEP licensing framework that makes everyone happy won't be possible. That said, I believe the current proposal is not just slightly suboptimal but fundamentally misguided, and that's why I believe DG GROW should go back to the drawing board. Also, DG COMP should take another look, and a very close one I mean, at the notion of letting the contributors to a given standard form a cartel and set an aggregate royalty rate...
Neither in the UK nor in the EU are sample sizes sufficient to draw any meaningful inferences concerning alleged SME issues with SEPs.
The UKIPO at least performed some quantitative validation of the self-declared SMEs who made submissions. There is no indication of DG GROW having made that effort. Of course, even if a respondent to a survey is a legitimate SME, they might just act as a service provider to someone with an interest in influencing policy to the benefit of large corporations. I have repeatedly debunked such fake SEP stories that made no sense regardless of whether the companies telling them were small enough to count as SMEs. Last year I exposed some astroturfers (that company clearly didn't have any SEP issues with the app project they were talking about), and a few days ago I pointed to implausibilities in the impact assessment accompanying the proposed EU SEP Regulation.
Frankly, I have my doubts about whether all of those SMEs who told the UKIPO about their SEP problems truly need to license SEPs. Let's look at these numbers:
"34 of the 40 questionnaire respondents (85%) are SMEs. 27 respondents (68%) represent micro companies (1 – 9 employee(s))."
How likely are "micro companies" (companies with a single-digit headcount) to actually make products that implement industry standards as opposed to just building on top of products (such as by making iPhone or Android apps) that do so?
Anyway, the number of UK-based SMEs who responded to the survey is just 28. The UK has millions of SMEs and easily thousands of SMEs in the technology sector. So the sample size here is small, and if 9 out of 9 SMEs who answer the last question of the survey say they are afraid of injunctions, how is that meaningful?
Statistical samples need a certain size to be reasonably reliable.
The impact assessment accompanying the proposed EU SEP Regulation isn't better in that regard. Given the sie of the EU, it's even worse. In the end it comes down to a few dozen entities giving feedback.
If there was a widespread SEP problem impacting SMEs, why would I as a litigation watcher never come across SEP infringement lawsuits against SMEs? Why weren't the UKIPO and DG GROW inundated by SME replies to their consultations?
I commend the UKIPO for a more thoughtful approach than what we've seen so far from DG GROW, but even a (purely quantitative) validation of respondents and a few bar charts won't convince me that there's anything more than anecdotal evidence. Anecdotal evidence at best, that is.
