UK intervention on SEPs including rate setting swims against the tide

The UK Intellectual Property Office’s 2025 consultation on standard essential patents proposes measures to improve licensing transparency and efficiency. These include searchable SEP databases, essentiality checking services, and mechanisms for aggregate rate setting to facilitate top-down approach FRAND licensing rate apportionments. While these initiatives aim to support UK innovation – particularly for SMEs – they risk undermining a licensing system that has successfully evolved through decades of commercial practice and judicial developments.

The UK’s Prime Minister and Chancellor have recently pledged promote economic growth by slashing red tape and taking out regulators. The IPO’s proposals fly in the face of that.

In my response submission to the IPO’s consultation, I focus on interventions that could do more harm than good: essentiality checking and essentiality rate estimating, aggregate royalty setting and top-down rate apportionment. My concerns are similar to those previously raised in response to the EU SEP consultation in 2023 and 2024.

Checking essentiality – along with infringement and validity – are important and are economically achieved on handfuls of patents to reliably establish that licensing is required. Comparable licences are then the generally preferred method of determining FRAND rates. Where these do not yet exist or are unavailable, parties are best placed to determine rates through discussion and negotiation.

Estimating essentiality rates of entire patent portfolios and for all patents reading on a standard is a far more demanding and costly endeavour, even when only random samples of patents are checked. Results are inaccurate and unreliable.

Setting aggregate royalties and then apportioning them based on counts of declared essential or checked essential patents is also very problematic.

My consultation submission can be downloaded here.