Practical Law

Elisabetta Rotondo, Kemp Little LLP:

On 11 September 2012, the European Parliament adopted the final text of the proposed European Standardisation Regulation (SR). The new SR will set out a new regime for the use in public procurement of certain standards in the field of Information and Communication Technologies (ICT).

In this post, Elisabetta Rotondo of Kemp Little LLP looks at the requirements of the SR and warns of the dangers of the UK pursuing its stated desire to require that open standards are licensed on a royalty-free basis.

For a more detailed overview of the issues and arguments please see Elisabetta’s in-depth article on the SR.

What is the SR for?

The new SR is intended to:

• Shorten the average time of the standard-setting process and facilitate the participation of small and medium-sized enterprises (SMEs) and consumer and social organisations.
• Help develop innovation and competitiveness by facilitating access to markets and enabling interoperability between new and existing products and services, which would benefit both economies and consumers.

A key way of achieving these goals will be to improve use by public authorities of relevant technical specifications when procuring ICT.

Why ICT?

Put simply, ICT is used in every part of our economy and daily life and is always the subject of constant development.The private sector has dealt with this by relying on standards developed by industry groups.The EU public procurement regime does not currently allow public sector purchasers to so the same and so the public sector ICT industry is becoming stifled.

What will it do?

Article 9 of the SR was developed to extend the definition of “technical specifications” as defined in the Public Procurement Directives to cover industry ICT standards in public procurement and enable them to be referenced in calls for ICT public procurement tenders. It is expected that by enabling industry standards to be referenced in this way, SMEs will benefit from reduced information costs, easier access to the specifications for their products, reduced innovation costs but most importantly increased business opportunities. This will also increase choice for public authorities when defining their ICT needs.

Please note that no other sectors have been singled out by the SR in this way. Thus for standards other than ICT standards, the Public Procurement Directives apply unchanged.

Trouble looming for the UK government

The SR will require standard essential Intellectual Property (IP) under the SR to be royalty-bearing, licensable on (fair) reasonable and non-discriminatory ((F)RAND) terms but will allow IPR holders to license on a royalty-free basis should they choose to do so.This is appealing in that it is arguably the approach which is best able to guarantee open access to as many operators as possible on a non-discriminatory basis.

However the approach creates two problems for the UK government, which has stated that it will require open standards to be provided only on royalty-free terms:

• Firstly, the UK government may well be in breach of the SR, the WTO Code of Good Practice, Article 36 of the TFEU and European case law (quite an impressive haul for one policy).
• Secondly, EU law will require that UK public sector purchasers accept standards based on (F)RAND terms (as well as those based on royalty-free terms) anyway.

It is to be hoped that the adoption of the SR will see the UK government look again at its plans.