UK government moves to rein in SEP litigation costs with new IPEC track

UK to consult on new IPEC track to fairly price standard-essential patents amid legal concerns

The UK government has launched a consultation to reform how courts handle standard-essential patents (SEPs)—a move aimed at curbing soaring litigation costs and power imbalances in the tech industry.

At the heart of the reform is a proposal to introduce a specialist ‘rate determination’ track within the Intellectual Property Enterprise Court (IPEC). The track would streamline disputes over licensing fees for SEPs, which are patents covering innovations deemed vital for implementing technical standards—such as mobile telephony, the internet of things, or electric vehicle networks.

The government’s Intellectual Property Office (IPO) said it wants to address “systemic issues” surrounding SEPs. These include a lack of clarity over what qualifies as standard-essential and an uneven playing field between large patent holders and smaller licensees.

“SEP-related litigation is prohibitively expensive,” the IPO warned. One of the most high-profile recent examples, Interdigital v Lenovo (2023), ran up legal costs of £31.5 million, underscoring the need for reform.

The proposed IPEC rate determination track would allow judges to set licence fees on a case-by-case basis, increasing consistency and transparency. According to the IPO, this would give “businesses of all sizes a more efficient and cost-effective route” to obtain a SEP licence.

The consultation outlines three major proposals:

• A dedicated IPEC track for SEP licence rate determination to reduce cost and enhance predictability.
  
• Mandatory disclosure of SEP-related patent information to the IPO to tackle transparency issues.
  
• A review of pre-action protocols in SEP disputes to assess whether early disclosure practices promote fairer negotiations.
  

SEPs are typically licensed under so-called FRAND terms—fair, reasonable, and non-discriminatory—designed to ensure that vital technologies remain accessible across devices and platforms. However, companies often disagree on what counts as “fair”, triggering long-running legal battles.

The consultation paper notes that disputes over FRAND terms can stall innovation, disproportionately affect small and medium-sized enterprises, and drive up prices for consumers.

An SEP example includes a patent that lets a headset from one manufacturer communicate seamlessly with a mobile phone from another. Without FRAND-compliant licensing, manufacturers risk being priced out—or sued—when building interoperable devices.

The IPO said the proposed new track and information disclosures would help level the playing field in negotiations, especially as SEPs grow more central to emerging technologies.

Responses to the consultation are due later this year, with any legislative proposals likely to follow in 2026.