Prof. Dr. Joachim Henkel is a professor of Technology and Innovation Management at TUM School of Management. One of his research areas is patent management and standards. He regularly serves as an expert witness in patent litigation cases in Germany and beyond, and has advised the European Commission on matters related to patent regulation. He is a dedicated European and committed to fostering European integration – whether it is by working alongside EU officials in Brussels or through initiating and organizing the European Union Week at TUM School of Management.
Patent regulation is often perceived as being very complex. What’s the appeal?
I’ve been working on patent management for more than 20 years, and to me it’s a hugely fascinating research area. Why? It may not seem so, but it is crucial for our daily lives. Covid-19 vaccines, faster smartphone downloads, your Wifi-controlled vacuum cleaner – all of these innovations are heavily patented. But patents don’t always promote progress, they may also hinder it. The patent system must be built and regulated in such a way that the benefits to society are maximized.
How does this relate to your research at TUM School of Management?
It all starts with innovation. Innovation is more important than ever, and in many fields it strongly relies on patents. I’m particularly interested in “standard essential patents” (SEPs) for technologies such as LTE, 5G, or Wi-Fi, and the way they are licensed. These standards are not invented by a single person, quite the contrary: they are developed collaboratively by dozens, even hundreds of companies. These firms are, of course, incentivized by profits. How many patents have been declared “essential” for 5G? Take a guess. It’s more than 50,000.
Patents and royalties: a multi-billion-dollar game
Why does this matter?
What matters are the royalties: we’re looking at around $20 billion per year, plus benefits from cross-licensing. So, how are these revenues distributed? And can a patent owner just go ahead and ask an implementor for royalties? The problem is that even a single patent, if it is really indispensable for implementing the standard, would allow its owner to block the entire standard, and thus to demand excessive royalties. This is where the regulators come into play …
… regulators such as the European Commission, to which you have served as an advisor. How did this come about?
The European Commission is faced with the tremendous task of ensuring three things: innovation on the level of both technical standards and downstream products; a fair distribution of the profits that are jointly created; and affordable products and services for consumers. Due to the peculiarities of standards, the patent system by itself is insufficient; additional regulation is required. One aspect is patent essentiality. Estimates are that less than a quarter of the 50,000 patents that have been declared to be essential for 5G are truly essential. But which? A portfolio of 1,000 such patents may contain 800 truly essential ones, or only 200. This matters. So the Commission launched an open call for project proposals five years ago: Can a system be devised that checks patent essentiality sufficiently accurately and at reasonable cost? Our consortium, headed by my colleague Rudi Bekkers from the Eindhoven University of Technology, tackled this question.
How did you approach this?
What we did was a combination of research and policy consulting. The consortium looked at various aspects of SEP licensing, among them patent pools and court cases. Lisa Teubner, a doctoral student in my group, and I were involved in a pilot study of a system of essentiality assessments, involving a sample of test patents assessed by patent examiners. We published our report in 2020, and the European Commission followed our findings in a regulation proposal published a few months ago. What helped was that I had been an expert witness in many court cases dealing with the allocation of royalties – for instance, at the High Court of England and Wales in London, in SEP-related litigation between Apple vs. Optis (a patent enforcement firm).
“A European at heart”
You have worked with the European Commission. Tell us more about your experience!
The European Commission – and the EU in general – are sometimes considered slow. But then, European legislation is by its nature consensus-driven, which necessarily requires more time. Also, delays are often caused by the member states, but attributed to the Commission. In my personal work, I was impressed by the Commission’s focus, commitment, and systematic approaches to complex issues.
Does your work with the European Commission influence your research and teaching at TUM School of Management?
Certainly. Contributing to the Commission’s work provides access to background information and different perspectives, which definitely influences and inspires my own research and that of my students. Also my teaching benefits from insights that can’t be found in textbooks or papers.
You’re a passionate European and the founder of TUM School of Management’s European Union Week. What’s driving you?
I’m amazed that a large group of countries, which had been tangled up in wars for centuries, managed to find common ground and bring a new organization to life. This is an incredible accomplishment – and one that needs to be safeguarded, especially in times of rising populism. The challenge is that we tend to take the numerous benefits of the EU for granted, while the public debate focuses on the problems. The European Union Week shall inform our students and the wider public about the EU more broadly. Importantly, it is itself a European collaboration, organized jointly with our partners HEC Paris, Politecnico di Milano, Kozminski University Warsaw, and from next year on also Rotterdam School of Management and Vlerick Business School Brussels.
TUM School of Management has a high share of (future) founders. What’s your advice in terms of patents?
It really depends on your field. In biotechnology, pharmaceuticals, and a few other fields they’re crucial, and also beyond they can help to get funding or to fight competitors. In any case they should be well-written and watertight to withstand attacks. Overall though, I would not overestimate patents for start-ups. In the end, it’s your product that matters.
Professor Dr. Joachim Henkel recently published an article on patent, standards, and the internet of things in one of the largest German daily newspapers, "Frankfurter Allgemeine Zeitung", under the title "Im Dschungel des Patentrechts" on October 2, 2023, p.18.