EU drops standard-essential patent reform plans

The Commission’s withdrawal of the proposed new EU regulation on SEPs was confirmed in its work programme for 2025 (29-page / 434KB PDF), published earlier this week. In that document, the Commission said the fact there is “no foreseeable agreement” on the reforms was the reason it is withdrawing the regulation, adding that it will “assess whether another proposal should be tabled or another type of approach should be chosen”.

Patent experts at Pinsent Masons said the development has surprised industry but would be welcomed by many.

SEPs are patents that protect technology believed to be essential to implementing a technical standard. In other words, you cannot operate a standard-compliant device without necessarily using the patented invention. Standards are important for interoperability in industries including telecommunications, the Internet of Things, as well as in other sectors that use smart technologies, such as energy and infrastructure.

Standards are developed by businesses working together under the auspices of standard-setting organisations (SSOs), such as the European Telecommunications Standards Institute (ETSI), which oversees the development of communications standards vital to many businesses. SSOs like ETSI typically require SEP rights holders to make SEPs available for others to use by way of a licence on fair, reasonable and non-discriminatory (FRAND) terms.

Disputes on what constitutes ‘FRAND’ often arise in the context of SEP licensing negotiations. Litigation can then follow if the parties are unable to agree. Disputes have arisen in many jurisdictions including the UK, Germany and France, as well as in the US and China.

With the draft new SEPs regulation it published in spring 2023, the Commission sought to improve transparency and predictability in SEP licensing, improve fairness and efficiency in the licensing process, and limit costs that can arise from disputes.

The proposals set out new mandatory requirements for the registration and essentiality checking of SEPs. They also envisaged aggregate royalty-setting mechanisms for technology standards, and a FRAND royalty rate determination procedure to be brought by the SEP holder at the EU Intellectual Property Office (EUIPO) before a patent owner sues in EU national courts or the Unified Patent Court.  The establishment of a new Competence Centre at the EUIPO to perform these functions was also proposed.

The regulation, if implemented as drafted, would have applied retroactively to previously published standards. However, any standards where SEP licensing and FRAND questions do not “give rise to significant difficulties or inefficiencies affecting the functioning of the internal market” would have been out-of-scope.

Mark Marfé of Pinsent Masons said: “On balance, the withdrawal of the SEP Regulation will be welcomed as bringing greater certainty to the sector. There was concern how the regulation’s new requirements would be carried out in practice. For example, whether sufficient experts would be found to effectively operate the new Competence Centre. It was also unclear how the new EU facing regime would operate alongside the UPC, which has now indicated its willingness to set a global FRAND rate in appropriate circumstances.”

Carissa Kendall-Windless, also of Pinsent Masons, said: "Practitioners in this area raised concerns that the EUIPO lacks the necessary expertise in patent management, and the proposed changes could have slowed technological progress. Overall, the withdrawal is seen as a victory for inventors and small to large businesses, ensuring that the existing framework, which has been effective in promoting innovation, remains in place."

Sarah Taylor of Pinsent Masons added: “The proposals had polarised the debate around the regulation of SEPs. They were largely seen as more favourable to implementers, many of whom welcomed the proposed increase in transparency. On the other hand, the proposed regulation was extremely unpopular with SEP holders who predicted it would increase costs and place huge administrative burdens upon them, and would lead to delays in licensing negotiations. That said, both sides questioned the proposed role of the EUIPO, which is responsible for managing EU trade marks and EU registered designs, and which has no responsibility for European or unitary patents.”

“The draft regulation had been adopted by the European Parliament in February 2024, which led to a significant amount of lobbying on both sides. Recent Commission announcements implied that it intended to forge ahead with the proposals, but it has now done a complete U-turn. While the withdrawal of the EU SEP Regulation was unexpected, it does perhaps reflect a change in the Commission’s approach, as demonstrated by its recent emphasis on improving the EU's competitiveness and boosting economic growth by closing the innovation gap, supporting the development of new technologies and making it easier for companies to operate in the EU by reducing regulatory blocks to innovation,” she said.