EU policymakers have a thin line to walk in regulating standard-essential patents, German lawmaker Andrea Wechsler said today. She cautioned against overregulation that stifles investment and innovation, while expressing concerns about failures to address inefficiencies of the existing system. Wechsler, a newly elected member of the European Parliament, today warned that Europe faces significant challenges over its innovation capacity, which is being reflected in national patent data.
EU policymakers have to walk a fine line when regulating standard-essential patents — SEPs — a German lawmaker said today. Andrea Wechsler cautioned against overregulation that stifles investment and innovation, and expressed concerns about failures to address inefficiencies of the existing system.Speaking at a conference*, Wechsler, a newly elected member of the European Parliament, warned that Europe faces significant challenges over its innovation capacity, which is being reflected in national patent data.
The European Parliament’s aim is to foster a balanced, innovation-friendly SEP framework. That translates into enhancing transparency without overregulation, ensuring a fair and predictable licensing environment, and supporting small and medium-sized enterprises.
“Let me stress it again. The SEP regulation is not just about patents and licensing; it's about the future of European innovation,” Wechsler said. “If you regulate and overregulate, you risk discouraging investments in European origin [companies] and losing ground to competitors in the US and Asia. And if you fail to address the inefficiencies, we risk creating barriers for SMEs and emerging industries.”
Wechsler was referring to a regulation on SEPs that's intended to impose greater transparency on patent owners and licensing negotiations. The proposal is currently stuck in the hands of EU ministers who will need to come to an agreement before negotiations can move forward with the parliament and the European Commission.
The regulation is a “very critical matter” for the bloc’s competitiveness globally, she said.
The regulation, as proposed by the commission in April 2023, said that only new SEPs would be covered. Companies such as Qualcomm, Ericsson and Nokia would be required to register their IP in an EU-mandated database and submit it for independent assessment.
Wechsler cited unspecified data and reports that highlight Europe's research and development activities, and expressed worry that investment in future-oriented sectors — such as AI — remains very low.
The comments come amid a slew of reports that warn of the EU’s laggard position in global industrial competitiveness. One of the upcoming report drafts shows that the EU’s global shares in patented technologies — such as AI, robotics and quantum computing — have declined as the gaps with the US and China have widened (see here).
These sectoral imbalances, when viewed in the context of the bloc's SEP regulation, could hurt Europe's long-term competitiveness, Wechsler said.
— Global patent race —
Wechsler, a former IP lawyer, pointed to patent finance and said it has "decreased significantly over the past decade." In Germany, patent finance has dropped to 13 percent, from 19 percent.
"The major cost for this is the shift away from traditional industries toward digital technologies. Whereas European patent applications remain very weak in these up-and-coming technological sectors, so Europe's declining innovation capacity and decreasing patent finance and key technological fields and future technologies pose a serious challenge for European global competitiveness," she said. As such, Europe must increase investment in emerging technologies, reduce regulatory burdens and enhance funding for it.
“Patents, in particular SEPs, play a key role in fostering innovation. They protect R&D investments, encourage technological advancements and provide legal certainty,” said Wechsler, who was elected in June.
“However, if not managed properly, they can also lead to inefficiencies, legal uncertainties and barriers to market entry, especially for startups,” she said, adding that strengthening the European SEP framework and technology standardization efforts would be crucial in maintaining technological leadership in the coming decades.
The comments come as globally, companies are preparing to work out standards for technologies such as 6G. A recent LexisNexis study found that China leads the patent race, with Chinese-based companies owning 40 percent of 5G patents (see here).
Another upcoming EU report, Competitive Compass, describes the pitfalls that companies in Europe face when it comes to risk capital, securing financial backing and accessing fragmented markets (see here).
In the report, the commission promises to make the “standard-setting processes faster and more accessible, in particular for SMEs and startups.” It criticizes current processes for not responding quickly enough to innovation in emerging technologies.
“Engaging systematically in global standard-setting processes is very important to influence outcomes aligned with EU interests,” the report says, with a focus on 5G, 6G, AI and the Internet of Things, among other topics.
A draft of another upcoming competitiveness report and monitoring documents shows a lag from small and medium-size enterprises to seek out intellectual property protections, with only 9 percent of small businesses owning registered IP (see here).
* “Modernising SEP Licensing,” organized by Charles River Associates and Max Planck Institute for Innovation and Competition, Brussels, Jan. 28, 2025.
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