Should the proposed EU regulation on standard essential patents really be withdrawn? The European Commission plans to do so, but a number of EU member states and a group of lawmakers are urging it to reconsider. In a recent position paper, Germany, Italy, Spain, Latvia and Slovakia called for continued negotiations. With a summer deadline approaching, political divisions persist. The European Parliament prepares to question Commissioner Stéphane Séjourné on the commission’s motives.
Nearly two months after the EU's executive said it would scrap the divisive proposed legislation for standard essential patents, or SEPs, the bill remains contentious and its status not yet fully decided. EU lawmakers and industry stakeholders of different stripes have expressed contrasting support and opposition to the European Commission’s intention to cancel the SEP regulation, which it originally proposed in April 2023.
The commission set a six-month timeline to finalize the withdrawal following its announcement in the annual working program unveiled in February, citing a lack of “foreseeable agreement” between the EU's co-legislators on a consensus version (see here).
That means the European Parliament and the Council of the EU, which represents the EU's member states, have until the end of the summer to express their views.
Most recently, a group of five EU countries — Germany, Italy, Spain, Slovakia, and Latvia — opposed the withdrawal. In a position paper seen by MLex, they argued that a legislative agreement on the regulation remains achievable and that discussions should continue.
The paper expressed commitment to keep working on the regulation, saying: “It is for the benefit of EU industry and users of the European patent system to facilitate negotiations on SEP licensing agreements.”
The SEP regulation was aimed at increasing market transparency and creating fairer dynamics between companies that own patents necessary for connectivity and technology standards such as 4G, 5G, WiFi, and Bluetooth.
European SEP holders, such as Nokia and Ericsson, lobbied against the regulation (see here), which would have required them to register their intellectual property in an EU-designated database and undergo independent evaluation. The regulation also proposed setting up an aggregate royalty rate for licenses and mandated a nine-month reconciliation period to determine fair licensing terms before litigation could be pursued.
The draft law saw backlash from judges and legal experts who argued that it would undermine existing legal structures, such as the role of the Unified Patent Court, or place excessive responsibility on the EU Intellectual Property Office, which primarily oversees trademarks (see here).
Companies using SEPs, such as Apple and Microsoft as well as small and medium-sized enterprises, on the other hand, are keen for guardrails to prevent SEP holders from abusing their market dominance (see here).
“We reaffirm our ambition to continue the legislative process with the co-legislators to develop a balanced regulatory framework for the licensing of SEP that can be widely accepted by both licensees and licensors while minimizing further bureaucracy and additional costs,” the member states’ letter stated.
A “steering note” seen by MLex dated Feb. 10 — a day before the commission's working program announcemet — invited EU representatives to respond to questions of different aspects of the SEP regulation, which were originally slated to be discussed later in the month.
For example, how to define and manage the scope of standards covered; whether SEP registration should be mandatory or voluntary; how to keep the system responsive to market changes; and the level of detail and enforcement needed to ensure transparency and accuracy in the SEP register, according to the note.
Withdrawal of the SEP regulation is part of a broader move by the commission to boost European industry competitiveness by cutting red tape that saw cancellation of 36 other draft proposals.
The commission introduced the SEP regulation in 2023 as part of a larger set of bills related to patents, including a proposal for regulation on compulsory licenses in crises and one on supplementary protection certificates for medicines. These bills are further along in the legislative process than the controversial SEP regulation.
“The focus on other parts of the patent package in 2024 cannot be interpreted as a lack of commitment to working on the SEP regulation, but is merely due to a lack of resources to cover all parts of the patent package at once,” the paper stated.
The position paper also noted that the European Parliament had adopted its position on the SEP proposal in February 2024, with strong majority support.
— Procedural Questions —
In the last Council of the EU working party meeting for intellectual property attachés at the end of March, procedural discussions arose. Representatives questioned the appropriate forum to address the commission’s intended withdrawal.
While Germany, Spain, Italy, Latvia and Slovakia have advocated for continued discussions on the regulation, Sweden, Finland, and the Netherlands have maintained that the General Affairs Council is the competent body to address the matter, MLex understands. The previous monthly meeting on March 18, however, did not include the issue of withdrawn proposals.
Further procedural questions were raised by Austria, Belgium, Germany, Spain, France and Hungary regarding the process.
The Council of the EU's legal service clarified that any formal expression of support or opposition to the commission’s withdrawal would have to come from the council's own volition and require a reinforced qualified majority, in which at least 72 percent of member states must vote in favor for a decision to be adopted.
These conditions must be satisfied when the council acts on its own initiative rather than responding to a commission proposal.
The legal service also noted that any expression would not be binding, although the commission said it would take co-legislators’ views into account. Member states may still submit written comments to the council presidency, MLex understands.
The SEP regulation is no longer a point on the agenda for meetings of the council’s attachés but can still be brought up as other business. The next meeting is on Thursday.
— Parliament talks with Séjourné —
In the parliament, lawmakers will have the opportunity to engage with Stéphane Séjourné, a vice president of the commission who oversees industry and the internal market. He is scheduled to appear in the committee for legal affairs on April 23.
Lawmakers will have the chance to ask for more justification for the decision to withdraw the regulation.
“I expect the commissioner to provide a clear explanation of [the commission's] motives, as many questions remain unanswered," said German center-right lawmaker Marion Walsmann, who led negotiations in the parliament that ended in it agreeing its stance last year.
“The reasons for the intended withdrawal have raised many questions, particularly because the European Parliament already has its position, and the Council Presidency was also ambitious to continue work on the Council position in a determined manner,” Walsmann told MLex.
She is not alone. In February, a group of lawmakers wrote to the commission urging that the SEP regulation be reinstated (see here). But another group wrote supporting the withdrawal, arguing that the file lacked consensus (see here).
The divisions reflect two years of dispute on the SEP regulation and its impact on legal structures and dynamics in the technology licensing market. What remains to be seen is whether co-legislators wanting the file reinstated can present a front united enough to sway the commission by this summer's deadline.
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