The European digital economy relies heavily on technical standards. But as these standards increasingly incorporate patented technologies, managing Standard Essential Patents (SEPs) has become a contentious and complex challenge.
Earlier this year, the European Commission withdrew its proposed SEP Regulation, approved by the European Parliament, after criticism from some stakeholders. In May, this topic has been discussed at the European Council, with many Member States requesting a revision of the proposal. Meanwhile, the European Parliament has called for negotiations on this issue to be restarted. The way forward now calls for renewing efforts towards a balanced, innovation-friendly approach—one that promotes transparency while avoiding unnecessary regulatory burdens.
By establishing clear guidelines, we can foster innovation, reduce unnecessary disputes, and create a more efficient and balanced system that benefits both patent holders and implementers. Many companies -especially SMEs- would benefit from a reform of the current quite opaque system towards a more transparent and predictable framework.
What is a Standard Essential Patent (SEP)?
A Standard Essential Patent (SEP) is a patent that protects a technology that is indispensable for implementing a technical standard. If a company wants to build a product that complies with a technical standard—like 5G, Wi-Fi, or MPEG video—they must use certain technologies. If the technologies included in a standard are patented, those patents are considered essential to the standard. As a result, manufacturers must obtain a license for the SEP to build a compliant, standardised product or service.
The key characteristics of Standard Essential Patents are:
- Mandatory to implement: You cannot comply with the standard without implementing the patented invention.
- The standards development organizations (SDOs) may require their members to use “reasonable endeavours” to publicly disclose their SEPs (e.g. ETSI)
- Licensed under FRAND terms: Most standards development organization require SEP holders to commit to licensing their SEPs under Fair, Reasonable, and Non-Discriminatory (FRAND) conditions, to prevent abuse of monopoly power and allow the practical implementation of the standard.
Why SEP licensing remains a challenge?
Licensing SEPs is riddled with legal and procedural hurdles. The main problem lies in the lack of transparency: there’s no reliable list of the patents that are essential to a given standard.
Some standard development organizations (SDOs) permit “blanket declarations”, which allow companies to claim they hold SEPs without listing the specific patents. For instance, over 70% of ITU-T declarations related to video codecs fall into this category.
ETSI is one of the organisations asking for specific SEP disclosures and which has a more comprehensive database to store this information. But its database is not always up to date. For example, out of 576 patents from the ETSI IPR database that were litigated, only 443 were declared before the litigation began—a gap that creates confusion and legal risk for implementers of the standard. Moreover, even that database lacks some information that would be highly relevant for prospective licensees, for instance, the type of products the patents are essential for (e.g. wireless device, base station, core network), or licensing conditions, such as availability through patent pools. In addition, its database is not prepared to be updated whenever the registered information changes, for instance, whenever the scope of the patent changes during the examination by patent offices and it is no longer relevant for the standard.
Additionally, many declared essential patents are not truly essential. In the process to determine a FRAND royalty, it is paramount to have reliable information on the actual essentiality of the patents at stake, as well as the level of contribution of a patent portfolio to the overall share of patents essential to the standard.
This lack of transparency often leads to disputes over what constitutes ‘fair and reasonable’ terms, especially when patent holders and implementers (e.g. device manufacturers) cannot agree on royalty rates. The absence of a harmonised global framework exacerbates this problem, creating uncertainty for both parties. Consequently, stakeholders often engage in forum shopping, filing lawsuits in jurisdictions they deem more favourable. This practice can lead to parallel litigation, conflicting rulings and anti-suit injunctions, all of which complicate patent enforcement and increase legal costs.
A clear example of this issue is the practice in German courts, where plaintiffs in SEP-related patent disputes can quickly obtain injunctions against the use of a SEP. These courts often do not assess whether the SEP holder’s licensing offer complies with FRAND obligations. The European Commission has criticised this approach and requested the Munich Higher Regional Court to refer the matter to the European Court of Justice (ECJ) in 2024; however, this request was dismissed.
As a result of previously described problems, companies—especially SMEs—struggle to determine licensing needs, negotiate Fair, Reasonable, and Non-Discriminatory (FRAND) terms, and avoid legal pitfalls. Implementers of the standard face increasing complexity without the tools or data to navigate the landscape efficiently. In addition, they often lack internal experts in patent law and cannot afford expensive litigation.
The proposed European SEP Regulation that was withdrawn
The now-withdrawn SEP Regulation proposed by the European Commission sought to bring clarity to the system through several key pillars:
- A central SEP registry managed by EUIPO (European Union Intellectual Property Office)
- Essentiality checks by independent experts
- Arbitration mechanisms to determine appropriate FRAND royalty rates
- Expert support to determine aggregate royalties for all SEPs of a standard
- SME support measures
While the intention was to improve transparency and reduce litigation, the proposal was criticized as overly complex and burdensome. Concerns included administrative costs, the hindering of patent rights enforcement and the complexity to set up the overall framework.
A pragmatic path forward
With the Commission stepping back, stakeholders now have a chance to reshape SEP policy. We propose a simpler and more pragmatic approach focused on a centralized SEP registry and cost-effective essentiality checks, as the most relevant needs. We must avoid a system that adds new regulatory burdens without solving the transparency problem.
A mandatory registry would create a “one-stop shop” for SEP-related information, including the allegedly affected product types, licensing status, and “essentiality” determinations. Integration with existing SDO databases could reduce redundancy, while funding could initially come from EU resources before transitioning to a fee-based model. A mechanism should be envisaged to officially enable this SEP Registry, e.g. through a European Act/Recommendation. EUIPO may be an option to run the SEP Registry, with its main advantages being the fact that it is an EU Agency and its experience running trademark and industrial design databases. However, a debate should be held to determine the most appropriate body to run this registry. As for essentiality checks, we would suggest they are mandatory for a statistically relevant sample of the declared patents to control costs, with reviews handled by qualified, impartial experts from patent offices or accredited organizations.
Towards a smarter and more transparent SEP management
Standard Essential Patents (SEPs) are a cornerstone of Europe’s innovation landscape, but their governance must evolve. The withdrawal of the proposed European Regulation presents an opportunity to create a system that is more transparent, practical, and aligned with the needs of both patent holders and implementers of technical standards.
As the European Patent Office rightly notes in their recent report on Standards and the European patent system: “A transparent and predictable environment is essential to strengthen European competitiveness.” The tools are within reach. Now it’s time to use them wisely.
