Solutions to EU standard-essential patent reform impasse emerge

Mark Marfé of Pinsent Masons, who specialises in resolving disputes over patents, was commenting after the European Patent Office (EPO) published a study on standards and the European patent system (82-page / 1.48MB PDF) featuring insights from its own dataset.

Publication of the EPO’s report comes as political pressure grows on the European Commission to reverse a decision it took in February to withdraw its proposed new EU SEP regulation.

SEPs are patents that protect technology that has been declared essential for the implementation of a technical standard adopted by a standard developing organisation (SDO). Such standards relate for instance to connectivity, such as 5G, Wi-Fi, Bluetooth, and NFC, or to audio/video compression and decompression standards.

The European Telecommunications Standards Institute (ETSI) is one SDO. ETSI's intellectual property rights policy requires the SEP owner to commit to offer licences of its SEPs to implementers on terms that are fair, reasonable and non-discriminatory (FRAND). The IPR policy sets out some features that a FRAND licence must possess. However, it does not fill in all the blanks. ETSI’s policy, therefore, envisages that the SEP owner and implementer will negotiate a licence on FRAND terms.

Disputes over what constitutes ‘FRAND’ are common, with some rights holders and implementers going to court to resolve their disagreements. In April 2023, the Commission set out plans for a new EU SEP regulation, with a view to improving transparency and predictability in SEP licensing, improving fairness and efficiency in the licensing process, and limiting costs that can arise from disputes.

The Commission’s proposals envisaged new mandatory requirements for the registration and ‘essentiality’ checking of SEPs; and aggregate royalty-setting mechanisms for technology standards. All of these functions were to be managed by a newly formed competence centre at the European Intellectual Property Office (EUIPO). Notably, the regulation proposed that a FRAND determination process must have been initiated at the EUIPO before a SEP holder could start infringement proceedings before EU courts or an implementer could start FRAND rate determination proceedings before an EU court.  

Major SEP holders, along with several judges in the Unified Patent Court (UPC), opposed the European Commission's proposal on various grounds. A point of criticism was the suggestion that many functions would fall under the jurisdiction of the EUIPO, an entity primarily focused on copyright and trade mark matters. 

The Commission’s proposals, as with any new EU legislation, were subject to scrutiny by EU law makers in the European Parliament and Council of Ministers – the latter brings together representatives of the governments of EU member states.

As reported by IAM, the Council submitted 250 questions for the Commission about the regulation that, in part, revealed opposition from Finland, the Netherlands, and Sweden, among other countries. These are countries where some of the major EU SEP holders are based.

In December last year, Spanish MEP Adrián Vázquez Lázara revealed during a roundtable discussion that the proposal had stalled in the Council. Lázara, a critic of the Commission’s proposals, said “at the Council level no one is willing to continue” and that it was “blocked in the Council”, remarking that if efforts to pass it resumed it could “stay there blocked for 10 years”. 

In its work programme for 2025 published in February, the Commission announced the withdrawal of its proposals, citing “no foreseeable agreement” on the reforms. However, that decision has sparked a backlash from some EU law makers, with members of the European Parliament’s Legal Affairs Committee (JURI) probing Commission executive vice-president Stéphane Séjourné on the matter last month. In response, Séjourné left the door open to fresh proposals being tabled.

The political pressure grew further this month as representatives from the Czech, French, German, Hungarian, Italian, Latvian, Portuguese, Slovak and Spanish governments urged the continuation of talks on the SEP regulation proposal at a meeting of the Council on 22 May.

Seven of the nine countries prepared a note in advance of the meeting in which they expressed disagreement with the Commission’s assessment that a deal on its original proposals was not foreseeable.

The note said: “It is for the benefit of EU industry and users of the European patent system to facilitate negotiations on SEP licensing agreements. Clearly, a transparent and fair legal framework for accessing SEP is essential for the competitiveness of the European manufacturers. Furthermore, in light of the rising share of non-European patent holders and their vertical integration, we must ensure that European value chains are resilient in the changing geopolitical environment, and that European actors are not driven out of them due to the absence of level playing field vis-à-vis their global competitors. Continuing the discussions on the SEP regulation proposal is the most effective path to address the numerous issues with SEP licensing.”

“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 minimising further bureaucracy and additional costs. For these reasons, we call upon the Commission to ‘withdraw the withdrawal notice’ and instead present a further developed proposal that constructively addresses the concerns expressed by the member states so far. We call upon other delegations to support this view,” the countries added.

With much of the criticism of the Commission’s original proposals centred on the prospective new role envisaged for the EUIPO in dealing with patent matters, the EPO has moved to position itself as able to help the Commission achieve the aims of reform.

President of the EPO, António Campinos, previously called on law makers to “push the pause button” on the reforms, citing scope to “implement improvements that make effective use of already existing capabilities, rather than create new costly and complex structures for the taxpayer that are actually redundant”.

Now, in his foreword to the EPO’s new report, Campinos has said the body “stands ready” to support a balanced and transparent system” on standards and patents.

Elaborating on that statement in its report, the EPO has highlighted “the extensive scope” of its “standard-related libraries” and how those libraries are integrated into searches for ‘prior art’ – the existence of which would preclude an invention from being patented. It said this helps to “naturally create new links between patents and standards, offering valuable opportunities for empirical analysis”.

The EPO also said the UPC “creates a new framework for the resolution of SEP-related disputes across Europe that merits attention”.

Mark Marfé of Pinsent Masons said: “The report can be read as highlighting how the established institutions of the EPO and UPC that are experienced on patent matters including SEPs can seek to address concerns raised over transparency with respect to patent ownership, essentiality, and licensing rates. The EPO and UPC could also address concerns over existing dispute resolution mechanisms.”

Marfé said the report flagged further points in support of this, such as use of standards documents by the EPO during patent examination, and suggestions around developing data-driven tools to assess essentiality. The report also noted the UPC’s potential to ensure harmonisation of SEP litigation across Europe – it cited data, accurate as up to March this year, showing that 12% of the disputes at the UPC already involve declared SEPs as well as that new SEP disputes now typically involve the UPC and the UK courts rather than national courts of UPC states.

Also noted in the report is the launch of the UPC’s Patent Mediation and Arbitration Centre (PMAC), in late 2025. The PMAC has announced its intention to provide a dedicated forum for resolving SEP disputes. The PMAC has opened a consultation asking stakeholder for feedback on its rules.

The EPO’s report concluded: “Taken together, the findings highlight the strong potential of the EPO, the UPC and its forthcoming PMAC to enhance transparency and predictability in Europe’s patent and standardisation landscape. The EPO can contribute by leveraging its internal infrastructure and procedures within the [patent grant procedure] to shed light on the link between patents and standards. Meanwhile, the UPC and the PMAC represent a move toward a more harmonised and effective framework for resolving SEP-related disputes.”

Marfé said he expects the Commission to bring forward a revised proposal for SEP reform soon – and to make provision for the EPO and the PMAC to perform the essentiality check and dispute resolution functions that were to have been performed by the EUIPO under the original SEP regulation proposal.