Following months of criticism, including at a major event hosted by Nokia and Ericsson last month (January 16, 2025 ip fray article), the European Commission yesterday dropped the EU regulation on standard-essential patents (February 11, 2025 ip fray article).
It said in a statement that this was due to there being “[n]o foreseeable agreement” and that the EC will “assess whether another proposal should be tabled or another type of approach should be chosen.” The move has come as a major surprise to members across the market on either side of the table.
Europe’s competitiveness, according to Nokia’s CEO Pekka Lundmark at the event last month, has “one foot in the morgue”, so it has come as a relief to many that the EC’s 2025 work programme, adopted today, outlines ambitions to boost competitiveness, enhance security, and bolster economic resilience in the EU (February 12, 2025 EC press release).
In a statement today, EC Executive Vice President for Tech Sovereignty Henna Virkkunen emphasized that Europe “needs less bureaucracy and more space for innovation and entrepreneurship”. Mrs. Virkkunen was very vocal about the withdrawal of the Regulation even before becoming an EU commissioner.
“We want to cut the red tape and work smarter,” she said today, noting that her main priorities moving forward are:
- AI and speeding up innovation
- Easing the administrative burden of businesses and the new Digital Wallet
- Preparedness for threats and strengthening our common security.
ip fray reached out to and collected responses from an array of sources across the market on the EC’s SEP Regulation withdrawal decision. Here, then, is what they had to say:
‘A promising indication it will no longer over-regulate’
The EC’s decision has been widely welcomed by SEP holders and patent pool administrators, however, including the likes of Nokia which was among the first to put out a statement yesterday. It said the company shares the EC’s goals for “more transparent and efficient licensing of SEPs” but the Regulation was “flawed” and “would not have delivered on these objectives”.
Nokia continued:
“Instead, it would have had an adverse impact on the global innovation ecosystem, in particular the incentives for European companies to invest billions of euros each year in R&D, for European leadership in 5G and 6G, and for Europe’s future competitiveness and resilience. The Commission’s willingness to rethink its approach on this important topic is a positive step. Nokia is ready to engage constructively with the Commission and other stakeholders to deliver a fair and balanced framework for the licensing of SEPs that supports the continued development of global open standards.”
Patent pool operator Sisvel also praised the EC’s decision. “This move aligns with the principles spelled out in the Draghi report and the EU’s new agenda on competitiveness and reinforces European leadership in standards-related innovation,” it said.
Sisvel stated that it is “encouraged” by the EC’s new focus on restoring European competitiveness and that yesterday’s withdrawal decision is a “solid step in this direction”. It added:
“The removal of a major uncertainty will bring immediate relief to European innovators, who have a central role to play in restoring dynamism and boosting growth.”
Meanwhile, Avanci’s VP of marketing and communications Mark Durrant told ip fray that it continues to believe market-driven joint licensing solutions, where participation is always optional and which find a compromise that can be widely accepted by both licensees and licensors, are better suited to foster simplification and efficiency in SEP licensing.
Access Advance also stated to ip fray that it “applauds” the decision as it avoids the “inefficient duplication and additional expense” of a regulatory mechanism to address issues that are “already addressed by procompetitive patent pools like those offered by Access Advance.”
A handful of lawyers also welcomed the EC’s move. Arnold Ruess partner Cordula Schumacher told ip fray:
“This is a promising indication that the new Commission understands that we should de-regulate, not over-regulate. I hope that this common sense will also apply to other areas to foster innovation and market dynamics for a stronger and optimistic Europe, seeing opportunities rather than fearing risks.”
Bird & Bird IP lawyer Wouter Pors also believes the proposal was “seriously flawed” and even “violated the access to justice – especially to the UPC – under the European Convention on Human Rights.”
He added that there was “no evidence” that this proposal would actually solve an existing problem:
“The EPO and the UPC have both taken the position that they can handle issues with regard to SEPs if proper regulation is enacted (if that is necessary at all). The UPC Mannheim Local Division has already decided on 22 November 2024 that it is capable of setting FRAND rates.”
And finally, IP Europe told ip fray:
“IP Europe believes that the Work Programme of the European Commission reflects its commitment to strengthen Europe’s competitiveness by encouraging research and development, innovation, and growth. The innovations and open standards that we champion are part of the solution. We look forward to working with the Commission to ensure a strong innovation ecosystem that acknowledges the crucial roles of patents and open standards—both of which are key drivers of Europe’s growth, security, and technological leadership.”
‘A black day for our European SMEs’
The Fair Standards Alliance has criticized the move by the European Commission. It stated today that the decision “undermines Europe’s ability to lead in innovation and technology” and “disregards” Draghi’s call to place innovation at the center of Europe’s competitiveness strategy and to remove barriers that hinder progress in key industries.
This decision sends a “deeply concerning signal” to businesses that depend on a transparent and predictable SEP licensing framework, it wrote. Adding:
“Instead of fostering investment, growth, and technological leadership, it creates greater legal uncertainty and weakens European industry.”
The FSA believes that the intention to withdraw the regulation is a “missed opportunity to “strengthen Europe’s innovation ecosystem, reduce strategic dependencies on non-EU technologies and ensure fair access to essential infrastructure like 5G.”
In making this decision it “jeopardises Europe’s technological sovereignty” and places European companies “as a disadvantage in the global market”, the FSA wrote.
Marion Walsmann MEP, formerly the EU Parliament’s rapporteur on the Regulation, has also reportedly come out with a statement. She has said that the EC made a “complete mistake” in dropping the proposal. She blamed “pressure from a small number of very influential companies, mostly from third countries” which “has brought the Commission to its knees”.
“This is not just a missed opportunity, but a real slap in the face for European companies,” especially small- and medium enterprises, “who would benefit from the new legislation,” she said. “Today is a black day for our European SMEs and their competitiveness.”
The director of IP policy at a major Chinese implementer told ip fray today:
“The SEP licensing market remains imbalanced, with significant challenges persisting regardless of the proposed EU SEP Regulation. That’s why I don’t have a very strong position about what has happened now. While the regulation was definitely an attempt to address disproportionality, I believe implementers and SEP holders can find other solutions. We have already seen efforts from UK and Chinese courts to resolve these issues.”