Context: Two weeks ago, the European Commission (EC) dropped its proposal for a regulation on standard-essential patents (SEPs) (February 11, 2025 ip fray article). The EC has the right of (legislative) initiative in the EU, though it does not have the power to enact laws, which is the prerogative of the bloc’s co-legislators, the EU Council (where the governments of the EU member states cast their votes) and the European Parliament (EP).
What’s new: Tomorrow (Thursday, February 27, 2025), the EU Council’s Working Group on intellectual property (IP) will hold a half-day meeting. The SEP Regulation was originally on the agenda for a full day, but in light of the most recent development, the part concerning the SEP Regulation will only be a half-day session. The EC will officially explain its decision.
Direct impact & wider ramifications: There never was much enthusiasm for the bill in the Council, and the reason the EC gave for the withdrawal was that no political agreement was in sight. “Political agreement” is Council terminology. Presumably, the Council will ignore some recent attempts to lobby for an about-face and simply acknowledge, if not applaud, the EC’s decision. It could be that those demanding the continuation of the legislative process concerning the SEP Regulation don’t expect a U-turn, but just need to demonstrate that they are not giving up yet and in reality hope that the louder they cry, the more willing the EC may be to explore other options relating to SEPs. Separately, a long-planned event with many prominent speakers from the SEP ecosystem will be held in Warsaw, Poland on next week’s Thursday (March 6) and Friday (March 7) (conference page).
We noticed that some of the same organizations who previously supported the proposal expressed their disappointment. That is the normal course of business.
I personally agree with everything Vice President JD Vance said that week at the Paris AI event and the Munich Security Conference. He told the EU and its member states like Germany how to get innovation, free speech and democracy right. That was helpful in many ways, and did nothing to dissuade the EC from dropping the SEP Regulation. But it’s not plausible that he essentially ordered the EC President to withdraw a proposal that was evidently flawed and controversial, lacked support in the EU Council, and could not be reconciled with the Commission’s new approach to regulation.
Florian Mueller
Founder & Publisher of ip fray
We also learned that Tiemo Woelken (“Wölken” in German), a Member of the European Parliament from Germany’s Social Democratic Party, blamed the decision on the Vice President of the United States, JD Vance, who delivered a fervent speech against overregulation at the Paris AI Action Summit hours before the withdrawal of the SEP Regulation and apparently also had a private meeting with EC President Ursula von der Leyen. What is plausible (though far from proven) is that Mr. Vance’s speech added to the second thoughts regarding the self-harm the EU has inflicted through regulatory excess, a trend that predates the U.S. election as it started with the Draghi and Letta reports. But the fact that several of the largest U.S. corporations supported the bill while only Qualcomm and InterDigital (significant companies, but tiny compared to Big Tech) opposed it makes it hard to imagine that the U.S. government, despite bipartisan concerns in D.C., took an extremely strong position on that topic.
On Monday (February 24, 2025), approximately 60 companies and industry associations as well as astroturfers (who falsely claim to represent small and medium-sized enterprises while actually being funded by Apple and working against the very category of companies (app developers) they call their non-paying “members”) wrote a letter to the President von der Leyen “and various EU commissioners “urging to advance, not withdraw” the SEP Regulation (Euractiv article).
There was a similar letter by automotive industry association ACEA 10 days earlier. It is hard to see how a cumulative 5G SEP royalty of approximately $30 (which car makers of course have every right to reject if they can get better deals bilaterally than from the Avanci pool) impacts competitiveness, much less if everyone has to pay that fee. Should ACEA’s primary concern have been that Chinese automakers have not taken enough SEP licenses yet, the discovery of European patent enforcement actions by Koeran-American SEP holder Sol IP (February 15, 2025 ip fray article) should alleviate that concern. Being unlicensed is not an option for anyone in the long run. There will have to be a solution, but the SEP Regulation would not provide one, and especially not anytime soon even if it had been enacted already.
The question of whether a legislative proposal is desirable (or even just workable) is not answered by comparing the number of proponents to that of the number of opponents. This particularly does not mean much when there is a fundamental asymmetry: not only will there always be more companies implementing major standards than developing them but there is a difference between what is a minor expense for one group of companies and another’s seed corn: a key revenue stream that is needed to fund the next round of standards-related innovations. And in this case, some of that innovative activity is directly linked to European sovereignty in the network infrastructure field.
In any event, there was no shortage of critics of the proposal. During the legislative process, pro-patentee industry body IP Europe maintained a live blog that collected statements from companies, industry organizations, institutions like the Unified Patent Court and the European Patent Office, judges and research institutes. One can find many statements there, but that is not even an exhaustive collection. For instance, there was a Brussels event last month (January 16, 2025 ip fray article) that addressed regulation in general and where the CEOs of Ericsson and Nokia particularly also expressed concerns over the SEP Regulation. And there was a letter by a group of European patent judges led by former UK appellate judge Professor Sir Robin Jacob.
At yesterday’s General Affairs Council meeting (video), almost every EU member state welcomed the Commission’s more cautious approach to regulation and its focus on competitiveness. Some (such as Sweden) specifically also applauded the Commission for its work program and the withdrawals of various legislative proposals, apart from the equal treatment directive, which some Member States indeed would like to see on the agenda again. In the concluding remarks, the Commission noted that it had withdrawn proposals that were stuck too long in the Council or the Parliament, which is in line with an interinstitutional agreement on better law making in the EU.
All things considered, tomorrow’s Council Working Group meeting could be the end of the road for the SEP Regulation in its current (or any similar) form. Even if some continued to lobby for the bill, the only question is what the EC will do (and when) in order to explore alternative approaches with full stakeholder consultations on specific ideas (as opposed to abstract takes and vague ideas).
Regardless of whether any ill-conceived proposals will rise from the ashes, it is always a good idea to talk about how the SEP licensing process as well as SEP enforcement can improve in terms of striking a reasonable balance. A high-profile SEP event will take place in Warsaw, Poland next week, with many well-known speakers from the SEP ecosystem and from academia (conference page).
The organizers are the Faculty of Law and Administration of the Adam Mickiewicz University, the University of Utah S.J. Quinney College of Law and the Institute of Legal Studies of the Polish Academy of Sciences. The conference title is “Regulatory and Enforcement Developments for SEPs” and it is also supported by the Polish patent office. It will be held on next week’s Thursday and Friday (March 6-7, 2025).
ip fray will follow the live stream. Some sessions will additionally be recorded.
Among the speakers there are some well-known judges such as the President of the Unified Patent Court’s Court of Appeal, Judge Dr. Klaus Grabinski, the above-mentioned Sir Robin Jacob, Lord Justice Richard Arnold of the England & Wales Court of Appeal (the Optis v. Apple hearing is ongoing as we speak), Judge Fabian Hoffmann (Federal Court of Justice of Germany; an outlier among judges with respect to the SEP Regulation), Judge Yanfang Wang (former Justice of the Supreme People’s Court of China), Judge Agnieszka Gołaszewska (Court of Appeal in Warsaw, Poland), Presiding Judge Professor Peter Tochtermann (Unified Patent Court’s Mannheim Local Division) and Judge Prathiba M. Singh (Delhi High Court).
Many industry players (SEP holders as well as implementers), academics researching the field and lawyers in private practice will also be present.
The proposed SEP Regulation has ceased to be (in practical terms), but discussions between stakeholders and policy makers will continue.