Mixed reaction from market as EU withdraws SEP regulation

Just a few days ago, a representative of the EU Commission announced at an SEP conference in Brussels that the Polish government intends to push ahead with the proposal for an SEP regulation. The Polish government currently holds the presidency of the European Council.

It would probably have taken many months for the EU member states to give their final approval. Some speculated it could take up to two and a half years, but at least the project would be moving forward after being put on ice under the Hungarian Council presidency.

The current U-turn on the SEP regulation is thus all the more surprising. As documents from its 2025 work program show, the EU Commission decided yesterday not to pursue the proposal any further (EU 2017/1001).

The document states the reasons, “No foreseeable agreement — the Commission will assess whether another proposal should be tabled or another type of approach should be chosen.” In the language of EU officials, this likely means there will be no new attempt for some time.

European industry, including European car manufacturers, had called for the SEP regulation. Stakeholders hotly debated the proposal in 2023 and 2024 and it met with fierce resistance, particularly from European SEP holders such as Nokia and Ericsson.

Fierce pushback, a quick end

Despite the resistance, the Commission managed to get the proposal for an SEP regulation through the EU Parliament without any major changes. Since then, EU member states have put the proposal up for discussion in the EU Council. Experts believed it had a chance of passing but not without significant changes from the member states.

The Commission essentially proposed establishing a competence centre under the umbrella of the European Union Intellectual Property Office (EUIPO). Currently, the office is mainly concerned with copyright and trademark issues. As such, experts criticised its limited expertise in SEPs and FRAND.

In the future, the EUIPO would have carried out non-binding essentiality checks. A FRAND determination by mediators would have been mandatory, if non-binding, before parties could have litigated in UPC countries.

The regulation would have prohibited SEP owners from enforcing their SEPs against implementers in court during the EUIPO’s examination. This would also have affected the Unified Patent Court, where the majority of cases concern telecom and computer patents.

SEP implementers, including car and smartphone manufacturers, welcomed the Commission’s proposal for an SEP regulation.

More pragmatic solution

Experts suspect that the global political situation has turned against the project. For example, the new US government took office with the declared aim of deregulation. Many see the SEP regulation as an example of over-regulation.

There are also many voices in Germany in favour of de-regulation to ensure better economic conditions. The country will elect a new government in the next two weeks.

Experts on social media are now calling for a new, more pragmatic proposal but this is likely to take a while.

Reactions from the market

The current Commission only took up its work in December 2024 and will remain in office for another five years. Experts have already speculated that there will not be a new attempt at a regulation before at least December 2029 when a new Commission comes in.

Evelina Kurgonaite, secretary general of the Fair Standards Alliance, said in a statement, “The Fair Standards Alliance is stunned by the Commission’s decision to abruptly scrap the SEP regulation. It goes against Draghi’s call to put innovation at the centre of Europe’s quest for competitiveness and to eliminate obstacles that hinder innovation of Europe’s strength industries. The withdrawal sends a terrible signal to innovative businesses who rely on a predictable and fair SEP licensing system. We urge the Commission to reconsider.”

As a member of the European Parliament, Marion Walsmann had been closely involved in the project. She considers the withdrawal “to be a completely wrong decision”. According to Walsmann, the European Council had already scheduled several working group meetings specifically on the Commission proposal.

Walsmann writes in a statement, “It makes no sense at all to withdraw a text that brings with it an urgently needed transparency demanded by the sector itself and which was adopted by a broad majority in Parliament only last year. Especially as the Polish presidency is very ambitious to move the negotiations forward quickly.” She continues, “This shows how pressure from a small number of very influential companies, mostly from third countries, has brought the Commission to its knees.”

IP2Innovate, which also leans more toward implementers, urges “Member States and European Parliament to reject this proposal for withdrawal and demonstrate their commitment to progressing this vital file”.

The interest group said in a statement, “The current patent system in Europe urgently needs modernisation to bolster the region’s competitiveness and innovation capacity. The lack of transparency and fairness in SEP licensing, combined with the absence of the application of proportionality to patent infringement cases, continues to impede innovation and ultimately diminishes the benefits of interoperability for European consumers.”

Nevertheless, many companies and experts welcomed the Commission’s move in numerous comments on social media.

A spokesperson for Nokia, for example, said, “We share the Commission’s goals for more transparent and efficient licensing of standard essential patents. However, the proposed regulation was flawed and would not have delivered on these objectives,”

He added, “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.”