Earlier this year, the European Commission has quietly shelved its 2023 proposal to regulate Standard Essential Patents (SEPs). The plan was heavily criticized for potentially undermining Europe’s strength in telecommunications, one of the few high-tech sectors where European companies still lead globally.
The Aborted Centralization of Patent Negotiations
SEPs are patents on technologies that are indispensable for a standard to work. Many standards embed patented technologies; mobile telecoms, in particular, rely on standardisation that bundles numerous patented innovations, with 2G/3G/4G/5G and Wi‑Fi depending on thousands of patents to function, and these communication standards underpin key technologies in the Internet of Things (IoT), consumer electronics, automotive and power grids.
These patents are licensed under so-called “FRAND” terms – fair, reasonable and non-discriminatory – which means they are available to all at reasonable rates. This system fits Europe’s industrial fabric well: a network of SMEs and champions in their fields, rather than a handful of vertically-integrated companies.
The Commission’s proposal would have upended this. Instead of letting companies negotiate licences directly, it sought to centralise the process at the European Union Intellectual Property Office (EUIPO), an agency that deals with trademarks.
The reform’s two most consequential features were the creation of a centralised EU registry for SEP registration, requiring patent holders to register their SEPs and have them checked to verify whether they were truly essential to specific standards, and the introduction of a mandatory pre-litigation conciliation process to establish FRAND licensing terms prior to court proceedings.
The plan was to put political control at the heart of standardisation, tilting the balance towards users of digital technology rather than those who invent it. In effect, Brussels wanted to referee global technology markets from sunny Alicante, where the EUIPO is based.
The problem was not only the idea but also the timing.
The battles of the “smartphone patent wars” are history. The “smartphone patent wars” were a wave of global lawsuits in the 2010s where phone makers and suppliers sued each other across countries over overlapping patents to block rivals or force costly licenses, until courts, regulators, and standard‑setting FRAND rules curbed SEP injunctions and pushed parties toward court‑ or arbitration‑set FRAND royalties instead.
The industry has largely solved these frictions through so-called “patent pools”, a single licensing arrangement where multiple owners bundle their related or essential patents and offer one package license—typically via a neutral administrator—so implementers can get all needed rights at once. Patent pools now offer clarity on which SEPs are needed and the new Unified Patent Court provides mediation when disputes arise.
Reading The Fine Print
Reading the fine print, one cannot escape the impression that the real objective was price control.
By empowering EUIPO to recommend royalty rates, the regulation would have turned the agency into a de facto price regulator. That is a dangerous tactic. Price-setting in fast-moving, innovation-driven markets distorts incentives.
Europe’s telecom sector has delivered some of the most important technological breakthroughs in a generation (thanks to SEPs, we have 3G, 4G, 5G, Wi-Fi, USB and Bluetooth). Interfering with the system that made this possible would have caused more harm than good.
Why take such a risk? The answer lies in a familiar Brussels obsession: manufacturing.
The belief was that Europe has more “implementers” – companies that use technologies – than “holders” – companies that produce technologies – of SEPs, and that shifting revenues towards implementers would therefore benefit the EU economy.
But this logic collapses in a global context. Europe is a world leader in telecommunications R&D, while most devices using these technologies – smartphones, cars, connected appliances – are manufactured elsewhere. Europe is a net exporter of innovation and its firms depend on licensing revenues from SEPs. Reducing those revenues would have weakened Europe’s innovators.
This is why the proposal was opposed across the board: by the European Patent Office, the Unified Patent Court, standards bodies such as ETSI, national governments, judges and industry experts.
Critics pointed out that it would have added red tape, delayed access to justice, and fragmented international licensing. It would also have encouraged other jurisdictions to copy Europe’s mistake – indeed, China already signalled interest in expanding state control over patent licensing, citing the EU’s example.
Good News?
The Commission was right to step back. Europe cannot afford to undermine one of its strategic assets. The telecom sector is not just another industry: it underpins the digital economy, from defence and automotive to healthcare and energy. Its health depends on a delicate balance between innovators and implementers, struck through negotiation – not through bureaucratic price controls.
The lesson is simple. Markets for SEPs have evolved in ways that encourage transparency, specialisation and global interoperability. Europe should nurture this ecosystem, not suffocate it. In a world where technology is at the centre of geopolitical rivalry, the EU needs to strengthen its role as a hub of innovation, not weaken it with ill-conceived experiments.
By withdrawing the proposal, Brussels has avoided an own goal. The challenge now is to resist the temptation to try again. Europe’s future competitiveness rests on supporting its innovators, not on taxing them to subsidise others.