Internal Market, Industry, Entrepreneurship and SMEs

Standard Essential Patents

Standard Essential Patents

Standardisation based on patent-protected technologies is a key contributor to industrial innovation and competitiveness. The European Commission supports the improvement of the framework governing the inclusion of patent-protected technologies into standards and the facilitation of the licensing process for these technologies.

What is the relationship between patents and standards?

Patents provide incentives for research and development, and facilitate knowledge transfers. Standards ensure the rapid diffusion of technologies and the interoperability between products.

Many standards are based on patented technologies. For example, the mobile telecommunications industry is driven by a heavy reliance on standardisation, which is made up of a great number of innovations protected by patents. 2G (GSM), 3G (UMTS), 4G (LTE), 5G and WiFi networks rely on thousands of patented technologies to work. Such communication standards are also key for the development of the hyper-connected society, for example in the field of the Internet of Things in sectors such as consumer electronics, the automotive industry and the electricity grid industry.

Organisations engaged in standard setting have developed rules and practices to ensure the efficient licensing of patents that are essential for their standards ('standard-essential patents'). A smooth licensing environment is essential to the success of a standard. It helps to achieve broad and rapid diffusion of innovation and to give patent holders an adequate return on investment in research and development (R&D). It also gives all users of the standard fair access at a reasonable cost.

Webinar series on Standard Essential Patents

We are organising a number of webinars on Standard Essential Patents (SEPs) in winter/spring 2021 so that we can take stock of the state-of-play, share some of the ideas developed under recent actions and discuss with stakeholders potential improvements to the framework governing SEPs.

See the full schedule of the webinar series on Standard Essential Patents

What the Commission is doing

To ensure that Europe is well positioned in today’s competitive global environment, the Commission supports a smooth and balanced functioning of the system for standard essential patents (SEPs). This includes removing unnecessary barriers in the market for the licensing of SEPs.

2020 action plan on intellectual property

The intellectual property (IP) action plan, ‘Making the most of the EU’s innovative potential - An intellectual property action plan to support the EU’s recovery and resilience’ of November 2020 proposes ways to improve transparency and predictability in the licensing of SEPs. These are key elements for the digital transformation of Europe's industry, such as the roll-out of connected cars and other Internet of Things (IoT) products.

Despite guidance provided in the 2017 Communication ‘Setting out the EU approach to SEPs' (see below), we observe continued friction in the uptake of SEP-protected standards. In addition, the landscape gets more complex as we move to 5G and beyond, and the number of SEPs, as well as the number of SEP holders and implementers, are increasing. Many new players are not familiar with SEP licensing, but need to enter into SEP arrangements. Navigating the SEPs landscape may pose in particular challenges for smaller players, such as SMEs and start-ups active in the IoT. The current system does not offer all the tools businesses need in order to come to fast, effective and fair SEP licensing arrangements. Licensing negotiations take a long time and may end in conflict and litigation, which undermines EU businesses on all sides (notably SEP holders and implementers).

The Commission will improve transparency and predictability in SEP licensing by encouraging industry-led initiatives in the most affected sectors. This could be combined with reforms, including regulatory if and where needed, aiming to clarify and improve the SEPs framework and offer effective transparency tools.

Communication, 'Setting out the EU approach to Standard Essential Patents'

In November 2017 the Commission adopted, as part of the IP package on enforcement, the Communication, 'Setting out the EU approach to Standard Essential Patents'. It provides for a clearer framework to incentivise the development of, and ease the access to key technologies that enable interconnection and connectivity. Stakeholders will have better legal certainty for the development and licensing of technologies required for the hyper-connected society. The Communication covers 3 key aspects of SEPs. It

  • contributes to a more transparent environment for negotiations between SEP holders and potential licensees
  • proposes common valuation principles for SEPs technology
  • suggests ideas for a balanced and predictable enforcement regime

    Group of experts on licensing and valuation of Standard Essential Patents

    Jump to 'Contributions of the expert group'

    In the 2017 Communication, ‘Setting out the EU approach to Standard Essential Patents’ the Commission presented its views on SEPs with a holistic and balanced approach. It stated that sound policy relating to the treatment of SEPs should, on the one hand, incentivise contribution of best technologies to global standardisation efforts, while on the other hand, foster smooth access to standardised technologies for implementers. This approach was supported by Council Conclusions 6681/18.

    The communication announced that the Commission would monitor the SEP licensing markets with a particular focus on Internet of Things (IoT) technologies. In this context, it would also set up an expert group to deepen expertise on industry licensing practices, sound IP valuation and FRAND (fair, reasonable, and non-discriminatory) determination.

    The expert group was created by a Commission decision in July 2018 and was composed of 15 members. More information about the activities of the expert group can be found on the Group of experts on licensing and valuation of standard essential patents page in the register of Commission expert groups.

    The members of the expert group were in particular invited to

    • Look at licensing and valuation practices, and techniques that are currently applied and/or immediately available to address the identified challenges, with a particular focus on IoT
    • Generate ideas looking forward to the future framework for SEPs licensing and valuation, taking into account the particular needs of small and medium-sized enterprises (SMEs). These ideas will feed into the future debate on SEPs alongside other studies and analysis.

    Contributions of the expert group

    Further policy measures

    The contributions of the expert group to the SEP debate do not reflect the views of the European Commission. They are intended to advise the Commission and to stimulate discussion among all relevant stakeholders. The contributions of the expert group to the SEP debate do not constitute policy positions that are binding to EU Member States or the Commission. Possible policy follow-up will be based on considerations by the relevant bodies and institutions within their respective fields of competence.

    Public consultation on patents and standards

    From October 2014 to February 2015, the Commission held a public consultation on patents and standards. This consultation allowed stakeholders interested in standards that involve patents to provide their views on

    • the performance of the current governing framework
    • how the framework should evolve to ensure that standardisation remains efficient and well-adapted to a fast-changing economic and technological environment