The time is ripe to re-think the EU SEP regulation
New faces at the European Commission and a warning on over-regulation and competitiveness should give EU leaders pause
By Jacob Schindler
Progress on the EU SEP regulation has been slow since the file was passed to the EU Council last spring. In the meantime, there have been significant changes in Europe’s policymaking apparatus.
Thierry Breton, the internal market chief who championed the legislation, stepped aside last week as Ursula von der Leyen assembled the leadership team for her second term as president of the European Commission. In a shake-up of the College of Commissioners, Stephane Séjourné will assume the DG Grow portfolio previously handled by Breton.
Séjourné is reputed to have a good understanding of intellectual property policy issues, but his stance on the details of the controversial SEP regulation is unknown.
Another top post in the new executive body has gone to Finland’s Henna Virkkunen, who has spoken out against the SEP regulation as an MEP. Virkkunen has been handed responsibility for “Tech Sovereignty, Security and Democracy”.
While this directorate was not involved in the SEP regulation, the legislation has clear implications for Europe’s ability to retain global leadership in setting global connectivity standards, which form a key building block of the digital world.
During the European Parliament debate over the SEP regulation, Virkkunen characterised the proposal as an excessive regulatory burden on standard essential patent holders and pointed out that 5G and 6G technologies were important components of Europe’s strategic autonomy and digital competitiveness.
Although the legislation is now sitting with the Council, it has not yet formed a position. According to a report in IAM, the Council has questions about the proposal that the Commission has not yet answered to its satisfaction. The Commission, along with the Council and the European Parliament, will participate in trilogue negotiations once the Council has determined its stance.
The Commission is still central to the process for enacting the SEP regulation and any reservations among its senior leadership could impact whether or, perhaps more likely, in what form it becomes law.
Regulation is stifling innovation, Draghi report warns
Unveiling her new leadership team last week, von der Leyen named the EU’s lagging competitiveness as one of three issues atop her agenda. She has just been handed a comprehensive report on that subject from former Italian prime minister Mario Draghi, who was tasked with studying the bloc’s slow growth and formulating a new competitiveness strategy.
This report should prompt further reconsideration of the SEP regulation.
The first and most profound problem identified by Draghi is Europe’s growing innovation gap with both the United States and China in advanced technologies. Citing patent filing numbers, he observes that the continent does not lack talented researchers or innovative ideas. However, commercialising those ideas is another story.
“[I]nnovative companies that want to scale up in Europe are hindered at every stage by inconsistent and restrictive regulations,” the report says.
The Better Regulation agenda for reducing red tape has had limited impact, according to the report. EU laws take an average of 19 months from Commission proposal to signing, plus additional time for member state implementation. A “slow and disaggregated policymaking process” struggles to keep pace with fast-moving developments.
In other words, even well-intentioned policy initiatives can work against EU interests in advanced technology.
The report properly frames intellectual property as an accelerant rather than a barrier for innovative new market entrants. “The EU should become as attractive for inventors as other leading regions for innovation,” Draghi declares, adding that it also needs to do more to help those inventions reach the market.
Calling for the adoption of the Unitary Patent by all member states, the report argues that complex and fragmented national patent systems are “hindering young companies from leveraging the Single Market”.
Draghi also stresses the need to unlock more value from Europe’s world-leading cohort of research universities and R&D labs. The first step, according to the report, is “to overcome bureaucratic barriers in universities and research institutions to managing intellectual property rights”. To do this, the report suggests adopting a new blueprint for fair and transparent royalty sharing between institutions and researchers.
The confidently pro-innovation tone of the report makes a striking contrast to the unfounded lament among some proponents of the SEP regulation that Europe is destined to be a net taker of standardised technologies and should devalue SEPs accordingly.
Standards leadership is a key competitive advantage for Europe
Europe’s leading position in telecoms standards is a success story. Look no further than the United States and China and you’ll see that the people running the most dynamic tech economies understand this.
Standards contribution is central to the strategies of China’s tech champions. These companies can be expected to plug the gaps in the event of any reduction in R&D investment by Europe’s telecoms leaders.
In the United States, standards are increasingly understood as a core element of economic security. The Biden White House recently unveiled the roadmap for a whole-of-government standards strategy and stated in no uncertain terms that any impediment to US participation in standards development is a national security threat.
A European leadership with a renewed focus on strengthening competitiveness and preserving tech sovereignty could seize the chance to step back and re-assess the SEP regulation in its current form. This would provide an opportunity for a refined approach to standards that bolsters Europe’s strengths, enhances alignment with its allies and keeps the pressure on its competitors.
Jacob Schindler is Sisvel’s Senior Content and Strategic Communications Manager
This article was prepared by him in a personal capacity. The opinions expressed within it are the author’s own and do not necessarily reflect the views of Sisvel. The content is for informational purposes and should not be taken as legal advice.
