COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT REPORT Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on standard essential patents and amending Regulation (EU) 2017/1001
Date: 2023-04-27
Institutions: Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, European Commission
Subjects: European Union Intellectual Property Office, European patent, European standard, harmonisation of standards, patent law, patents licence, technical specification, technical standard

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 27.4.2023  SWD(2023) 124 final  COMMISSION STAFF WORKING DOCUMENT  IMPACT ASSESSMENT REPORT    Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on standard essential patents and amending Regulation (EU) 2017/1001    {COM(2023) 232 final} - {SEC(2023) 174 final} - {SWD(2023) 123 final} - {SWD(2023) 125 final}  
 
 
Table of contents 

1. 

2. 

INTRODUCTION ................................................................................................................................ 4 

PROBLEM DEFINITION .................................................................................................................... 8 

3.  WHY SHOULD THE EU ACT? .........................................................................................................27 

4.  OBJECTIVES: WHAT IS TO BE ACHIEVED? ................................................................................28 

5.  WHAT ARE THE AVAILABLE POLICY OPTIONS? .....................................................................29 

6.  WHAT ARE THE IMPACTS OF THE POLICY OPTIONS? ............................................................35 

7.  HOW DO THE OPTIONS COMPARE? .............................................................................................51 

8. 

PREFERRED OPTION .......................................................................................................................57 

9.  HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED?...................................59 

ANNEX 1: PROCEDURAL INFORMATION .............................................................................................61 

ANNEX 2: STAKEHOLDER CONSULTATION (SYNOPSIS REPORT) .................................................63 

ANNEX 3: WHO IS AFFECTED AND HOW? ...........................................................................................73 

ANNEX 4: ANALYTICAL METHODS ......................................................................................................76 

ANNEX 5: ADDITIONAL INFORMATION IN SUPPORT OF PROBLEM SECTION ...........................77 

ANNEX 6: ADDITIONAL INFORMATION ON OPTIONS DISCARDED AT AN EARLY STAGE .....89 

ANNEX 7: ADDITIONAL INFORMATION IN SUPPORT OF IMPACT ANALYSIS ............................97 

ANNEX 8: SMES AND SEPS ....................................................................................................................123 

ANNEX 9: PUBLIC CONSULTATION – DETAILED SUMMARY .......................................................149 

1 

 
 
 
 
Glossary 

Term or acronym 

Meaning or definition 

3GPP 

Arbitration 

ADR 

EU Charter 

CJEU 

Commission 

Conciliation 

Council 

EPO 

EP 

ETSI 

EUIPO 

FRAND 

FRAND  determination  process 
(conciliation +) 

ICT 

IEEE 

IoT 

IPR 

ITU-T 

Mediation 

3GPP – The Mobile Broadband Standard Partnership 
Project 

A structured process in which the parties submit their 
dispute for adjudication to a trained arbitrator or panel of 
arbitrators resulting in a binding decision. 

Alternative Dispute Resolution 

Charter of Fundamental Rights of the European Union 

Court of Justice of the European Union 

European Commission 

A structured process in which the parties submit their 
dispute for negotiation and resolution with the assistance 
of a neutral person, who may issue a non-binding 
opinion if the parties are unable to resolve their dispute. 

Council of the European Union 

European Patent Office 

European Parliament 

European Telecommunications Standards Institute 

European Union Intellectual Property Office 

Fair, Reasonable and Non-discriminatory 

A structured process initiated at the request of one party, 
in which a neutral person assists the parties to determine 
FRAND royalties, may request evidence from the parties 
and will issue a non-binding opinion, if the parties are 
unable to resolve their dispute. 

Information and Communication Technologies 

Institute of Electrical and Electronics Engineers 

Internet of Things 

Intellectual Property Rights 

International Telecommunications Union – 
Telecommunications Sector 

A structured process in which the parties submit their 
dispute for negotiation with the assistance of a mutually 
selected impartial and neutral person. 

NDA 

Non-Disclosure Agreement 

2 

 
NPE(s) 

NPO 

Patent claims 

Patent Family 

Patent pool 

R&D 

SDO 

SEP(s) 

SME(s) 

TRIPS 

WIPO 

WTO 

Non-Practicing Entity(ies) 

National Patent Office 

Under the European Patent Convention (EPC), a claim 
must define the matter for which the protection is sought 
in terms of technical features. 

A patent family is a collection of patents that cover the 
same technology (invention) and are granted indifferent 
countries. 

Means an agreement between two or more SEP holders 
to license one or more of their patents to one another or 
to third parties. 

Research and Development 

Standards Development Organisation 

Standard Essential Patent(s) 

Small and Medium-sized Enterprise(s) 

Trade-Related Aspects of Intellectual Property Rights  

World Intellectual Property Organisation 

World Trade Organisation 

3 

 
 
1. 

INTRODUCTION 

1.1. 

Political and legal context 

Standard  Essential  Patents  (SEPs)  are  patents  that  protect  technology  that  is  incorporated  in  a 
standard.1 SEPs are “essential” in the sense that implementation of the standard requires use of the 
inventions covered by SEPs. 

SEPs  are  a  combination  of  two  seeming  contradictions.  Standards  ensure  compatibility  and 
functionality of complex technology, as well as enable interoperability between devices. The success 
of a standard depends on its wide implementation and as such every producer should be allowed to 
use a standard. On the other hand, the goal of a patent is protection of the technology of the patent 
owner who has the right granted by law to limit, or prevent, the usage of that technology and profit, 
or  not,  from  it,  by  choosing  how  and  to  whom  to  license/sell  patents,  whether  or  not  this  is  for 
remuneration. To deal with these contradictions, Standards Development Organisations (SDOs) ask 
the  patent  owners  who  participate  in  standard  development  to  promise  to  license  their  patented 
technology  (i.e.,  SEPs)  on  “fair  reasonable  and  non-discriminatory”  (FRAND)  terms2  to  any 
implementer3 that chooses to use the standard. If a patent owner makes this promise (called FRAND 
commitment)4, it cannot refuse to license its SEPs to a party who is willing to agree to FRAND terms. 

SEP licensing issues arise primarily in the context of standards where the SEP holders have made a 
promise to the relevant SDO to license their SEPs on FRAND terms for remuneration. Such standards 
are, for example, communication standards (e.g. 3G, 4G, 5G, WiFi, NFC), audio/video compression 
and decompression standards (MPEG, HEVC), as well as standardized technologies for data storage 
and  exchange  (CD  and  DVD),  photo  formats  (JPEG),  and  Home  Audio/Video  Interoperability 
(HAVi). The users of these standards are traditionally producers of telecommunication equipment, 
mobile phones, computers, tablets, TV sets, etc. With the recent rise of the Internet of Things (IoT) 
including connected cars, drones, payment terminals, tracking devices, smart meters and other smart 
devices, the standards listed above are increasingly implemented by a growing number of companies, 
often SMEs. 
Standard setting and the related FRAND obligation are guided by the Horizontal Guidelines5 and the 
CJEU landmark ruling from 2015 in Huawei v. ZTE.6 The summary of the judgment can be found 

1  A  patent  that  is  essential  to  a  standard  established  by  a  standardisation  body  renders  its  use  indispensable  to  all 
companies  who  envisage  manufacturing  products  that  comply  with  the  standard  to  which  it  is  linked.  That  feature 
distinguishes a SEP from a patent that is not essential to a standard and which normally allows third parties to manufacture 
competing products without recourse to the patent concerned and without compromising the essential functions of the 
product in question (see Judgment of the Court of Justice of 16 July 2015,  Huawei Technologies Co. Ltd v ZTE Corp. 
and ZTE Deutschland GmbH, C-170/13, ECLI:EU:C:2015:477, https://e-justice.europa.eu/ecli/ECLI:EU:C:2015:477). 
2 According to para. 285 of the Communication from the Commission – Guidelines on the applicability of Article 101 of 
the Treaty on the Functioning of the European Union to horizontal co-operation agreements, OJ C 11, 14.1.2011, p. 60, 
CELEX:  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52011XC0114(04),  FRAND  can  also  cover 
royalty-free licensing. 
3 ‘Implementer’ is any legal person that implements the standard in a product or service. 
4 The FRAND commitment is a voluntary contractual commitment given by the SEP holder to the benefit of third parties. 
Each commitment may be different, depending on each Standard Development Organisation’s policy. 
5 Communication from the Commission – Guidelines on the applicability of Article 101 of the Treaty on the Functioning 
of  the  European  Union  to  horizontal  co-operation  agreements,  OJ  C  11,  14.01.2011,  pp.  1-72,  CELEX:  https://eur-
lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52011XC0114(04). 
6 Judgment of the Court of Justice of 16 July 2015, Huawei Technologies Co. Ltd v ZTE Corp. and ZTE Deutschland 
GmbH, C-170/13, ECLI:EU:C:2015:477, https://e-justice.europa.eu/ecli/ECLI:EU:C:2015:477. 

4 

 
                                                 
under the link below.7 The CJEU recognized the right of the SEP holder to seek to enforce its patents 
in national courts subject to certain conditions that must be fulfilled to prevent an abuse of a dominant 
position by the SEP holder. Since a patent confers on its holder the exclusive right to prevent any 
third party from using the invention without the holder’s consent only in the jurisdiction for which it 
is issued (e.g., Germany, France, the US, China etc.), the patent disputes are governed by national 
patent laws and civil proceedings/enforcement laws.8  

In case of unlicensed imports, SEP holders can rely on Regulation (EU) No 608/2013 concerning 
customs enforcement of intellectual property rights9 by requesting detention of goods by customs, 
although that Regulation does not provide specific provisions with regard to applications for customs’ 
action concerning goods infringing SEPs.10 Jurisprudence seems to suggest that the parties have to 
comply with the conditions described under Huawei v ZTE before requesting such seizure or asking 
for the release of impounded goods on the part of the implementer.11 
In 2017, the Commission’s Communication12 “Setting out the EU approach to Standard Essential 
Patents,”  called  for  a  comprehensive  and  balanced  approach  to  SEP  licensing  to  incentivise  the 
contribution  of  the  best  technology  to  global  standardisation  efforts  and  foster  efficient  access  to 
standardised  technologies.  The  Commission  acknowledged  the  need  for  increased  transparency 
(regarding, among others, existence of SEPs, SEP ownership, and FRAND royalties) and addressed 
certain  aspects  of  FRAND  licensing  and  SEPs  enforcement.  The  Commission’s  views  were 
supported by Council Conclusions 6681/1813, with the Council stressing the importance of increased 
transparency. 

of 

157, 

rights 

property 

30.4.2004, 

intellectual 

(‘IPRED’),  OJ  L 

7  The  bringing  of  an  action  for  a  prohibitory  injunction  against  an  alleged  infringer  by  the  proprietor  of  a  standard-
essential  patent  which  holds  a  dominant  position  may  constitute  an  abuse  of  that  dominant  position  in  certain 
circumstances (europa.eu)  
8  Harmonised  by  Directive  2004/48/EC  of  the  European  Parliament  and  of  the  Council  of  29  April  2004  on  the 
enforcement 
45-86, 
http://data.europa.eu/eli/dir/2004/48/oj. 
9 Regulation (EU) No. 608/2013 of the European Parliament and of the Council of 12 June 2013 concerning customs 
enforcement  of  intellectual  property  rights  and  repealing  Council  Regulation  (EC)  No.  1383/2003  (‘Regulation 
concerning customs enforcement of IPRs’), OJ L 181, 29.6.2013, pp. 15-34, http://data.europa.eu/eli/reg/2013/608/oj. 
10  Customs  enforcement  of  patents  is  regulated  by  Regulation  concerning  customs  enforcement  of  IPRs.  Taking  into 
account  the  broad  definition  of  patents  in  this  Regulation,  in  particular  Article  2(1)(e):  “a  patent  as  provided  for  by 
national or Union law”, it is understood that it already encompasses SEPs. 
11  Hague  District  Court,  decision  of  24  October  2014,  ZTE  v.  Vringo,  C/09/470109  /  KG  ZA  14-  870, 
Court 
https://slidelegend.com/judgment-hoyng-rokh-monegier_59ec9d4e1723dd6d9a764540.html; 
Düsseldorf, 
13/17, 
November 
http://www.justiz.nrw.de/nrwe/lgs/duesseldorf/lg_duesseldorf/j2017/14d_O_13_17_Urteil_20171109.html. 
12 Communication from the Commission to the European Parliament, the Council and the European Economic and Social 
Committee  on  Setting  out  the  EU  approach  to  Standard  Essential  Patents,  COM(2017)712  final,  29.11.2017, 
https://ec.europa.eu/docsroom/documents/26583. 
13  Council 
the 
conclusions  on 
http://data.consilium.europa.eu/doc/document/ST-6681-2018-INIT/en/pdf. 

Intellectual  Property  Rights,  6681/18,  1.3.2018, 

Regional 
O 
14d 

enforcement  of 

Samsung, 

decision 

Sisvel 

2017, 

pp. 

of 

v. 

9 

5 

 
                                                 
Since  then,  the  Commission  has  conducted  several  studies14  and  a  series  of  webinars15,  has 
established a group of experts on the licensing and valuation of SEPs16, and has actively monitored 
the market situation. On 10 November 2020, by Council conclusions 12339/2017, the Council invited 
the  Commission  to  present  proposals  for  a  future  EU  IP  policy.  The  Council  encouraged  the 
Commission to swiftly present the announced IP action plan, with initiatives to make IP protection 
more  effective  and  more  affordable,  especially  for  small  and  medium-sized  EU  enterprises 
(“SMEs”),18 and to promote effective sharing of IP, in particular critical assets such as SEPs, whilst 
ensuring adequate and fair compensation to technology developers. 

On 25 November 2020, the Commission published its intellectual property action plan (‘the IP action 
plan’)19, where it announced its goals of promoting transparency and predictability in SEP licensing, 
including by improving the SEP licensing system, for the benefit of EU industry and consumers, and 
in particular SMEs. The IP Action plan noted increases in SEP licensing disputes in the automotive 
sector and the potential for other IoT sectors to become subject of such disputes, as they begin using 
connectivity and other standards. The IP Action plan was supported by Council Conclusions of 18 
June 202120 and by the European Parliament (EP) in its Resolution21. The EP acknowledged the need 
for a strong, balanced and robust IPR system and agreed with the Commission’s position that the 
transparency  necessary  for  fair  licensing  negotiations  depends  in  large  part  on  the  availability  of 
information about the existence, scope, essentiality, ownership, and stipulated royalties of SEPs. The 

of 

of 

Expert 

Group’ 

essential 

standard 

the  European  Union, 

14 European Commission, Joint Research Centre, Bekkers, R., Henkel, J., Tur, E. M., et al.,  Pilot study for essentiality 
assessment 
2020, 
patents,  Publications  Office 
https://data.europa.eu/doi/10.2760/68906;  European  Commission,  Joint  Research  Centre,  Bekkers,  R.,  Raiteri,  E., 
Martinelli, A., et al., Landscape study of potentially essential patents disclosed to ETSI: a study carried out in the context 
of the EC ‘Pilot study for essentiality assessment of standard essential patents’ project, Thumm, N. (editor), Publications 
Office,  2020,  https://data.europa.eu/doi/10.2760/313626;  European  Commission,  Joint  Research  Centre,  Baron,  J., 
Pentheroudakis,  C.,  Thumm,  N.,  Licensing  terms  of  standard  essential  patents:  a  comprehensive  analysis  of  cases, 
Thumm,  N.  (editor),  Publications  Office,  2018,  https://data.europa.eu/doi/10.2791/32230;  CRA,  Régibeau,  P.,  De 
Coninck,  R.  and  Zenger,  H.,  Transparency,  Predictability,  and  Efficiency  of  SSO-based  Standardization  and  SEP 
Licensing: A Report for the European Commission, 2016, https://ec.europa.eu/docsroom/documents/48794?locale=en; 
European Commission, Directorate-General for Enterprise and Industry, Patents and standards: a modern framework for 
IPR-based standardization: final report, 2014, https://data.europa.eu/doi/10.2769/90861. 
15 See webpage https://ec.europa.eu/growth/content/webinar-series-standard-essential-patents_en. 
16 Baron, J., Geradin, D., Granata, S., et. al., Group of Experts on Licensing and Valuation of Standard Essential Patents 
‘SEPs 
2021, 
https://ec.europa.eu/docsroom/documents/45217.   
17 Council conclusions on Intellectual property policy and the  revision of the industrial designs  system  in the Union, 
12750/20, 10.11.2020, https://www.consilium.europa.eu/media/46671/st-12750-2020-init.pdf.  
18 SME definition: https://single-market-economy.ec.europa.eu/smes/sme-definition_en. 
19 Communication from the Commission to the European Parliament, the Council, the European Economic and Social 
Committee  and  the  Committee  of  the  Regions  on  making  the  most  of  the  EU’s  innovative  potential:  An  intellectual 
property action plan to support the EU’s recovery and resilience (‘IP action plan’), COM(2020) 760 final, 25.11.2020, 
https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:52020DC0760. 
This  proposal  along  with  two  others  announced  in  the  IP  action  plan  on  Supplementary  Protection  Certificates  and 
Compulsory Licensing are scheduled for adoption as a package in the first half of 2023. These three  initiatives share 
similar goals of increasing legal certainty and transparency as well as reducing fragmentation and transaction costs. All 
three initiatives take into account the introduction of the Unitary Patent. Beyond the common objectives the two other 
initiatives are not tackling issues specific to SEPs.  
20 
https://www.consilium.europa.eu/media/50529/st-9932-2021-init.pdf. 
21  European  Parliament  resolution  of  11  November  2021  on  an  intellectual  property  action  plan  to  support  the  EU’s 
recovery  and  resilience  (2021/2007(INI)),  OJ  C  205,  20.5.2022,  pp.  26-36,  CELEX:  https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=CELEX:52021IP0453. 

Contribution 

conclusions 

intellectual 

18.6.2021, 

(E03600): 

9932/21, 

property 

Council 

Debate 

policy, 

SEPs, 

the 

on 

on 

to 

6 

 
                                                 
EP also asked the Commission to provide more clarity on various aspects of FRAND, and to consider 
possible incentives for more efficient SEP licensing negotiations and reducing litigation. 
In  parallel  with  this  initiative,  the  Commission  has  updated  its  Standardisation  strategy22  (EU 
Strategy) and is revising the Horizontal guidelines23. The new EU Strategy, published in February 
2022, aims to strengthen the EU's global competitiveness, preserve the high quality of EU standards, 
and enable a resilient, green and digital economy. The present SEPs initiative is complementary to 
this EU Strategy and to the ongoing work to revise the Horizontal Guidelines. 

Furthermore, this initiative is important in the context of global developments. For example, certain 
emerging economies are taking a much more assertive approach, not only in promoting home-grown 
standards,  but  also  by  actively  supporting  participation  by  domestic  companies  in  global 
standardisation efforts, providing their industries with a competitive edge in terms of market access 
and technology roll-out. Moreover, courts in the UK, US and China have, with their own specificities, 
decided that they have jurisdiction to determine global FRAND terms in specific cases, which may 
impact the EU industry.24 Some countries have released25 or are considering guidelines governing 
SEP licensing negotiations as well.26 

22 Communication from the Commission to the European Parliament, the Council, the European Economic and Social 
Committee and the Committee of the Regions on an EU Strategy on Standardisation: Setting global standards in support 
of  a  resilient,  green  and  digital  EU  single  market,  COM(2022)  31  final,  2.2.2022,  https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=CELEX%3A52022DC0031&qid=1675955640882. 
23 https://ec.europa.eu/competition-policy/public-consultations/2019-hbers_en. 
24 United Kingdom’s Supreme Court, Judgment of 26 August 2020, Unwired Planet v. Huawei, UKSC 2018/0214, [2020] 
UKSC 37, https://www.supremecourt.uk/cases/uksc-2018-0214.html; Decision of the United States District Court for the 
Central District of California, TCL v Ericsson, Case No. 8:14-cv-00341-JVS-DFM with consent of both parties; Chinese 
Supreme Court, ruling of 19 August 2021, OPPO v Sharp, Zui Gao Fa Zhi Min Xia Zhong No. 517; Order of the Wuhan 
Intermediate  Court  of  23  September  2020,  Xiaomi  v.  Interdigital,  (2020)  E  01  Zhi  Min  Chu  169  No.  1, 
https://patentlyo.com/media/2020/10/Xiaomi-v.-InterDigital-decision-trans-10-17-2020.pdf;  Order  of 
the  Wuhan 
Intermediate Court, Samsung v Ericsson, (2020) E 01 Zhi Min Chu No. 743. Due to concerns about the compatibility of 
China's policy in this area with its WTO obligations, the EU has challenged certain measures before the WTO and initiated 
dispute settlement proceedings (China – Enforcement of intellectual property rights DS611). The EU seeks to ensure that 
its high-tech industry can effectively protect its patents before courts outside China. The EU internal initiative aims at 
increasing transparency and improving the licensing environment for SEPs within the EU. 
25 
Involving  Standard  Essential  Patents, 
https://www.jpo.go.jp/e/system/laws/rule/guideline/patent/document/rev-seps-tebiki/guide-seps-en.pdf;  South  Korean 
Guidelines 
Rights, 
unfair 
https://ftc.go.kr/eng/cop/bbs/selectBoardList.do?key=2855&bbsId= 
BBSMSTR_000000003632&bbsTyCode=BBST11; Singapore’s Competition & Consumers Commission Guidelines on 
treatment  of  Intellectual  Property  Rights,  https://www.cccs.gov.sg/-/media/custom/ccs/files/legislation/ccs-
the 
guidelines/revised-guidelines-jan-2022/9-cccs-guidelines-on-the-treatment-of-
ip.pdf?la=en&hash=4B788CFD35E23E6E6D680F898C3A339FD3B43E0A. 
26 The United States of America withdrew its Policy Statement on Licensing Negotiations and Remedies for Standards-
Essential Patents Subject to F/RAND Commitments and concluded a Memorandum of Understanding with the WIPO 
Arbitration and Mediation Centre. The UK has launched a process in 2021 on SEPs and innovation, which is ongoing. 
India’s  Department  of  Telecommunications  is  discussing  a  proposal  to  set  up  a  Digicom  Intellectual  Property 
Management Board to facilitate IPR licensing and IP management in the telecommunication sector. China has consulted 
on the draft amendments to the implementing regulations of its Anti Monopoly Law. Japan’s Patent Office is revising its 
guidelines and METI launched a Study Group on Licensing Environment of SEPs. 

Japanese  Patent  Office  Guide 

to  Licensing  Negotiations 

Intellectual 

Property 

exercise 

on 

of 

7 

 
                                                 
2.  PROBLEM DEFINITION 

2.1.  Market description 

SEPs  represent  approximately  2%  of  the  population  of  the  patents  that  are  currently  in  force. 
Standards to which FRAND commitments are made and SEPs are declared include communication 
standards (e.g. 4G, 5G, WiFi) (90% of declared SEPs), computer technology (5% of declared SEPs), 
audio/visual  field  (e.g.  codecs)  (2%  of  declared  SEPs).  The  remaining  3%  cover  machinery, 
measurement,  semiconductors,  optics  or  medical  technology.  The  number  of  declared  SEPs  was 
estimated at around 75 000 (patent families) worldwide in 2021 following a six fold increase over 
the  last  decade.  They  are  owned  by  approximately  260  companies  (companies  with  at  least  10 
SEPs).27 One third of all SEPs is owned by Chinese companies, doubling their share in just seven 
years. Also shares of Korean and Taiwanese SEPs increased over that period to respectively 19% and 
1.2%. On the other hand, both the EU and the US shares in SEPs decreased from 22% to 15% and 
from 26% to 19% respectively. The share of Japanese companies remains stable at around 11% (see 
figure below). Around 80% of all SEPs held by EU companies are owned by just two companies, 
Nokia and Ericsson, and a further 10% by Philips and Siemens. The remaining 10% are shared by 
around 27 firms including telecoms (e.g. Orange, KPN, Deutsche Telekom, Teliasonera, Telecom 
Italia, T-Mobile, Alcatel), engineering firms (e.g. Bosch), or research institutions (e.g. Fraunhofer 
Gesellschaft)  to  name  just  a  few.28  It  has  to  be  noted  that  the  number  of  declared  SEPs  may  not 
provide information on the strength of the SEPs portfolio of the different companies. The latter would 
depend  inter  alia  on  which  of  those  declared  SEPs  are  actually  essential,  which  features  of  the 
standard they cover and what is their quality. 

Figure 1: SEP ownership share by year and country (top 50 owners) 

Note: Based on top 50 owners representing from 88% (2014) to 95% (2021) of all SEP families 
Source: IPLytics database 

The FRAND commitment underlies the SEP owners’ approach to licensing SEPs to implementers, 
which may be done either free of charge or for royalties. For instance, SEPs in the area of internet 
(e.g.  URL,  HTML,  XML,  TCP,  Java  Script)  are  predominantly  licensed  royalty-free.  Cellular 
standards  (e.g.  4G,  5G)  are  subject  to  royalty  payments,  similar  to  short  range  communication 
standards WiFi and NFC, with the exception of Bluetooth, which is royalty-free but requires a small 
annual  membership  fee.  SEPs  related  to  CD,  DVD,  digital  image  formats  (JPEG)  and  most 

27 The number of patent families presented. - Baron, J., Arque-Castells, P., Leonard, A., Pohlmann, T., Sergheraert, E., 
Empirical Assessment of Potential Challenges in SEP Licensing, European Commission, DG GROW, 2023; Figure 4 
and 5, p. 17 (chapter 2.1.1. Potentially large numbers of declared SEPs per standard). 
28 The statistics concern firms with 10 or more SEP patent families. 

8 

22%EU, 15%USA, 19%Japan, 11%Korea, 19%China, 30%Taiwan, 1%0%5%10%15%20%25%30%20142015201620172018201920202021EUUSAJapanKoreaChinaTaiwan 
 
                                                 
audio/video compression technologies (MPEG, AAC, HEVC) are also subject to royalty payments.29 
Royalty  bearing  SEPs  can  be  licensed  through  bilateral  arrangements  or  via  joint  licensing 
programmes, including  “patent pools”  (consortia  of patent owners created to  license  their patents 
jointly, through a single transaction). SEP holders are expected to license their patents on FRAND 
terms30 so as not to abuse their monopoly position.  

An  empirical  study  (Biddle  et  al.,  2010)  identified  251  technical  interoperability  standards 
implemented in a modern laptop computer. The intellectual property rights policies associated with 
197 of the standards were assessed. The results show that 78% were developed under “FRAND” 
terms and 22% under “royalty free” terms. 

The largest share of royalty payments for SEP licenses comes from the mobile telecommunications 
industry, which generates an estimated patent royalty yield of EUR 14 – 18 billion per year31 with 
additional EUR 4 billion of non-monetary benefits from cross-licensing.32 The EU’s share could be 
estimated at around EUR 3 billion per year.33 

One  standard  can  consist  of  thousands  of  technical  contributions  protected  by  patents  owned  by 
dozens or even hundreds of SEP holders (for example, in the case of 5G, major SEP holders include 
Ericsson, Huawei, Intel, Nokia, Qualcomm, Samsung,  and ZTE, just to name a few). Moreover, a 
single product (e.g. a car) can implement multiple standards (see figure below). 

Figure 2: Standards with FRAND commitments implemented in a modern connected car 

Source: Tim Pohlmann, Intellectual Asset Management, May/June 2017, pp. 22-27 

Historically, with regard to SEPs in communications technologies, SEP licensing occurred in large 
part between phone and network equipment companies who licensed their SEPs to each other (i.e., 

Policy, 

29 See: Annex 5. ‘SEP – free or royalty bearing’. 
30 The FRAND commitment is a voluntary contractual commitment given by the SEP holder to the benefit of third parties. 
Each commitment may be different, depending on each Standard Development Organisation’s policy. 
31 Galetovic et al. produce an estimate of the cumulative patent royalty yield in the mobile telecommunications industry, 
which they estimate to reach USD 14.2 billion in 2016, see Galetovic, A., Haber, S., and Zaretzki, L., ‘An estimate of the 
average  cumulative  royalty  yield  in  the  world  mobile  phone  industry:  Theory,  measurement  and  results’, 
Telecommunications 
263-276, 
https://www.sciencedirect.com/science/article/pii/S0308596117302240?via%3Dihub,  quoted  in  Baron,  J.,  Arque-
Castells, P., Leonard, A., et al., Empirical Assessment of Potential Challenges in SEP Licensing, European Commission, 
DG  GROW,  2023.  Régibeau  et  al.  cite  an  estimate  of  the  yearly  SEP  royalty  yield  generated  by  2G,  3G,  and  4G 
technology  of  EUR18  billion  per  year,  see  CRA,  Régibeau,  P.,  De  Coninck,  R.  and  Zenger,  H.,  Transparency, 
Predictability, and Efficiency of SSO-based Standardization and SEP Licensing: A Report for the European Commission, 
2016, https://ec.europa.eu/docsroom/documents/48794?locale=en. Converted to EUR using EUR1:USD1 rate. 
32 Sidak, G. ‘What aggregate royalty do manufacturers of mobile phones pay to license standard-essential patents?’, The 
Criterion 
701-711, 
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3178336. 
33 Under assumption that it is proportional to EU’s share in the world GDP (roughly 1/6). 

Innovation, 

Journal 

2016, 

2018, 

April 

Issue 

Vol. 

Vol. 

pp. 

42, 

pp. 

on 

1, 

3, 

9 

 
 
                                                 
“cross licensing”)34, because they all had products using the standards. With the market entry of pure 
SEP holders and pure SEP users, divestiture and licensing of SEPs for monetization purposes, lead 
to the rise of patent assertion entities (PAE).35 More recently, the rise of the Internet of Things (IoT) 
is  resulting  in  more  and  more  devices  using  connectivity  and  the  landscape  of  SEP  licensing  is 
shifting even more. Today, (i) some companies incorporate standards into their products while not 
owning SEPs covering such standards, (ii) others own and license SEPs without using them in any 
products, and (iii) major SEP holders have significantly reduced their product businesses and focus 
more on licensing their SEPs. Whereas over the last two decades most high-stakes SEP disputes have 
centred around mobile communication devices (i.e. smartphones), we are already witnessing more 
disputes in the automotive sector and expect other IoT sectors to be similarly affected.  

See Annex 5 for more explanations on SEP market and SEP licensing. 

McKinsey36 estimates that by 2030 IoT could enable USD 5.5 trillion to USD 12.6 trillion in value 
globally37, including the value captured by consumers and customers of IoT products and services. 
The total number of IoT connected devices38 is estimated to grow rapidly from 13 billion in 2022 
to  30  billion  by  203039,  with  the  share  of  devices  connected  to  cellular  networks  gradually 
increasing40.  The  total  number  of  cellular  IoT  connected  devices  is  expected  to  grow  from  1.7 
billion in 2022 to 5.4 billion in 2030 (representing 18% of all IoT connected devices).41 98% of 
these will be using either 5G or 4G standards.42 At the same time, the number of mobile phones is 
expected to grow moderately from 8.4 billion in 2022 to around 9.5 billion in 2030.43  

The largest SEP licensing market continues to be mobile phones, in which the top ten phone makers 
are Samsung, Apple, and 8 Chinese companies, including OPPO, Xiaomi and Vivo. SEP licensing, 
however, is now moving more towards the growing IoT market, including automotive, smart energy 
(smart  meters  and  smart  grids),  payment  terminals,  tracking  devices,  drones,  medical  devices, 
wireless charging stations and other products. 

economy’, 

34 Sidak estimated the implicit value of cross-licenses of large implementers, i.e., the licensing revenue that firms like 
Samsung, Huawei or Apple would have obtained had they not engaged in cross licensing deals but charged royalties to 
one another. Sidak's estimates imply an additional USD 4 billion in non-cash value of cross licenses in 2013 and USD 
3.7 billion in 2014 (roughly one percent of mobile phone sales in each year). See Sidak, G. ‘What aggregate royalty do 
manufacturers of mobile phones pay to license standard-essential patents?’, The Criterion Journal on Innovation, 2016, 
Vol. 1, pp. 701-711, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3178336, cited in CRA, De Coninck, R., von 
Muellern, C., Zimmermann, S., and Mueller, K., SEP Royalties, Investment Incentives and Total Welfare, 2022, p. 6. 
35 Companies that acquire a patent or patent rights but do not practice the patented invention. 
36 McKinsey & Company, Chui, M., Collins, M. and Patel, M., ‘The Internet of Things: Catching up to an accelerating 
opportunity’, November 2021, https://sitic.org/the-internet-of-things-catching-up-to-an-accelerating-opportunity/. 
37 See also IHS Markit, Campbell, K., Cruz, L., Flanagan, B., et. al., ‘The 5G Economy: How 5G will contribute to the 
https://www.qualcomm.com/content/dam/qcomm-martech/dm-
global 
assets/documents/the_ihs_5g_economy_-_2019.pdf?mod=article_inline. 
38  Transforma  Insights  defines  IoT  connections  as  connections  to  remote  sensing  and  actuating  devices  and  includes 
associated aggregation devices. 
39 Number of Internet of Things (IoT) connected devices from 2019 to 2030 calculated by Transforma Insights. Retrieved 
from Statista: https://www.statista.com/statistics/1194677/iot-connected-devices-regionally/. 
40 https://www.statista.com/statistics/1194688/iot-connected-devices-communications-technology/. 
41 Current IoT Forecast Highlights - Transforma Insights: https://transformainsights.com/research/forecast/highlights. 
42 Connection numbers will be dominated by 5G mMTC (massive Machine Type Communications, which includes the 
NB-IoT and LTE-M technologies) and 4G, driven to a great extent by 2G and 3G network switch-off. 
43 CRA, De Coninck, R., von Muellern, C., Zimmermann, S., and Mueller, K., SEP Royalties, Investment Incentives and 
Total Welfare, 2022, p. 19. Using: “Mobile phone units are approximated using SIM connections (excluding licensed 
cellular  IoT).  SIM  connections  are  reported  in  GSMA’s  report  ‘The  Mobile  Economy  2022’,  available  at 
https://www.gsma.com/mo-bileeconomy/wp-content/uploads/2022/02/280222-The-Mobile-Economy-2022.pdf”.  

November 

2019, 

10 

 
                                                 
Based  on  the  Orbis44  database,  in  2022  there  were  around  47 500  potential  manufacturing  firms 
worldwide that may implement standards that are subject to FRAND commitments. Around 3 800 
(8%) were located in the EU. Among those EU firms, 16% were large and 84% were SMEs (based 
on employment figures). They employed 2.2 million persons. The combined turnover of these firms 
for the last available year amounted to around EUR 600 billion. 88 of the companies reported a total 
R&D spending of EUR 26 billion in the last available year, on average 7% of their turnover.45  

Furthermore,  we  estimate  that  each  year  around  600  SEP  license  agreements  are  signed  with 
approximately 230 EU based implementers (including 80 SMEs) and around 190 non-EU based firms 
with  subsidiaries  in  the  EU.  For  more  information  on  the  implementers’  landscape,  please  see 
Annex 5.1. 

2.2.  What are the problems? 

In this section we will present the current problems of SEP licensing, in a situation when a SEP holder 
makes a FRAND commitment to an SDO, from the point of view of SEP holders and implementers. 
As  SEP  licensing  concerns  commercial  deals  between  two  parties  and  is  often  subject  to  non-
disclosure agreements, there is only limited public information available (for instance when there is 
a  court  dispute).  Hence  the  information  below  is  based  on  evidence  obtained  through  public 
consultations, numerous interviews with stakeholders and dedicated studies. The examples provided 
below  are  anonymised  and  aggregated  versions  of  evidence  the  Commission  obtained  from 
testimonies,  but  which  are  subject  to  commercial  secrecy.  The  figure  below  outlines  the 
argumentation logic of this chapter. 

Figure 3: Problem tree 

The  overarching  problematic  issues  are  uncertainty  and  high  transaction  costs,  which  affect 
differently  the  behaviour  of  SEP  implementers  and  owners  (this  may  not  be  the  case  when  an 
implementer also owns SEPs as e.g. in case of mobile phone companies, but increasingly with the 
rise of IoT, the two groups are distinct). 

2.2.1.  SEP owners’ perspective 

In  order  to  participate  in  standard  creation,  prospective  SEP  holders  had  to  invest  considerable 
resources and time in R&D activities to first develop new technology and then to patent it worldwide. 

44 ORBIS is a private global database which has information on almost 60 million companies. 
45 It should be noted however, that we cannot attribute neither the share of revenue, employment nor R&D expenses to 
products embedding SEPs. 

11 

SEP ownership and essentiality not clearLimited information on SEP price (FRAND royalty)Dispute settlement mechanisms not adapted to resolve FRAND disputesDriversProblemsConsequencesEspecially (but not limited) to SMEs:-Reduced ability to innovate -Impaired global sustainable competitiveness-Frictions in technology diffusion-Risks to supply chain security Firms cannot assess SEP exposureFirms unable to incorporate SEP cost into product priceOut of scope:-Global forum shopping for favourable court-New business models of firms involved in SEPs-Specificities of industrial sectors, including the Internet of Things.Uncertaintyand High transaction costUncertain and delayed SEP revenueInsufficient transparencyFor implementersFor SEP owners-Reduced ability to innovate-Impaired global sustainable competitiveness -Frictions in technology diffusion-Weaker participation in standardisation 
 
                                                 
CRA (2022) estimates R&D amounts of between USD 2 and 9 billion annually for standards used in 
a smartphone.46 All that is done without guarantee that first, the inventor’s patents will be used by 
the standard, and second, that the standard will be accepted by the market.47 Even if a standard is 
accepted, it takes years before it is widely used while an invention is patented for maximum 20 years. 
As a result, SEP holders have limited time to generate a return for their R&D investments through 
royalties for the use of the patents.   

A SEP owner, as any patent owner, may license implementers for the use of the protected technology 
and  request  remuneration.  In  contrast  to  other  patents,  a  SEP  holder  has  to  license  subject  to  the 
FRAND commitment. According to the public consultation48, in order to be able to better assess the 
value that their technology brings to the standard implementations, a SEP holder would wait a few 
years  (around  2  to  4  years)49  until  the  standard  is  implemented  in  the  market  and  then  approach 
companies in specific markets to offer them licences. This is followed by negotiations, which take 
on average 3  years50,  and  potentially litigation in  case parties  cannot  reach  an agreement (adding 
another 1 to 2.5 years).51  

Work on the 4G standard began in 2002 with the first commercial use in 200952, by 2021 around 
60%  of  phones  used  this  technology.  Work  on  5G  started  in  2008,53  and  phones  with  this 
technology only now emerge on the market. One of the leading SEP holders told the Commission 
it spends around 20% of its annual sales on R&D. 

The  Avanci  platform  was  created  in  September  2016  to  license  2G,  3G  and  4G  technology  to 
vehicle  producers.  Even  though  it  included  only  a  few  SEP  holders  at  the  outset,  once  its  first 
licence  was  concluded  with  a  German  automotive  manufacturer  at  the  end  of  2017,  more  SEP 
holders  joined  the  platform,  and  it  now  represents  about  52  SEP  holders  in  these  technologies 
(about  60%  of  SEP).54  In  September  2022  it  announced  that  more  than  80  automotive  brands 
selling 100 million connected vehicles are covered by its licence. Prices range from USD 3 (eCall) 
to USD 20 (2G, 3G and 4G) per vehicle.55 The figure below illustrates progress in license coverage 
of connected vehicles. Most OEMs took a licence before the announced increase in the price of the 

46 CRA, De Coninck, R., von Muellern, C., Zimmermann, S., and Mueller, K., SEP Royalties, Investment Incentives and 
Total Welfare, 2022, pp. 3-5, data for 2020, lower bound based on relation of R&D to SEP royalties, upper based on SEP 
royalties. Based on the lower bound, the largest estimated smartphone R&D are Qualcomm (USD1.1bn in 2020), Nokia 
(USD256m) and Ericsson (USD159m). Other upstream innovators are estimated to have invested USD 406 million in 
smartphone related R&D. 
47 Not all R&D expenses targeted at a certain standard (or a certain field of innovation more generally) lead, in the end, 
to usable contributions to this standard. This reflects the generally risky nature of innovation. 
48 Public consultation, see summary of comments to “Access to all” and “licensing in the value chain”. 
49 OPC results, Q9 9. How much time after the first implementation of a standard in your products are you, on average, 
contacted by a SEP holder with an invitation to take a licence? 
50 Baron, J., Arque-Castells, P., Leonard,  A., et al.,  Empirical Assessment of Potential  Challenges in SEP Licensing, 
European Commission, DG GROW, 2023, p. 145: “We observe significant heterogeneity in the duration of negotiations 
prior to litigation, ranging from 0 to almost 9 years; with a median duration of 2.1 years (mean duration 2.9 years) from 
the first contact to the filing of the (first) lawsuit”. 
51 Baron, J., Arque-Castells, P., Leonard,  A., et al.,  Empirical Assessment of Potential  Challenges in SEP Licensing, 
European Commission, DG GROW, 2023, p. 148: Once a complaint has been filed, the average duration of SEP litigation 
cases (the period from first filing date to resolution) range from 14.4 months in Germany, 15.8 months in the Netherlands, 
to 32.2 months in France (only first instance). 
52 https://en.wikipedia.org/wiki/4G. 
53 https://en.wikipedia.org/wiki/5G. 
54 Companies missing from Avanci include among others Huawei, Samsung, Apple, Google, ETRI. Source of % IPlytics. 
55 https://www.avanci.com/2022/09/21/avanci-expands-4g-coverage-to-over-80-auto-brands/; USD prices converted to 
EUR using EUR1:USD1 rate. 

12 

 
 
                                                 
licence from USD 15 to USD 20. According to major SEP owners, the process of licensing the 
automotive industry is about 10 years.56 

Figure 4: Estimated accumulated sales of licensed and unlicensed connected vehicles based on 
Avanci announcements 

* Including licenses signed up to August 4, 2022 
Source: - Baron, J., Arque-Castells, P., Leonard, A., Pohlmann, T., Sergheraert, E., Empirical Assessment of Potential Challenges 
in SEP Licensing, European Commission, DG GROW, 2023;, using estimates, p. 156 
In the public consultation, SEP holders  identified their most important  problem  to  be the various 
reasons  used  by  the  implementers  to  delay  the  taking  of  a  licence.57  Examples  are  provided  in 
Annex 2. 

The costs related to SEP licensing are also significant for both SEP holders and implementers. The 
average  bilateral  negotiation  cost  per  licence  for  both  the  SEP  holder  and  the  implementer  is 
estimated at EUR 2 million to EUR 11 million (see Table 1 and examples in Annex 2). Such high 
cost (both, in terms of time and money) also explains why major SEP holders usually have licensing 
deals signed with only around 100-200 implementers58, that have a sufficiently high volume and/or 
value of sales that would allow for absorbing these costs. There are also SEP holders whose main 
source  of  income  is  licensing.  They  constitute  a  very  heterogeneous  population,  including  R&D 
specialist firms (e.g. InterDigital), public or semi-public research institutes (e.g. Fraunhofer, CSIRO, 
ETRI), universities, and different types of patent assertion entities (PAE).59 PAEs are entities whose 
business model is the licensing and assertion of patents acquired from other parties. They usually 
conclude below 100 licenses, yielding a modest revenue. Finally, patent pools are platforms through 
which multiple  SEP holders  offer a single license  to  multiple licensees,  promoting more efficient 
licensing. For an overview of licensing practices see table below: 

Table 1: Licensing cost and revenue for different SEP holders (worldwide) 

# SEP Licenses per year (Total) 

Major net licensors 
100-150 

Licensees (types) 

Large multinationals 

Patent Assertion 
Entities/Non practicing 
entities 
 < 100 
Large and medium-size 
firms 

SEP Pools 
1 000-2 000 
Large, medium-size and 
smaller firms 

56 Major SEP holders reported approaching the automotive industry for licences already in 2013. 
57 Public consultation – responses to question 19. 
58 Baron, J., Arque-Castells, P., Leonard,  A., et al.,  Empirical Assessment of Potential  Challenges in SEP Licensing, 
European Commission, DG GROW, 2023, Section 6.2.3.1. SEP licensing by major net licensors. 
59 Baron, J., Arque-Castells, P., Leonard,  A., et al.,  Empirical Assessment of Potential  Challenges in SEP Licensing, 
European Commission, DG GROW, 2023, p. 114: “NPEs constitute a very heterogeneous population, including R&D 
specialist firms (e.g. InterDigital), public or semi-public research institutes (Fraunhofer, CSIRO, ETRI..), universities, 
and different types of patent assertion entities (PAE)”. 

13 

 
 
 
                                                 
Average yearly royalty value 
(royalty revenue per license) 
Duration of license 
Negotiation cost 
Dispute cost per license  
Average cost per license60 

EUR 15M 
6 years 
>1M EUR 
EUR 500k 
EUR 2M-11M 

EUR 300k 
6 years 
<500k EUR 
EUR 900k 
EUR 1.75M 

? 
6 years 
small 
< EUR 25k 
EUR 300k-600k 

Source: - Baron, J., Arque-Castells, P., Leonard, A., Pohlmann, T., Sergheraert, E., Empirical Assessment of Potential Challenges in 
SEP Licensing, European Commission, DG GROW, 2023;, Table 16, pp. 138-139 

Consequently,  SEP  owners,  in  particular  those  who  pursue  bilateral  licensing,  face  two  main 
challenges:  long  negotiations  and  high  cost  of  SEP  licensing.  This  could  potentially  reduce  their 
income  base  and  might  reduce  incentives  for  participation  in  development  of  new  standards, 
especially where strategic licensing markets stagnate and/or move to low-cost business models.  

Stakeholders  reported  that  the  royalty  rates  earned  by  the  firms  that  specialise  in  technology 
development have been steady for years in the mobile phone market.61 It appears that the income 
uncertainty is currently mitigated by relatively high SEP prices charged to those who are licensed 
(first example below). And the rate of standard development does not appear to have been affected 
(second example below). 

There are indications that investment in the development of SEPs, certainly for cellular standards, 
is commercially attractive. For instance, while Bekkers et al. (2002) count 14 different SEP holders 
for 2G62, more than 100 parties had declared 5G SEPs as of February 2021 according to IPlytics 
(2021).63

In 2013 and 2014, royalties requested by  SEP holders for patents essential to the 802.11 Wi-Fi 
standard were slashed in multiple bench trials and jury verdicts in the United States, in some cases 
considerably, by up to 90%. Yet incentives for innovation remained strong and the contributions 
to  the  next  generations,  Wi-Fi  6  and  Wi-Fi  7  –  whose  development  began  in  2014  and  2019, 
respectively, are significantly larger than the contributions to Wi-Fi 4 and Wi-Fi 5.64 

The ability of the SEP holder to seek royalties is likely to be put under pressure in the future. Some 
phone manufacturers  reported to  the  Commission that they  adopted a  low-cost business  model to 
serve lower income consumers, and the royalty demands are not commensurate with their business 
model.  An  IoT  supplier  and  an  IoT  mid-cap65  reported  that  the  IoT  market  is  very  fragmented, 
competitive and cost sensitive.  

60 Average licensing cost = marginal cost of licence + (licensor fixed costs/ # licences/programme) + (implementer fixed 
cost/ #licences/product). 
61 Submission by the 4iP Council to the European Commission Call for evidence for an impact assessment. 
62 Bekkers, R., Duysters, G., Verspagen, B., ‘Intellectual property rights, strategic technology agreements and market 
structure:  The  case  of  GSM’,  Research  Policy,  2002,  No. 31,  pp.  1141-1161,  DOI:10.1016/S0048-7333(01)00189-5, 
https://www.researchgate.net/publication/239904150_Intellectual_Property_Rights_Strategic_Technology_Agreements
_and_Market_Structure_The_Case_of_GSM. 
63 IPlytics, ‘Who is leading the 5G patent race?’, February 2021, p. 4, https://www.iplytics.com/de/report/5g-patent-race-
02-2021/. 
64 CRA, De Coninck, R., von Muellern, C., Zimmermann, S., and Mueller, K., SEP Royalties, Investment Incentives and 
Total Welfare, 2022, pp. 15-16., quoting: IPlytics: https://www.iam-media.com/article/whos-ahead-in-the-wifi-6-patent-
race.  
65 Mid-cap (or mid-capitalisation) is the term that is used to designate companies with a market cap (capitalization) – or 
market value – between USD 2 and USD 10 billion, https://www.investopedia.com/terms/m/midcapstock.asp. 

14 

 
 
 
 
                                                 
These developments, together with the fact that many SEP holders are no longer implementers, or 
implementers on a much smaller scale (in particular in the IoT), is likely to have an impact on the 
FRAND royalty negotiations as the disagreements about the FRAND royalty determination are likely 
to become more pronounced. This in turn will have a negative impact on both the length and the cost 
of the negotiations. 

2.2.2.  Implementers’ perspective  

While SEP holders need time to assess the value of the technology in standard implementations and 
make  decisions  about  who  and  how  to  license,  and  for  how  much,  in  particular  in  new  markets, 
implementers  encounter  great  uncertainty  and  prospects  of  much  higher  than  anticipated  costs 
associated  with  the  use  of  standards,  potentially  discouraging  the  implementation  of  these  new 
technologies. 

In principle, goods sold should be free from any right or claim of a third party based on intellectual 
property, if known to the seller or the seller “could not have been unaware”.66 If a company discovers 
that it may be infringing a patent67, it has the choice, among other things, to (i) “work around”, using 
a solution that does not result in patent infringement; or (ii) stop the product development unless the 
company is able to secure a license from the patent owner for the use of the patented technology.68 
The rationale is to respect the law by ensuring  first, that a company does not infringe on another 
person’s property rights, and second, anyone who buys such a product has legal certainty. The same 
rules apply to exports.  

50%  of  the  companies  who  replied  to  the  public  consultation  claimed  that  they  have  proactively 
sought SEP licences.69 Not infringing a SEP, having legal certainty over costs and an enhanced ability 
to plan business activities were mentioned as the top reasons for seeking a license by around three 
quarters of respondents to the public consultation.70 Some of those who sought licences did not obtain 
such  licences,  mainly  because  of  disagreement  on  a  FRAND  royalty  (especially  in  new  markets 
where the SEP holder has not yet decided on its licensing policy and where the SEP holder prefers 
licensing at end-product level). 17% of the companies who replied to the public consultation reported 
not  to  have  requested  a  licence  proactively.  33%  expressed  no  opinion.  There  are  various 
considerations in the decision not to proactively seek a licence. 

A manufacturer of medical devices for the treatment of various critical health disorders wishes to 
implement  cellular  connectivity  in  its  product  to  enable  remote  patient  health  monitoring  and 
enhancing patient adherence to prescribed treatments. Development, clinical trials and regulatory 

p. 

12, 

2010, 

66 Pursuant to Article 42 United Nations Convention on Contracts for the International Sale of Goods “The seller must 
deliver goods which are free from any right or claim of a third party based on industrial property or other intellectual 
property, of which at the time of the conclusion of the contract the seller knew or could not have been unaware…”, “The 
obligation of the seller … does not extend to cases where: (a) at the time of the conclusion of the contract the buyer knew 
or could not have been unaware of the right or claim” United Nations Convention on Contracts for the International Sale 
of  Goods, 
https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/19-
09951_e_ebook.pdf. 
67 Whether or not a product infringes a patent is established with legal certainty only through court proceedings, where 
the  validity and enforceability of a patent is also examined. A product developer may preliminarily assess whether it 
could be infringing a patent to determine what course of action may be appropriate. 
68  See  Annex  9,  Q12  “What  is  the  main  effect  for  SEP  implementers,  in  particular  start-ups  and  SMEs,  of  the  costs 
involved in licensing SEPs (search, negotiation and litigation costs)?”: “I look for alternatives (e.g. not using standardised 
technology or royalty free standards)” – 38% all, 52% implementers; “I go out of business/change business” – 20% all, 
38% implementers. 
69 See Annex 9, Q7. 
70 See Annex 9, Q10 “What would be the main reason for you to request a licence?”: “Not to infringe a SEP without a 
licence” (72% all, 82% implementers); “To have legal certainty over my costs and plan my business activities” (60% all, 
73% implementers). 

15 

 
                                                 
approvals  for  a  medical  device  take  years  (up  to  10  years  or  more).  Thus,  the  company  needs 
certainty at an early stage about the cost of cellular SEP licenses, as this must be taken into account 
to  consider  total  costs  and  alternative  technologies.  Moreover,  once  the  company  enters  into 
licensing negotiations, it faces the prospect of an injunction order potentially affecting patients’ 
access  to  telehealth  services  and  derailing  its  product  financially.  With  no  indication  of  an 
aggregate  royalty  for  implementing  the  standard  and  given  the  large  number  of  SEP  owners, 
evaluating the patents and negotiating the necessary licenses is beyond the firm’s capability.  

In practice, it is impossible to sign a SEP licence with all SEP holders whose standardised technology 
the firm uses. For example, Avanci represents 52 SEP holders of 2G, 3G and 4G but does not include 
certain large SEP holders such as Huawei, Samsung and others in their membership. SEP holders 
with whom a company did not sign a licence may ask the firm to enter into a licence at any time (and 
some may never seek royalties). 

Standards are in most cases embedded into components that are used in an end-product sold to the 
consumer. Suppliers of such components may not have the necessary SEP licenses when they sell 
such  components  to  the  end-product  manufacturers.  As  a  result,  such  end-product  manufacturers 
could  be  subject  to  a  demand  for  SEP  licenses.  For  example,  in  the  automotive  industry,  while 
component manufacturers were buying their chips licensed for 2G and 3G, they were not licensed 
for  4G.71  With  the  adoption  of  the  4G  standard,  SEP  holders  chose  not  to  license  component 
manufactures  but  to  license  the  car  manufacturers.  Component  suppliers  are  not  able  to  pay  the 
royalty requested from the OEMs and pass the cost downstream. Some European suppliers chose to 
exit the market72, others are still litigating73. 

The likelihood of SEP holders asserting their SEPs in courts is greater in regions with more efficient 
judicial  systems  and  large  markets.  During  the  webinar  on  enforcement,  to  which  893  persons 
registered for participation74, 51% of the participants indicated that they prefer to litigate in Europe 
against 30% who preferred the US. To the question in which jurisdiction they have litigated, 58% of 
the participants  indicated Germany, 7% indicated France  and 4% indicated the Netherlands. 31% 
specified jurisdictions outside of the EU. Using the number of court cases as a proxy, we can estimate 
that implementers are targets of court actions in the EU primarily in Germany (around 44 court cases 
per year), France (around 2) and the Netherlands (around 1).75 Note that not every SEP holder decides 
to litigate, but only court cases are observable.  

An  EU  small  SME  reports:  “European  companies  are  at  a  disadvantage  compared  to  foreign 
producers that might fly under the radar.”76  

As the threat  of a  court  injunction/cessation  of production means income loss and loss of market 
share to competitors and switching to another technology is costly or impossible (because of standard 
implementation),  implementers  can  engage  in  court  procedures  that  are  cost-  and  time  intensive, 
attempt  to  negotiate,  or  agree  to  licence  agreements  at  any  price  (especially  SMEs,  if  they  are 
targeted). This holds true especially for licensing in the IoT, where there is continuous entry of new 
start-ups that implement standardised technologies in their IoT devices. 82% of SMEs in the targeted 

71 If the  supplier is licensed for all patents (SEPs), the downstream user does not need a licence. Otherwise, the SEP 
holder will receive the price twice, the so called ‘double dipping’. 
72 Bury, Thales and U-Blox. 
73 Continental and partially Thales (for damages). 
74 GROWTH, Webinar series on Standard Essential Patents, https://ec.europa.eu/newsroom/growth/items/701874/en. 
75 Baron, J., Essentiality Checks for Potential SEPs – Framework for Assessing the Impact of Different Policy Options, 
European Commission, DG GROW, 2023, p.133, Table 15. 
76 See Annex A8.3 SME survey. 

16 

 
                                                 
survey  stated  that  they  do  not  have  resources  to  negotiate  with  SEP  holders  or  engage  in  court 
proceedings.77 
Start-ups and SMEs lack not only the resources but also the SEP and licensing expertise.78 Two thirds 
of SMEs replying to the Commission’s targeted survey stated that there is uncertainty regarding SEPs 
and that royalty payments affect their competitive position.79 Currently, there is no public support 
available to start-ups and SMEs for handling SEP licensing negotiations. So, the majority are de facto 
not licensed. One third of the SMEs replying to the targeted survey believe that it is unlikely they 
will be invited to take a licence by a SEP holder (small size and insufficient volume of sales). Another 
third of the replying SMEs thought otherwise.80 In principle, nothing prevents a SEP holder from 
demanding that an SME take a licence. 

EU SME: It is said that large SEP holders ‘do not target SMEs’, our case shows that this is not 
entirely accurate. Even if some do not, the financial uncertainty SMEs face is unreasonable and 
unfair: an SME has to wait and fear that any SEP holder can approach it at any time (perhaps when 
the SME becomes larger) and ask for payment of past royalties.  

An SME reported: We received multiple SEP licensing requests. Some SEP holders have litigated 
(one litigation cost amounted to tens of thousands of Euros, more than the few thousand Euro value 
of the licence it concerned). We have taken several licences, but we know we have unfairly paid 
much more than others.  

Another  SME  noted:  “As  we  are  a  small  company,  we  often  do  not  even  have  the  option  to 
negotiate.” 81 

Whether big or small company, this uncertainty makes business planning more difficult.82 We will 
elaborate  in  the  next  section  on  the  problem  drivers.  For  more  examples  of  problems  that 
implementers face, see Annex 2. 

2.3.  What are the problem drivers? 

The problems above are caused in large part by the following drivers, which this initiative aims to 
tackle:  insufficient  transparency  on  SEP  ownership  and  essentiality;  lack  of  information  about 
FRAND royalties; and a dispute settlement system not adapted for FRAND determination. There are 
also other drivers affecting the problem, which this initiative cannot solve directly, such as the use of 
foreign courts to resolve SEP cases. 

77 See Annex A8.3 SME survey, Q12. 
78 CRA, De Coninck, R., von Muellern, C., Zimmermann, S., and Mueller, K., SEP Royalties, Investment Incentives and 
Total Welfare, 2022, p. 11: “SMEs – and in particular start-ups - are likely to lack licensing experience, expertise, and 
resources to properly evaluate and challenge the demands of SEP holders. For this reason, they could be more intimidated 
by the possible consequences of patent infringement (e.g., facing an injunction) and thus be prone to simply accept non-
FRAND royalty demands instead of engaging in further negotiations.”. 
79 65% (17 out of 26) and 64% (18 out of 28) respectively. See Annex 8.3 SME Survey, Q16. 
80 See Annex A8.3 SME Survey, Q16. 
81 See Annex A8.3 SME survey. 
82 In the Public consultation companies estimated their internal costs of assessing SEP exposure before they put a new 
product onto market at on average EUR 155 000, with median in range of between EUR 10 000 and 50 000. See Annex 
9, Q11. 

17 

 
                                                 
2.3.1.  Unclear SEP ownership and essentiality 

To negotiate a SEP licence, a standard implementer should know which SEP holders license for a 
fee, how many declared SEPs83 each has, and how many of those are actually essential (necessary to 
implement a standard). 
Information on patent ownership and essentiality is not readily available.84 The vast majority of SMEs 
replying to the Commission’s survey said they did not know who owns SEPs relevant to a standard 
they implement and stated they did not know if all the patents that a SEP holder presented to them 
during negotiations were actually essential to the standard.85 This is consistent with the results from 
the  public  consultation.86  Without  such  information,  the  cost  and  complexity  of  SEP  licensing 
negotiations increases. With regard to almost all standards, expert third party analysis is required to 
obtain  reasonably  reliable  estimates  of  the  number  of  actual  SEPs.  The  cost  for  implementers  of 
assessing the essentiality of individual patents could be significant from an average cost of EUR 355 
to EUR 7 860 per SEP, depending on the evaluation rigorousness.87 

There  are  three  main  reasons  for  the  lack  of  transparency  on  the  number  of  essential  patents  for 
different standards:  

First, many Standards Development Organisations (SDO) do not provide comprehensive data on self-
declared potential SEPs, as they allow for blanket disclosures. Patent owners may simply declare that 
they own potential SEPs and are prepared to license on terms compliant with the SDO’s IPR policy, 
without specifically identifying any of these patents or their relevance to the standard(s) in question. 
Some estimates indicate that only about 10-20% of all Wi-Fi SEPs are specifically declared at its 
SDO: IEEE,88 and approximately 20-30% of all High Efficiency Video Coding (“HEVC”) SEPs are 
specifically declared at the relevant SDO: ITU-T89. Hence, the large majority of potential SEPs are 
not  specifically  declared  at  either  SDO.  As  a  result,  these  SDOs’  databases  provide  no  useful 
information about the numbers of potential SEPs held by the various owners.  

Second,  while  some  SDOs  (for  example  ETSI)  require  patent  owners  to  identify  specific  patents 
and/or patent applications that they believe are or may become essential to a standard, the disclosure 
(also called declaration) process is complex. This process is geared towards standardisation activities 
and not adapted for SEP licensing negotiations. 

Third,  declarations  of  potential  SEPs  are  often  made  during  the  standardisation  process  (firms 
wishing  to  contribute  to  a  new  standard  identify  their  patent  assets  that  may  cover  the  standard, 
depending on what contributions are accepted) and hence do not provide reliable information on the 
actual SEPs covering the final standard. This is one of the reasons why experts estimate that only 
between 25% and 40% of the patents found in the ETSI IPR database are in fact essential to the final 

83 Declared SEPs are patents that the holder declares as either being or likely to be essential to a standard. This is the SEP 
holder’s position, largely without any independent evaluation. Some SDOs required such declarations of specific patents 
(e.g. ETSI) but most do not. Thus, even the number of SEPs a holder believes to be essential is not available for most 
standards. 
84 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12510-Intellectual-Property-Action-Plan. 
85 80% (16 out of 20) and 90% (19 out of 21) respectively. See Annex A8.3 SME Survey, Q12. 
86 Public consultation – responses to Question 19. 
87 Baron, J., Arque-Castells, P., Leonard,  A., et al.,  Empirical Assessment of Potential  Challenges in SEP Licensing, 
European Commission, DG GROW, 2023, pp. 38-39, Table 8: SEP evaluation rigorousness level description. 
88 Estimations in Microsoft Corp. v. Motorola, Inc. 2013 U.S. Dist. LEXIS 60233. 
89  Based  on  comparing  ITU-T declaration  data  with  patent  lists  of  MPEGLA’s  and  Access  Advance’s  HEVC  patent 
pools. 

18 

 
                                                 
published standard90, as supported by empirical research.91 In the case of 5G, the essentiality rate can 
be as low as 15%.92 

Depending on the SDO, SEP holders are not required to regularly update the information originally 
provided  to  SDOs,  for  example  by  removing  non-essential  patents  or  specifying  a  change  in 
ownership. 
Patent pools provide more transparency93 and conduct essentiality checks. Typically, not all SEPs of 
an individual SEP holder are checked for essentiality. In addition, the SEP holder chooses which of 
its SEPs to submit for essentiality check. The likelihood of those SEPs being confirmed essential is, 
therefore, very high. The essentiality check system of the pools is thus not designed to determine the 
rate of essentiality in the portfolio of an individual SEP owner. Furthermore, there is no patent pool 
that has gathered all SEP holders for a given standard. It follows that patent pools are not capable of 
providing sufficient information on the overall SEP landscape. 

More readily usable data is available from commercial providers. The cost varies from EUR 5 000 
to EUR 25 000.94 These private databases are thus available only at high cost, and it is unclear how 
reliable their assessments of essentiality are.95 

80% of SMEs responding to the SME survey said they did not know who owns SEPs relevant to the 
standard  they  use  and  90%  did  not  know  if  patents  presented  to  them  during  negotiations  were 
essential to the standard.96 

2.3.2.  What is a FRAND royalty for SEPs? 

FRAND refers to the grant of licences on fair, reasonable and non-discriminatory terms (‘FRAND 
terms’) in relation to a patent right. Individual patent holders give an undertaking to the SDO that 
they are prepared to grant licences on FRAND terms.97   

to 

the  Debate 

(E03600):  Contribution 

(E03600):  Contribution 

90 Baron, J., Geradin, D., Granata, S., et. al., Group of Experts on Licensing and Valuation of Standard Essential Patents 
‘SEPs  Expert  Group’ 
the  Debate  on  SEPs,  2021,  Part  2,  Section  4.2, 
https://ec.europa.eu/docsroom/documents/45217.  
91  Brachtendorf,  L.,  Gaessler,  F.,  and  Harhoff,  D.,  ‘Truly  Standard-Essential  Patents?  A  Semantics-Based  Analysis’, 
CEPR  Discussion  Paper  No.  DP14726,  May  2020,  https://ssrn.com/abstract=3603956;  estimate  that  in  case  of  LTE 
standards (4G) around 32.3% of SEP in the database are essential, in case of UMTS (3G) - 37.7%; GSM (2G): 38.5%. 
92 IPLytics. 
93 Baron, J., Geradin, D., Granata, S., et. al., Group of Experts on Licensing and Valuation of Standard Essential Patents 
‘SEPs  Expert  Group’ 
10, 
to 
https://ec.europa.eu/docsroom/documents/45217. 
94 Baron, J., Arque-Castells, P., Leonard,  A., et al.,  Empirical Assessment of Potential  Challenges in SEP Licensing, 
European Commission, DG GROW, 2023, p. 30, Section 3.2.1.3. Commercial patent databases. 
95 Professional software solutions provide a fast and easy access to SEP declaration data, allowing to break down patent 
counts  of  self-declared  patent  families  by  current  patent  holder,  standards  generation,  even  release  or  working  group 
within a few minutes or hours. Some have created designated patent declaration analytics solutions that allow searching 
across the full text of patent and standard documents. The solutions vary in terms of quality and scope. See: Baron, J., 
Arque-Castells,  P.,  Leonard,  A.,  et  al.,  Empirical  Assessment  of  Potential  Challenges  in  SEP  Licensing,  European 
Commission, DG GROW, 2023, pp. 31-32. 
96 See Annex A8.3, Q12 (16 out of 20), Q12 (19 out of 21) respectively.  
97 According to Horizontal guidelines: Compliance with Article 101 by the standard development organisation does not 
require the standard development organisation to verify  whether the licensing terms of participants fulfil the FRAND 
commitment. Participants must assess for themselves whether their licensing terms and in particular the fees they charge 
fulfil the FRAND commitment. Therefore, when deciding whether to commit to FRAND for a particular IPR, participants 
will need to anticipate the implications of the FRAND commitment, notably on their ability to freely set the level of their 
fees. 

2021,  Annex 

SEPs, 

on 

19 

 
                                                 
Any SEP holder may demand royalties from an implementer, irrespective of the number of SEPs it 
owns. Standards such as 5G can have around 200 SEP holders and each of them may own a different 
number of SEPs covering different patented technologies included in the standard. It is, however, 
unclear how many truly essential patents each owner has, as explained above. Furthermore, the value 
of such patented technologies may be different. Therefore, the number of patents contributed by each 
owner could be seen as an imperfect proxy. Finally, the products of the implementers almost always 
include  many  other  features  and  technologies  that  contribute  to  the  value  of  their  products.  This 
makes  it  even  more  difficult  to  determine  the  value  of  the  standardised  technology.  In  addition, 
determining the share of royalties for each SEP holder is also a complex process. 

When a SEP holder approaches a standard implementer for royalties, the implementer can choose to 
engage in in-depth and lengthy negotiations to determine what would be a reasonable royalty (i.e., 
FRAND) or to accept the demanded rate. Engaging in negotiation requires technical  competence, 
knowledge of patent law and licensing skills, all of which may be less available capabilities in smaller 
companies as compared to larger firms. Thus, SMEs for example may tend to accept the SEP holder’s 
offered terms fearing an injunction/stop of production. Moreover, if a company (even a large one) is 
implementing the standard by using a component supplied by a third party, it will most likely have 
no  knowledge  of  the  relevant  technology  and  must  engage  external  expertise  to  assist  in  the 
assessment  of  the  royalty  demand.98  This  comes  in  addition  to  the  legal  resources  necessary  to 
negotiate and finalise a licence agreement. 

One way of determining the added value of a standard to a product is to compare its price with and 
without the standardised technology. For instance, the price of a phone with and without 5G. The 
problem  is  that  any  new  technology  (such  as  5G)  is  first  implemented  in  high  end/flagship 
products, which are the most expensive. Second, such products incorporate additional features on 
top  of  the  standard  (e.g.  better  camera),  and  the  additional  value  is  partly  attributable  to  the 
interaction of the new standard with those features. A relatively high FRAND rate determined for 
flagship product can then linger on also for cheaper models (unless an adjustment mechanism is in 
place), slowing the rate of technology diffusion and adoption. 

A SEP owner’s refusal to comply with their FRAND licensing obligation may give rise to liability 
under competition law. However, FRAND may be a range and could mean that the royalty rates differ 
in different market segments based on the specific use for the standard or parts thereof (e.g. car versus 
connected vacuum cleaner) and even between producers of the same product, depending on whether 
they are considered to be “similarly situated” (a FRAND rate should be the same for a company in a 
comparable  situation).  SEP  holders  often  disclose  their  FRAND  rate  demand  at  the  outset  of  the 
licencing negotiations (they may ask for a non-disclosure agreement to be signed, but many do not), 
however they typically refuse to share information about “comparable licences” or are selective about 
which comparable SEP deals they will show to the implementer (this kind of information is typically 
not public). Some SEP holders announce a SEP price in advance, yet in many cases this is a maximum 
price that can be reduced during negotiations. In most cases this is not a price for all relevant SEPs 
(of all SEP holders) for a standard (“aggregate royalty”), but a rate the particular SEP owner(s) would 
like to get for their share of the total SEPs. 

Avanci (52 SEP holders in 2G/3G/4G) prices for connected vehicles range from USD 3 (eCall) to 
USD20 (4G) per vehicle. Sisvel’s price for WiFi6 for certain products is from USD 0.5 to USD 
3.6  per  unit.99  Sisvel  for  DVB-T2  entrance  fee  of  EUR  10  000  and  EUR  0.60  to  EUR  1  per 

98 Half of SMEs reported that they “did not understand the technology (e.g. of component I use) to engage in meaningful 
negotiations”. See Annex A8.3 SME survey, Q12. 
99  Wireless  connectivity  standard,  https://www.sisvel.com/licensing-programs/wireless-communications/wifi6/patent-
pool/license-terms. 

20 

 
                                                 
consumer product.100 The MPGLA video coding standard AVC/H.264 is royalty free for the first 
100 000 units per year, and then USD 0.2 per unit sold with an enterprise cap of USD 9.75 million 
per year until 2025.101 

Stakeholders  consider  that  the  FRAND  licensing  concept  could  benefit  greatly  from  some 
clarification, notably with regard to the determination of an aggregate royalty burden, the level in the 
value chain at which SEPs should be licensed (e.g. at end product, or component level), or whether 
an initial offer by a SEP holder must be FRAND (e.g. guidance in addition to that provided in the 
2017 Communication). From our analysis and meetings with stakeholders it emerged that especially 
the level of licencing issue is very controversial with no one-size-fits-all solution,102 and may not be 
mandated. It could be recommended, however, that customary industry practices are considered in 
this respect.  

Issues  related  to  SEP  licensing  are  also  regularly  raised  to  competition  authorities,  including  the 
Commission’s department responsible for EU competition enforcement. SEP holders raise concerns 
regarding  implementers  unduly  delaying  negotiations.  Implementers  complain  mostly  about  SEP 
holders not following the Huawei v. ZTE process, offers that are not on FRAND terms or about SEP 
holders refusing to licence at a certain level of the value chain.103  

Almost all SMEs reported that in negotiations they do not know what a fair price for the SEPs would 
be.104 

2.3.3.  Dispute settlement not adapted to resolve FRAND rate disagreements 

SEP holders and implementers often disagree about what constitutes FRAND terms and conditions 
(primarily  royalties)  for  a  SEP  licence.  If  parties  cannot  agree  on  a  FRAND  rate,  SEP  licensing 
disputes can turn into patent infringement proceedings before national courts (around 35 per year in 
the EU)105 in which SEP holders usually seek injunctions. On average, the annual costs of SEP related 
court proceedings in the EU are estimated at around EUR 6 million. However, already the costs of a 
complicated case alone can reach millions of euros.106  

100 Digital Video Broadcasting – Terrestrial 2 (“DVB-T2”) is a standard for broadcasting digital television on terrestrial 
networks  available  since  2009.  https://www.sisvel.com/licensing-programs/digital-video-display-technology/dvb-
t2/license-terms. 
101 https://www.mpegla.com/wp-content/uploads/avcweb.pdf. 
102 It should be noted that implementers, especially SMEs (see  Annex A8.3 SME Survey, as well as survey to SMEs 
conducted by Apple) opt for component level licensing. On the other hand,  SEP holders are adamant that they should 
remain free as to the level they license. See Annex 9 “Questions on FRAND”, for instance see Q36: “Licensing could 
take place at every level of the value chain” 93% of implementers and only 13% of SEP holders agree; or Q37 “Licensing 
should take place at the most upstream level of the value chain” 69% of implementers and 0% of SEP holders agree. See 
also Annex 5.4 for extended discussion on level of licensing. 
103 Without taking any position on the merits of complaints, by way of example, one company has recently made public 
its complaint: “HMD has now also filed competition law complaints against VAEVS before the European Commission 
in order seek the authorities to intervene in issues such as  over-standardization, requirements  for open standards and 
apparent  non-FRAND  demands  and  behaviour.”,  see  https://www.hmdglobal.com/evs-substandard-of-4g-press-
release#id-2hm0baKaAwcCJlKW0dRYY3-0. 
104 See Annex A8.3 SME survey, Q12. 
105 Baron, J., Arque-Castells, P., Leonard, A., et al., Empirical Assessment of Potential Challenges in SEP Licensing, 
European Commission, DG GROW, 2023, Table 15, p. 133. 
106  During  the  public  consultations  we  received  a  limited  number  of  replies  on  cost  of  court  disputes.  Among  eight 
respondents who replied to Q51 on cost of FRAND disputes, the median amount was between EUR 3 and 6 million. 
Among five who provided estimates on the costs of essentiality related disputes, the median amount was between EUR 
1 and 2 million.   According  to  Baron  (2023) (see  footnote  105)  the  average  cost  of  a  SEP  related  dispute  in  the  EU 
amounts to EUR 170 000 for around 70 cases per year (this figure however also includes for instance EPO opposition 
proceedings). It is estimated that around half (35) are court cases, hence the EUR 6 million cost reported. For subsequent 

21 

 
                                                 
An EU SEP holder reached out in 2016 to a car producer who was using cellular connectivity in 
its cars. The SEP holder made several offers to the implementer which were rejected (for instance 
the implementer was  directing the  SEP holder to  license its suppliers instead). The  SEP holder 
spent tens of millions euros on legal counsels and litigation – resources that could have been spent 
on R&D. The two firms signed a licence agreement in 2021. 

It is very difficult to properly determine FRAND rates in patent infringement proceedings before a 
national court, because the SEP holder selects a limited number of SEPs from its national portfolio 
to adjudicate, but seeks to license all of its SEPs for the particular technology (e.g., 4G or HEVC), 
including those in other jurisdictions (global FRAND licence).    

The  CJEU  judgment  in  Huawei  v  ZTE  established  that  the  SEP  holder’s  offer,  and  the  potential 
licensee’s counteroffer must be FRAND and left it up to national courts to assess whether the parties 
observed  the  process  before  granting  an  injunction.  National  courts  in  the  EU  typically  focus  on 
establishing whether the good faith negotiation process has been complied with and have so far not 
been involved in global FRAND determinations. Thus, potential remedies tend to focus primarily on 
the  availability  of  an  injunction,  as  well  as  on  damages  for  the  past  infringement  of  the  asserted 
patents  and  only  in  the  relevant  jurisdiction.  Thus,  the  parties  are  still  left  with  little  certainty 
regarding FRAND royalties for future sales. 

To deal with this uncertainty, a number of courts outside the EU have declared to have jurisdiction 
to  determine  a  global  FRAND  rate,  if  the  parties  do  not  themselves  reach  agreement  on  global 
FRAND royalties (e.g., UK107 and China108). Courts in the EU have so far refrained from making any 
FRAND royalties determinations at a national or global level. 

While traditional alternative dispute resolution (“ADR”) mechanisms are available to SEP holders 
and implementers and could potentially result in broader FRAND determinations, ADR is rarely used 
to settle FRAND-related disputes.109 Among the key concerns are that (i) implementers may not be 
able to obtain information regarding comparable licenses and other relevant data from SEP holders 
(available  through  discovery  proceedings  in  certain  judicial  proceedings),  and  (ii)  the  proceeding 
itself as well as the resulting decision are kept confidential and are not publicly available, so they 
have limited precedential value for future FRAND-related cases.110  

In response to the public consultation, however, a number of respondents acknowledged the potential 
for  ADR  processes  to  help  resolve  global  SEP  disputes,  provided  that  the  above  concerns  are 
addressed.  

calculations and in order to remain prudent we have used the lower figure from the study rather than figures reported 
during the public consultations. See Annex 9, Q51. 
107 Judgment of the United Kingdom’s Supreme Court of 26 August 2020, Unwired Planet v. Huawei, UKSC 2018/0214, 
[2020]  UKSC 37,  https://www.supremecourt.uk/cases/uksc-2018-0214.html.  Note  that  UK  courts  allow  also  different 
prices per region. 
108 Chinese Supreme Court’s ruling of 19 August 2021, OPPO v Sharp, Zui Gao Fa Zhi Min Xia Zhong No. 517. China's 
Supreme People's Court has decided that Chinese Courts can set global FRAND rates at the request of one party, but so 
far no court has made such a determination. 
109 375 persons registered for a Webinar on Enforcement which took place on 4 May 2021 and responded to a survey 
during the registration process. To the question in what type of dispute settlement the respondents were involved, 65% 
indicated to have been involved in litigation before a court, 20% in settlements between the parties and 4% in mediation. 
None indicated to have been involved in arbitration. The responses to the public consultation also revealed that those 
mechanisms may be useful subject to conditions. 
110 The responses to the public consultation identified this lack of information and transparency as an important obstacle 
– see comments to responses to questions 53 to 55. Response of Continental to the Call for Evidence. 

22 

 
                                                 
There is also no mechanism enabling the use of the customs enforcement regulation111 by SEP holders 
because the regulation does not require that the negotiating steps set out in Huawei v ZTE be followed. 
Customs authorities do not have the competence, resources and expertise to establish whether the 
negotiating steps set out in Huawei v ZTE were conducted (for more explanation see Annex 5.4) 

2.3.4.  Drivers out of the scope of this initiative 

There are also other factors that may contribute to the uncertainty and high transaction costs for both 
SEP  holders  and  implementers.  These  factors  include,  without  limitation,  the  global  nature  of 
standards and products; changes in the business models such as low-cost smart phones; specificities 
of the IoT markets, which are fragmented, competitive and often a low margin market; and the fact 
that SEP licensing is sector-specific depending on the nature of the use of the standards. Furthermore, 
because  both  SEP  holders  and  implementers  typically  operate  globally,  SEP  disputes  can  be 
adjudicated  in  different  jurisdictions  including  outside  the  EU.  As  such,  SEP  holders  and 
implementers alike are free to exploit jurisdictional differences to their benefit.  

2.4.  What are the consequences? 

As new standards are developed, additional  contributors participate in  the standardisation process 
(particularly from Asia), putting more pressure on existing SEP holders due to further fragmentation 
of the SEP landscape. Existing SEP holders also face increased challenges to their pricing policies 
from their main licensing market, mobile devices (primarily for cellular standards). Chinese phone 
makers are increasing their market share and are focusing on low-cost business models to serve lower 
income populations. SEP holders need to  adapt their licensing model to the realities of these new 
emerging markets, especially the price pressures.  

The IoT market presents additional challenges. It is a market that is growing at a high speed but is 
fragmented.  Volumes  for  certain  applications  may  be  small  and  profit  margins  seem  tight.112 
Licensing  may  prove  difficult  and  expensive  as  those  industries  are  not  familiar  with  SEPs  (see 
Annex 2). The combination of all these factors is likely to deepen the disagreements about FRAND 
royalties, which is likely to cause more delays in negotiations and to increase the parties’ licensing 
costs,  potentially  impacting  SEP  holders’  revenues.  This  uncertainty  about  future  revenues  could 
impact  the  decisions  of  SEP  holders  to  invest  into  R&D  and  may  in  turn  have  an  impact  on 
participation in standardisation. 

On the other hand, the lack of transparency and unpredictability of royalty demands, plus the cost of 
negotiation and disputes also puts pressure on the costs of products by implementers that are entering 
the  market.  This  is  likely  to  put  pressure  on  the  innovation  capacity  of  implementers  as  well. 
CRA(2022) noted that there is a trade-off between high SEP royalties and more innovation upstream 
(by SEP owners), on the one hand, and less innovation downstream (by implementers) as a result of 
high SEP royalties, on the other hand. 

Both SEP holders and implementers are likely to (i) lose incentives to innovate; (ii) reduce sustainable 
competitiveness; and (iii) adversely affect supply chain security. 

1)  Incentives to innovate. Uncertainty regarding SEP licensing, price and conditions, with the risk 

of litigation may impact investment and R&D decisions as explained above.  

111 Regulation (EU) No. 608/2013 of the European Parliament and of the Council of 12 June 2013 concerning customs 
enforcement  of  intellectual  property  rights  and  repealing  Council  Regulation  (EC)  No.  1383/2003  (‘Regulation 
concerning customs enforcement of IPRs’), OJ L 181, 29.6.2013, pp. 15-34, http://data.europa.eu/eli/reg/2013/608/oj. 
112 According to testimonies from an IoT supplier and an IoT end-product manufacturer. 

23 

 
                                                 
2)  Sustainable competitiveness  

Global competitiveness 

SEP  holders  often face challenges to  the royalty  rates offered. Although  some implementers may 
push to obtain lower rates without consideration of what constitutes FRAND, there is also a lack of 
certainty and transparency with regard to factors that would support a determination of FRAND rates. 
Uncertainty about which SEPs are essential and the inability of implementers (large and small) to 
determine  the  overall  essentiality  and  validity  of  the  SEP  owner’s  portfolio  through  technical 
discussions (which are often limited to one or two dozen SEPs) lead to questions whether the value 
of the SEP owners’ portfolio is overestimated. The testimonies listed in Annex 2 all refer to a lack of 
trust in the system and regarding the FRAND-ness of the SEP owners’ offers.  

Implementers are typically challenged at courts in the EU first, particularly if they have important 
sales in the EU. Those that take a licence first face competition from unlicensed competitors.  

A European IoT device manufacturer who uses 3G/4G standards for connectivity was approached 
by a SEP holder to pay royalty. The proposed licence would increase the product price by 3%. At 
the same time, a Korean manufacturer sells similar products without a licence, as it  has not yet 
been approached by the SEP owner. The EU manufacturer fears losing its market share. 

EU semiconductor  firm: Not having  a SEP license adds to  uncertainty, both  for us and for our 
customers. If we make a provision for estimated royalties and our competitors do not, we are at a 
disadvantage.  Our  module  customers  generally  do  not  understand  the  technology  and  want  a 
solution with SEP indemnification as they feel unable to navigate the licensing process. If we do 
not offer such indemnification and our competitors do, we are at a disadvantage. 

Furthermore, EU companies implementing more expensive standards face difficulties to effectively 
compete  in  markets  which  have  adopted  their  own  competing  standards.  For  example,  China 
promoted the creation of a Chinese patent pool for its audio-visual standards (AVS) and standard 
contributors  accepted  to  contribute  patented  technologies  for  an  aggregate  fee  of  one  yuan 
(approximately EUR 0.14) per hardware device.113 EU implementers of the competing AVC standard 
may not be able to compete in that market. 

The public consultation confirms that if European companies in the IoT sector, such as smart meters, 
wireless charging stations and payment terminals, are licensed first at rates that their competitors in 
other jurisdictions would not pay, they are likely to lose competitiveness.114 More testimonials are 
available in Annex 2.  

Technology diffusion  

There are risks that standards’ take-up will be slower or implementation will be delayed in the EU 
until applicable SEP royalty rates become more affordable. 

Royalty free Bluetooth gained 100% phone market coverage in 8 years, while royalty bearing NFC 
gained only 36% coverage in the same period.115 

Companies may also try to work around the SEP technology by creating their own (not standard) 
solutions or develop a competing standard on a royalty-free basis, where investment cost permits it. 

113 AVS-Audio and Video Coding Standard Workgroup of China and Webinar on Patent Pools – 20 April 2021, Summary 
report, p. 9, https://ec.europa.eu/docsroom/documents/45814/attachments/1/translations/en/renditions/pdf. 
114 Public consultation, answers to Questions 8, 13 and comments on non-discrimination. 
115 Baron, J., Arque-Castells, P., Leonard, A., et al.,  Empirical Assessment of Potential Challenges in SEP Licensing, 
European Commission, DG GROW, 2023, p. 180. 

24 

 
                                                 
It is also possible that older/less efficient, but lower-royalty or royalty-free technology will be used 
to avoid high SEP royalty exposure. Half of the SMEs stated they try to use free or older technology 
in  order  not  to  pay  for  SEPs,  while  one  in  five  stated  that  they  would  try  to  develop  in-house 
alternatives.116 

Royalty bearing  FireWire (at  least  initially)  was  superior to  the  royalty-free USB standard, but 
USB became the dominant one.117 

Although  the  study  commissioned  to  support  this  IA  concluded  that  at  least  currently  there  is  no 
systematic evidence of mass scale occurrence of slower than expected or delayed implementation of 
standards,118 the public consultation and several testimonies show that the IoT sector is adopting the 
newest standards slower than the mobile phone market.119 Many IoT devices can operate on older 
standards such as 2G (patents expired) and 3G (which is cheaper) but the 2G and 3G infrastructure 
will be removed in the near future.120 

Both EU SEP holders and implementers are set to lose from this situation. 

3)  Supply chain security  

Delays in the negotiations and increasing costs of licensing, may disincentivise EU SEP holders to 
continue  their  participation  in  standardisation.  This  would  benefit  non-EU  contributors  to  the 
standards. The EU would thus lose its ability to contribute European technology to the global market, 
also related to critical infrastructure. 

There is already proof in the automotive industry that because of SEP royalties, European suppliers 
are  no  longer  able  to  compete  and  exit  the  automotive  supplier  market.  In  a  submission  to  the 
Commission,  the  automotive  manufacturers’  organisation  ACEA  reported  a  shortage  of  supplier 
offers and a growing dependence on Chinese suppliers. 

2.5.  How likely is the problem to persist? 

With an increasing demand for connectivity (particularly for IoT) and other standards that promote 
interoperability,  the problem  of SEP licensing is set  to  gain  prominence and affect  a  much larger 
number of companies. About 70% of surveyed SEP experts121 as well as conclusions from the Expert 
Group Contribution confirm that the licensing of SEPs for IoT applications is expected to be more 
challenging.  This  is  because  of  current  trends  in  standard  development,  including  the  increasing 
complexity of new standards, the high number of SEP holders with varying interests and business 
models,  a  lower  volume  of  products  for  a  larger  number  of  implementers,  and  increased  use  of 
standards across different sectors of the economy. These factors in combination are likely to amplify 
frictions  in  the  SEP  licensing  environment,  further  spotlighting  the  need  for  more  certainty  and 
transparency. 

116 48% (12 out of 25) and 19% (5 out of 26) respectively. See Annex A8.2 SME survey, Q16. 
117 Baron, J., Arque-Castells, P., Leonard, A., et al.,  Empirical Assessment of Potential Challenges in SEP Licensing, 
European Commission, DG GROW, 2023, p. 176. 
118 Baron, J., Arque-Castells, P., Leonard, A., et al.,  Empirical Assessment of Potential Challenges in SEP Licensing, 
European Commission, DG GROW, 2023, p. 179. 
119 See Annex 9, Q12. 
120 Michael Bosson, 2G and 3G sunsets and how to prepare, Onomondo, 2022, https://onomondo.com/resource-hub/2g-
3g-sunset/#Europe.  
121 Results of a Survey conducted with SEP industry experts by the Technical University of Berlin in October 2020. See 
Baron,  J.,  Arque-Castells,  P.,  Leonard,  A.,  et  al.,  Empirical  Assessment  of  Potential  Challenges  in  SEP  Licensing, 
European Commission, DG GROW, 2023, p. 24. 

25 

 
                                                 
On the other hand, the level of information  on SEP ownership and essentiality is not  expected to 
improve absent a push from outside sources. The Commission has been trying to stimulate voluntary 
industry  solutions  since  its  Communication  in  1992  on  Intellectual  Property  Rights  and 
Standardisation122,  and  most  recently  in  2017  when  the  Commission  issued  a  Communication  on 
SEPs123.  Attempts  to  improve  the  quality  of  SEP  declarations  at  SDOs  since  then  show  little 
progress.124  The  polarised  responses  to  the  many  surveys,  webinars,  conferences  and  the  Public 
Consultation have made it clear that the industry will not act on its own. 

SEP holders will continue to selectively approach successful SEP implementers for royalty payments 
(70%  of  SEP  holders  in  the  public  consultation  answered  that  they  do  not  contact  all  known 
implementers).125 Although patent pools are likely to emerge for certain IoT applications, such as 
Sisvel  pools  for  Wi-Fi  6  products,126  smart  meters  and  tracking  devices,127  such  pools  will  not 
represent  all  SEP  owners.  Consequently,  most  implementers  will  not  be  fully  licensed  and  will 
operate under the threat of an injunction (particularly if they become successful with higher volumes). 
Furthermore, due to the increasing number of SEP implementers in an increasingly connected world, 
SEP holders could choose to outsource SEP licensing (and resulting litigations) to specialized patent 
assertion entities128 in the future.  

About 70% of the implementers take a licence without litigation according to the results from the 
public  consultation.129  There  is  no  indication  that  traditional  alternative  dispute  resolution 
mechanisms  currently  available  to  SEP  holders  and  implementers  will  be  used  more  often  going 
forward  to  settle  FRAND-related  issues.130  Respondents  to  the  public  consultation  considered 
mediation insufficient as the mediator has no authority to request information and no authority to 
make  a  price  recommendation.131  The  newly  established  Unified  Patent  Court132  is  not  yet 
operational, and it remains unclear how the court will assess and grant injunctions in the context of 
SEPs and whether it will engage in the assessment of (global) FRAND rates. 

No other initiative by the Commission or Member States is going to help provide solutions for these 
SEP issues.133 At the same time other jurisdictions already have (Japan, South Korea, Singapore) or 

122  Communication  from  the  Commission  on  Intellectual  Property  Rights  and  Standardisation,  COM(92)  445  final, 
27.10.1992, https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:1992:0445:FIN:EN:PDF. 
123 Communication from the Commission to the European Parliament, the Council and the European Economic and Social 
Committee  on  Setting  out  the  EU  approach  to  Standard  Essential  Patents,  COM(2017)712  final,  29.11.2017, 
https://ec.europa.eu/docsroom/documents/26583. 
124 For example, ETSI has taken some incremental steps to improve its database and to make it more user-friendly. CEN-
CENELEC improved its declaration system. Other industrial associations, like the Next Generation Mobile Networks 
(which brings together mobile network operators and their suppliers) are working on proposals to improve transparency. 
125 See Annex 9, Q15. Do you contact all known SEP implementers from the selected category? 
126 https://www.sisvel.com/news-events/news-events/news/sisvel-launches-a-patent-pool-on-wi-fi-6. 
127 https://www.sisvel.com/news-events/news-events/news/sisvel-launches-its-cellular-iot-patent-pool. 
128 This includes state-owned entities (such as Japanese IPBridge or FranceBrevets), ‘privateering’ spinoffs from large 
operating companies (e.g. Unwired Planet from Ericsson, Panoptis from Panasonic etc), former operating companies who 
have ceased other activities to concentrate on patent licensing (e.g. Sisvel), and private companies acquiring patents from 
a variety of predecessors (e.g. IPcom, Uniloc, etc.). PAEs contribute to further fragmentation of the SEP holders market. 
129 See Annex 9, Q17. What percentage of the SEP implementers that reply take a license without litigation? 
130 WIPO arbitration and mediation centre has reported an increased interest in mediation and referrals by national courts 
to WIPO for mediations on FRAND terms and conditions by non-EU courts. There is no public data as to whether EU 
courts use this possibility. https://www.wipo.int/amc/en/center/caseload.html. 
131 Public consultation – responses and comments to question 53. 
132 https://www.unified-patent-court.org/en. 
133 
Guidelines 
(https://ec.europa.eu/commission/presscorner/detail/en/ip_22_1371). However, the revised draft Horizontal Guidelines 
address  issues  in  the  context  of  standardization  agreements,  but  do  not  tackle  issues  related  to  license  negotiations, 
litigation and lack of information on SEPs once the standard is adopted. The Horizontal Guidelines also remain voluntary.  

Commission 

Horizontal 

reviewing 

currently 

The 

of 

is 

26 

 
                                                 
are considering SEP related initiatives (including China, India and the UK). If the EU does not take 
the  initiative,  it  will  have  to  follow  developments  in  other  jurisdictions,  which  will  affect  EU 
companies as well as the EU-related businesses of global companies.  

3.  WHY SHOULD THE EU ACT?  

3.1.  Legal basis 

The initiative concerns standards to which a patent holder has contributed a patented technology and 
which it has committed to an SDO to license on FRAND terms and conditions. Standards for which 
patent  holders  make  FRAND  commitments  are  applied  cross-border  among  Member  States  and 
globally. SEP licensing is also seldom national. Usually, licensing contracts are global and may take 
into account certain regional aspects. The international standards in question cover technologies such 
as 4G, 5G, Wi-Fi, HEVC, AVC, DVB and others that ensure interoperability of products worldwide. 

Article 114 TFEU constitutes the appropriate legal basis as the objective is to improve the conditions 
for  the  establishment  and  functioning  of  the  internal  market.  The  initiative  seeks  to  ensure  the 
efficiency of SEPs licensing, facilitating lawful access to the standards and promoting wider adoption 
of standards. There are no specific EU or national rules on SEPs and it has been left to competition 
law to regulate.134 In addition, as acknowledged by the CJEU in Huawei v ZTE, apart from common 
rules relating to the grant of a European patent, a European patent remains governed by the national 
law of each of the Contracting States for which it has been granted as is also the case of national 
patents.  
The CJEU has confirmed135 that recourse to Article 114 TFEU is possible, if the aim is to prevent the 
emergence of obstacles to trade between Member States resulting from the divergent development of 
national laws. However, the emergence of such obstacles must be likely and the measure in question 
must  be  designed  to  prevent  them.  Dutch136,  French137 and  German138,139 courts  have  been 
considering FRAND-related issues in national litigation, based on the laws of the Member states and 
the specificities of the disputes brought  before them.  Those cases show  different  approaches  (not 
necessarily  different  results)  with  regard  to  FRAND  determinations  concerning  SEPs  covering 
regional or global standards. It is difficult for EU national courts to handle SEP-related cases and 
make  detailed  and  consistent  FRAND  determinations.  This  is  in  large  part  due  to  the  lack  of 
transparency and complexity of the issues that are central to such determinations, such as essentiality 
of patents, comparable licences and compliance with FRAND requirements. While the initiative will 
neither interpret the CJEU case-law nor dictate methodologies for FRAND determinations per se, it 
will establish mechanisms that promote the necessary transparency, increase certainty and reduce the 

134 Communication from the Commission – Guidelines on the applicability of Article 101 of the Treaty on the Functioning 
of  the  European  Union  to  horizontal  co-operation  agreements,  OJ  C  11,  14.01.2011,  pp.  1-72,  CELEX:  https://eur-
lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52011XC0114(04) and competition case-law. 
 135 Judgment of the Court of Justice of 12 December 2006, Germany v Parliament and Council, Case C‑380/03, [2006] 
ECR I‑11573, para. 38 and the case-law cited, and Judgment of the Court of Justice of 10 February 2009 ,  Ireland v 
Parliament and Council, Case C‑301/06 [2009] ECR I-593, para. 64; see also, to that effect, Judgment of the Court of 
Justice of 2 May 2006, United Kingdom v Parliament and Council, Case C-217/04, [2006] ECR I‑3771, paras. 60 to 64. 
136 Court of Appeal of The Hague, judgment of 2 July 2019, Philips v Wiko, Case number : C/09/511922/HA ZA 16-
623; Hoge Raad, Judgment of 25 February 2022, Wiko v Philips, Nummer 19/04503, ECLI:NL:HR:2022:294; District 
Court The Hague, Judgment of 15 December 2021, Vestel v Access Advance, ECLI:NL:RBDHA:2021:14372. 
137 Paris Court, order of the pre-trial judge of 6 February 2020, TCT v Philips, RG 19/02085  – Portalis 352J-W-B7D-
CPCIX; TJ Paris, 3.3, judgment of 7 December 2021, Xiaomi v Philips and ETSI, RG 20/12558. 
138  German  Federal  Court  of  Justice  (‘Bundesgerichtshof  –  BGH’),  judgement  of  5  May  2020,  Sisvel  v.  Haier,  KZR 
36/17, and German Federal Court of Justice, judgment of 24 November 2020, FRAND-Einwand II, KZR 35/17. 
139 Order of the President of the Court of 24 June 2021, Nokia Technologies Oy v Daimler AG, Request for a preliminary 
ruling from the Landgericht Düsseldorf, Removal from the Register, Case C-182/21, ECLI:EU:C:2021:575. 

27 

 
                                                 
potential for inconsistent rulings. This will be a significant improvement in these courts’ abilities to 
handle SEP disputes.  

EU-wide rules on transparency regarding SEPs and FRAND terms would have a harmonising effect 
within the EU, which would facilitate the work of national courts and the future Unified Patent Court. 
The instrument to implement this initiative should be a regulation. A regulation would be directly 
applicable, including by empowering an EU agency with the tasks of managing a register of SEPs, 
and establishing a common FRAND determination procedure that would ensure uniformity across 
the  EU  and  provide  greater  legal  certainty.  These  outcomes  cannot  be  achieved  by  means  of  a 
Directive. 

3.2. 

 Subsidiarity: Necessity of EU action 

Measures taken at national, regional or local level aiming at increasing transparency and facilitating 
licensing  of  SEPs  may  not  be  efficient  for  the  following  reasons.  First,  instead  of  one  EU-wide 
solution for SEPs, there might be different national solutions for the SEPs on one specific standard. 
Second, under an EU-wide approach, it will not be necessary to conduct more than one essentiality 
check per patent family to find that patents are indeed truly essential to a standard. The check would 
be  done  based  on  a  single  EU-wide  methodology.  Third,  non-centralized  alternative  dispute 
resolution processes may come to different results for the same SEP portfolio, opening the door to 
“forum shopping” within the EU. An EU-wide approach can help avoid these problems. 

3.3. 

 Subsidiarity: Added value of EU action  

Action at EU level is expected to save costs for stakeholders, both SEP holders and implementers, 
and for Member States. For instance, there would be one register, one essentiality check per patent 
family, one common methodology for the conduct of such checks, and a streamlined and transparent 
conciliation (FRAND determination) process. SEP holders and implementers would not have to incur 
the same costs in each EU Member State which would be the case with national solutions, especially 
in a situation where most standards are regional or global. 

4.  OBJECTIVES: WHAT IS TO BE ACHIEVED?  

4.1.  General objectives  

This initiative aims at: 

  Ensuring that end users, including small business and EU consumers benefit from products 

based on the latest standardized technologies at reasonable prices. 

  Making the EU an attractive place for innovation and standards development (including for 

global participants).  

  Ensuring  that  both  EU  SEP  holders  and  implementers  innovate  in  the  EU,  make  and  sell 

products in the EU and are competitive on global markets. 

In  particular,  the  goal  is  to  facilitate  SEP  licensing  negotiations  for  both  SEP  holders  and 
implementers, by reducing current uncertainties as to the level of SEP exposure (implementers) and 
return on research and development activities (SEP  owners) thereby also lowering the transaction 
costs. 

4.2. 

Specific objectives 

This initiative has three specific objectives: 

  Provide more clarity on who owns SEP and which SEPs are truly essential. 
  Provide clarity on FRAND royalty and other terms and conditions 

28 

 
  Facilitate SEP dispute resolution. 

Figure 5: Objectives tree 

5.  WHAT ARE THE AVAILABLE POLICY OPTIONS?  

5.1.  What is the baseline from which options are assessed?  

The baseline was described in section 2.5 above. In essence, SEP holders will continue to selectively 
approach implementers, and both will bear the costs of protracted negotiations and court disputes. 
The  information  asymmetry  between  SEP  holders  and  implementers  will  remain,  with  the  latter 
having to bear additional costs either by committing resources to long negotiations (including own 
essentiality  checks)  or  by  accepting  the  SEP  owner’s  offer  and  paying  potentially  higher  fees  to 
continue production. With time, patent pools offering more efficient licensing solutions for selected 
applications may emerge and facilitate licensing, if they gain acceptance in the market. This is not 
likely  to  happen  because  the  new  emerging  pools  gather  SEP  holders  who  do  not  implement  the 
technology, for example in the IoT. The FRAND royalty expectations are likely to be higher than the 
market would suggest.140  

None  of  the  other  patent  related  initiatives  announced  in  the  IP  action  plan  of  2020  (i.e. 
Supplementary  Protection  Certificates141  and  Compulsory  Licensing142)  is  tackling  nor  affecting 
development of SEP specific problems identified in this impact assessment. 

5.2.  Description of the policy options 

The  options  concern  international  standards  for  which  a  patent  owner  has  made  a  FRAND 
commitment and SEPs are in force in one or more EU Member State(s). The initiative will exclude 
national  standards  and  standards  with  royalty  free  licensing  policies.  The  options  are  constructed 
following an incremental approach from the least to the most ambitious. More details on options are 
provided in Annex 6. 

140 For example, Sisvel launched a new IoT pool with 20 licensors who claim to represent about 30% of all SEPs. The 
price for a smart meter is announced at USD 2, so the total aggregate royalty would be around USD 7 (EUR 6.7 on 15 
February 2023). The value of a consumer smart meter is reported to be around EUR 65. 
141 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13353-Medicinal-&-plant-protection-
products-single-procedure-for-the-granting-of-SPCs_en  
142 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13357-Intellectual-property-revised-
framework-for-compulsory-licensing-of-patents_en  

29 

GeneralSpecificEnsure that EU customers have access to the latest technology at reasonable priceEnsure that EU firms innovate and produce in the EU and are competitive on global markets Facilitate SEP negotiations (reduce uncertainty and transaction costs) Provide clarity on FRAND royaltyProvide information on SEPs ownership and essentialityFacilitate dispute resolutionFor implementers:Facilitate assessment of SEP exposureFor SEP owners:Facilitate reasonable return on SEP innovation 
 
 
 
                                                 
5.2.1.  Option 1 (PO1): Voluntary guidance  

This option consists of non-binding guidance that provides further clarification of FRAND concepts 
and conditions  such as,  for example, i) the  economic value of patented technology should not  be 
conditional on market success of a product that implements it, ii) the value may depend on actual 
functionalities of the standard used, iii) similarly situated entities using the same functionalities of a 
standard in similar applications should receive similar terms and conditions; iv) an aggregate royalty 
must be “reasonable”; v) promote the use of FRAND rate discounts for early standard adopters; vi) 
differentiation  of  FRAND  terms  and  conditions  between  sectors  and  over  time;  vii)  a 
recommendation  that  SEP  licensing  takes  place  at  the  level  (component  or  final  product)  where 
intellectual property is customary licensed in an existing industry; viii) an explanation of the legal 
rules on liability for infringement of  third-party  intellectual property in  commercial contracts  and 
their application in the context of SEPs (e.g. indemnification obligations, passing the cost of the SEP 
licence downstream; ix) clauses in arbitral agreements that should be avoided (e.g. a prohibition to 
challenge the validity of a patent).  The guidance will also  recommend  measures to  facilitate SEP 
license uptake by SMEs. Additionally, the Commission may recommend to (or require) SEP holders 
to  adopt  existing  SEP  pool  practices  addressed  to  SMEs,  such  as  royalty-free  licences  for  small 
volume production or discounts. The guidance will be reviewed and updated regularly to take account 
of legal (e.g. CJEU jurisprudence, other case law) and market developments. 

An EU Competence Centre on SEPs will be created within the European Union Intellectual Property 
Office  (EUIPO).  Its  tasks  will  include  monitoring  of  the  SEP  licensing  landscape,  gathering  and 
providing  easy  access  to  SEP-related  policies  from  key  jurisdictions  globally  as  well  as  case-law 
summaries  (including  arbitrations)  related  to  FRAND  issues,  also  for  foreign  jurisdictions, 
supporting EU SEP policy making (e.g. via studies). The Competence Centre would also seek to sign 
an agreement with the World Intellectual Property Organization (WIPO) to promote the use of the 
WIPO Arbitration and Mediation Centre for SEP disputes in the EU and to exchange information.143 
Additionally, the centre will become an SME144 SEP licensing assistance hub. It will offer European 
SMEs free SEP advice, both for SME SEP holders and SME implementers, provide trainings on SEP 
licensing/FRAND negotiations and conduct studies concerning SEP-related issues. These activities 
will be available at least in English, free of charge and may be funded from the existing SME support 
mechanisms such as the SME Fund or the IP Helpdesk.145  

5.2.2.  Option 2 (PO2): SEP register with essentiality checks 

PO2 builds on PO1 and establishes a SEPs register146 where SEP holders that seek to license their 
SEPs  in  the  EU  will  specify  which  patents  they  consider  to  be  essential  to  a  particular  standard. 
Registration will be mandatory for enforcement purposes, such that if a SEP is not registered, the 
SEP holder will not be able to assert it in court and/or it will not be able to collect royalties or past 
damages for any use of a SEP prior to the date of registration. This condition will apply to patents 
for standards (or new versions of existing standards) adopted after the entry into force of the rules 
implementing this option.147 A number of standards, however, rely on older technical documents in 

143  Similar  to  the  agreement  signed  between  USPTO  and  WIPO  in  mid-2022:  https://www.uspto.gov/about-us/news-
updates/uspto-and-wipo-agree-partner-dispute-resolution-efforts-related-standard. 
144  SMEs  as  defined  by  the  EU  recommendation  2003/361,  https://single-market-economy.ec.europa.eu/smes/sme-
definition_en  
145 https://euipo.europa.eu/ohimportal/en/online-services/sme-fund. 
146 This register would provide an interface for SEP holders to submit their patents. 
147 It will also not affect ongoing license agreements, only the new ones, or renewal of existing agreements (if it concerns 
patents in the SEP register). 

30 

 
                                                 
order  to  function  (for  example,  a  4G  phone  should  be  able  to  also  support  3G)  and  many  IoT 
applications rely on 4G. Therefore, it will be possible to determine the scope of the standard by listing 
the relevant technical documents. All SEPs relevant to those documents will have to be registered. 
SEP holders can register their SEPs anytime following the publication of the relevant standard or the 
granting of their patents which are declared SEPs. Once a registration is done, any changes, such as 
ownership, invalidation or other court judgments should be updated within 6 months.148  

For the registration, SEP holders will be requested to submit: i) full details regarding their patents 
protected in the EU claimed to be essential, including the patent office  that granted the patent; ii) 
proof of their ownership; iii) identification of the commercial name of the standard for which the 
patent is essential; iv) information that helps to link the patent to the standard such as the specific 
section(s) of the standardisation document(s) for which the patent is potentially essential149 and an 
identification of which features of the standard are normative or optional; v) evidence of the SEP 
owner’s FRAND commitment and any other relevant information, such as links to standard licensing 
terms and conditions as well as contact details. SEP holders will have to update the information in 
the register to reflect relevant changes (including e.g. validity of a patent). 
The essentiality checks on SEPs included in the register150 will be performed in accordance with a 
pre-determined  EU  methodology  to  be  developed  by  industry  experts  under  the  auspices  of  the 
Commission. Essentiality checks could concern either: sub-option i) all SEPs in the register or sub-
option ii) up to a fixed number (e.g. 50 or 100)151 of patents selected by a SEP holder (or implementer) 
and  a  representative  random  sample  of  all  SEPs  in  the  register  conducted  annually  to  ensure  the 
quality of the register. No SEP holder or other interested party will be able to choose the evaluator 
for any given essentiality check. The SEP holder will have an opportunity to submit a claim chart (a 
detailed document that links a standard to the claims of a patent) for each SEP that is checked. The 
SEP holder will receive the preliminary results of the essentiality checks and have the opportunity to 
comment before the opinion is issued.  

The results of the non-binding essentiality checks will be published in the register (for each essential 
patent of the “up-to-100” group, and information on the percentage of essential patents for a given 
SEP holder based on random sampling). After the annual essentiality check process is completed, a 
SEP holder may request the cancellation of a  SEP registration, if the result is negative. A certain 
number of the essentiality checks will be the subject of a peer evaluation, to be performed annually 
by a group of evaluators with significant experience. This will ensure the quality and consistency of 
the  essentiality  checks.  Essentiality  checks  conducted  by  an  independent  person  prior  to  the 
publication of the standard in the context of pools and essentiality determinations in courts will be 
reflected  in  the  register.  Those  SEPs  will  not  be  re-checked  for  essentiality.  Any  court  decision 
determining the essentiality or lack thereof will be reflected in the register. 
Both register and essentiality checks will be managed by the Competence Centre152 created under 
PO1.  The  persons  that  will  conduct  the  essentiality  checks  (evaluators)  will  have  to  satisfy  pre-
determined criteria regarding competence and independence and will be designated and remunerated 

148 There could be a mandatory rule that the FRAND commitment must be transferred with the SEP ownership. This is 
currently  in  the  Horizontal  Guidelines  as  a  guiding  principle  but  could  be  reinforced  in  a  Regulation  as  Canada  did. 
Technically some changes could be automatically updated by connecting the SEP register to patents registers/databases. 
149 Such as ‘ETSI TS 125 215’, Section ‘claim charts’. 
150 This register will provide an interface for subject evaluators to chart patents and submit the results to this register. 
151  The  public  consultation  revealed  that  in  most  cases  no  more  than  50  SEPs  will  be  discussed  individually  in  SEP 
licensing negotiations, even if the number of SEPs licensed may be significantly higher. The number could be doubled 
to facilitate/encourage SEP holders to join patent pools, some of which conduct essentiality checks. 
152 Its main tasks would be: (i) creating and maintaining the register; (ii) setting up a scheme that would ensure that the 
assessing bodies are able to perform the assessments in a harmonised manner and meet the requirements for reliability, 
impartiality, quality, and performance; (iii) administrating the essentiality checks, etc. 

31 

 
                                                 
by the EUIPO. The essentiality check methodology and criteria for the selection of evaluators will 
be adopted as an implementing act under the Regulation.  

There will be an administrative fee for SEP holders to enter SEPs into the register and to cover the 
costs of essentiality checks. Interested stakeholders will be able to access certain basic information 
in the register for free (for example the list of SEP owners). Fees will be required, however, from 
implementers and any other interested stakeholder to access detailed information from the register. 
SMEs (both SEP holders and implementers) will benefit from reduced fees.  

5.2.3.  Option  3  (PO3):  SEP  register  with  essentiality  checks  and  conciliation 

procedure 

This option adds a conciliation (bilateral FRAND determination) process to PO2. Conciliation aims 
at assisting parties in negotiations of a SEP licence with the FRAND royalty determination designed 
for their needs. 

The  Competence  Centre  will  administer  the  conciliation  procedure.  It  will  create  a  “roster”  of 
conciliators that satisfy the requirements of competence and independence, as well as a repository of 
conciliation reports, the confidential version of which would be accessible only to the conciliators. 
The  conciliator  would  be  a  neutral  party  with  extensive  experience  in  dispute  resolution  and 
substantial understanding of the economics of FRAND licensing to be credible. The parties will be 
given an opportunity to agree on (a) conciliator(s) from that roster and failing to do so will empower 
a representative of the EU Competence Centre to choose the conciliator(s). 

The conciliation procedure would have to be initiated by either the SEP holder or the implementer 
and concluded within nine months. Neither party would be able to initiate an action in a court of any 
EU  Member  State  (either  patent  infringement  or  FRAND  determination)  until  the  conciliator  has 
issued a report153 (or optional: the procedure has been initiated).  

The  conciliator  would  examine  the  parties’  offers/counteroffers  and  consider  the  Huawei  v  ZTE 
negotiation steps among other relevant factors. The conciliator would have the power to request and 
receive information necessary to conduct the task (including access to the SEP register, essentiality 
checks and past conciliation reports), observing the level of confidentiality attributed to the relevant 
information in the proceedings. However, the parties would be free to engage in the proceedings and 
would  not  be  prevented  from  leaving  the  process  at  any  time  or  even  not  engaging  at  all.  At  the 
conclusion  of  the  procedure,  the  conciliator  would  issue  a  report  recommending  a  FRAND  rate. 
Either party would have the option to accept or reject the conciliator’s report and/or recommendation. 
The conciliation procedure would be confidential, as well the report the parties would receive at the 
end, unless they settle beforehand. A non-confidential version of the report containing the FRAND 
rates  and  the  methodology  used  (excluding  any  confidential  information)  will  be  provided  to  the 
Competence Centre for further publication. The SEP holder would also have to use the report or a 
notice of termination of the procedure before customs to support a request for customs action with 
regard to goods infringing SEPs.  

The conciliation procedure would be conducted in English, unless parties decide otherwise. All costs 
of the conciliation process would be in principle shared equally between parties. Each party would 
bear its own costs in the process. As a support measure for SMEs, the EU Competence Centre would 
provide free advice to SMEs on SEPs licensing, the conduct of the conciliation and how the SME 
can best represent itself. SMEs would also be able to benefit from a reduced administration fee for 
the conciliation and potentially a discount or financial support from e.g. the SME Fund to cover the 
conciliator’s fees. 

153 Except if one party is not participating or has started parallel court proceedings in a third country, the other party can 
terminate the conciliation without a report. 

32 

 
                                                 
5.2.4.  Option 4 (PO4): Aggregate royalty for SEP 

This  option  adds  to  PO3  a  process  for  determining  (ex-ante)  an  estimated  maximum  aggregate 
royalty. 

Ex-ante i.e., before (or shortly after) the publication of a standard, contributors to a standard should 
inform the Competence Centre about the maximum aggregate royalty for all SEPs essential to that 
standard. For complex standards with multiple implementations there may be a need for different 
aggregate royalties depending on the implementations known at the time of the publication of the 
standard.154 It would be possible, however, to reassess the aggregate royalty after a reasonable period 
of time following the adoption of the standard. Standard contributors would have the right to ask the 
Competence Centre to appoint a neutral party (a conciliator from the roster set in PO3) to assist them 
in setting an aggregate royalty.155 Additionally, a group composed of contributors to a standard and/or 
(potential) implementers would be able to ask the Competence Centre within a predefined time after 
the publication of a standard or after a new implementation becomes known, for an expert opinion 
on  the  aggregate  royalty.  An  expert  opinion  would  be  delivered  by  a  panel  of  three  conciliators, 
following an open process where any party demonstrating a legitimate interest in the standard (and 
upon paying a participation fee) will be able to provide information to the panel. There will be a fixed 
time for the panel to deliver its opinion.  

In case an aggregate royalty is not set by any of the methods described above, during the first bilateral 
FRAND determination (conciliation) procedure related to the relevant standard, the conciliator may 
make a recommendation for an estimated aggregate royalty (in addition to the determination of a 
FRAND rate for the parties’ specific dispute). Whether the conciliator makes such a recommendation 
would depend on the methodology it uses for the determination of the FRAND rate for the specific 
dispute at hand. Such an aggregate royalty will be specific to the dispute at hand. An aggregate royalty 
can also be determined or updated during any subsequent conciliation(s). 

An aggregate royalty set by any of the above methods will be published in the register and will be 
non-binding  on  the  negotiating  parties.  Under  this  Option  there  will  be  no  determination  of  the 
allocation of the aggregate royalties among different SEP owners. 

5.2.5.  Option 5 (PO5): SEP clearing house 

This option adds to PO4 a one-stop-shop facility for implementers. The aggregate royalty determined 
under the procedure under PO4 will become a binding aggregate royalty for those using the one-stop-
shop. Once the aggregate royalty is determined, any implementer will be able to request a licence 
from all SEP holders by informing the Competence Centre and depositing in an escrow account either 
the full amount of the published aggregate royalty  (in case of lump sum  payment) or the amount 
corresponding to at least an estimated monthly sales volume of a product concerned (in case of per 
unit royalty payment). At fixed intervals (at least once a year) the implementer should deposit further 
royalty payments to the escrow account, provide evidence on real sales volumes (e.g. VAT, financial 
statements)  and  correct  past  royalties  to  actual  sales.  Any  royalties  not  collected  by  SEP  holders 
within a year from the deposit shall be returned to the implementer. The Competence Centre will 
charge fees to cover the costs of the “clearing” service. 

The Competence Centre will notify all  SEP holders  who have  registered, checked and confirmed 
SEPs in the EU register, so that they may conclude a licensing agreement with an implementer. SEP 
holders should also inform the Competence Centre how to allocate the aggregate royalty among them. 

154 Once new implementations become known at a later stage, contributors will again have an opportunity (within a fixed 
time period) to inform the Competence Centre on the aggregate royalties for those implementations. 
155 Those requesting will have to bear the cost of such service. 

33 

 
                                                 
Until they do so, they will not be able to collect royalty payments from the escrow account. Should 
SEP holders fail to agree on such method, the Competence Centre upon request from any SEP holder 
involved will appoint a conciliator from the roster set in PO3 to recommend an allocation method 
(the  cost  of  the  facilitator  will  be  borne  by  all  SEP  holders  involved).  Once  an  allocation  is 
established, any implementer will be expected to deposit in the escrow account the aggregate royalty. 
Each SEP holder will have a period of time to conclude a licensing agreement. The implementer will 
be reimbursed the part of those SEP holders that do not conclude licensing agreements. Following 
notification,  SEP  holders  may  not  start  infringement  proceedings  in  any  EU  court  against  an 
implementer who deposited security for an aggregate royalty in the escrow account. 

An implementer may choose not to use the one-stop-shop and to have bilateral licensing with SEP 
owners. 

5.3.  Logic of options construction. Could options be standalone? 

The  options  are  constructed  following  an  incremental  logic  proposed  already  in  the  Call  for 
evidence.156 PO1 is voluntary and thus the least ambitious option. PO2 adds to PO1 a SEP register 
with essentiality  checks. PO3 adds conciliation to the register. Conciliation could be a standalone 
option. However, in that case a conciliator will not be able to use the register and the databases of 
case-law and other information to complete its analysis. This means that if only one party engages in 
the conciliation in good faith, the conciliator will be compelled to use only the information provided 
by that party and any other public information it may find but not on the information available to it 
under PO1 and PO2. This will significantly reduce the value and credibility of its report. This is why 
it is important that a conciliator can benefit from the SEP register in making recommendations. This 
way (s)he can at least check which patents a SEP holder has and what share is essential. PO4 adds 
aggregate  royalty  to  PO3.  SEP  holders  can  benefit  from  the  help  of  the  Competence  Centre’s 
conciliators to propose an aggregate royalty. Stakeholders will also have the right to request a non-
binding  expert  opinion  on  the  aggregate  royalty  by  a  panel  of  three  conciliators.  If  no  aggregate 
royalty  is  announced  or  proposed  by  the  panel  of  conciliators,  an  aggregate  royalty  may  be 
determined by any conciliator who decides to use this methodology for FRAND determination in a 
bilateral process (as explained in PO3). Finally, PO5 can only work when both aggregate royalty (set 
in PO4) and SEP holders eligible to get a share of that royalty (PO2) are known. 

5.4.  Options discarded at an early stage 

The following sub-options to those presented above were discarded following an initial assessment. 
For details see Annex 6.  

In case of PO1, determination of the level of licensing by the Commission was discarded as currently 
there are different practices with different standards and there does not seem to be a one size fits all 
solution. Therefore, such an intervention in the contractual freedom would be disproportionate.157 In 

156 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13109-Intellectual-property-new-
framework-for-standard-essential-patents_en. 
157  Competition  law  (Article  102  TFEU)  does  not  imply  a  preferred  licensing  level.  SEP  holders  argue  that  any 
intervention undermining a SEP holder’s discretion over licensing level would likely contravene Articles 30 and 31 of 
the TRIPS Agreement. Furthermore, some respondents explain that courts in Europe and other jurisdictions have rejected 
the  contention  that  SEP  holders  are  required  to  grant  licenses  to  component  and  chip  makers  (see,  District  Court 
Mannheim, decision of 18 August 2020, Nokia v Daimler, 2 O 34/19, http://eplaw.org/wp-content/uploads/2020/10/DE-
2-O-34_19-URT-Allgemeines-Urteil-FINAL_ANONYMISIERT.pdf;  District  Court  of  Munich,  judgment  of  10 
September 2020, Sharp v Daimler, 7 O 8818/19, https://www.gesetze-bayern.de/Content/Document/Y-300-Z-GRURRS-
B-2020-N-22577?hl=true;  US  Court  of  Appeal  for  the  Ninth  Circuit,  decision  of  11  August  2020,  Federal  Trade 
Commission v Qualcomm Inc.). See also US Court of Appeal, HTC v Ericsson. The US Court of Appeals for the Fifth 

34 

 
                                                 
case of PO2, a creation of up to 27 national SEP registers was discarded as a more expensive and 
cumbersome option. A SEP register without essentiality checks on a sampling basis to control the 
quality  of  the  register  was  also  discarded  because  it  would  have  only  helped  to  create  some 
transparency with regard to standards to which blanket declarations are made but would not resolve 
the issue of over-declaration in existing databases. In case of PO3, a voluntary conciliation was not 
considered as already existing voluntary  alternative dispute resolutions are not frequently used by 
stakeholders158 and there are usually no negative consequences for non-participation. In case of PO4, 
a mandatory aggregate royalty determination after adoption of a standard was rejected as by that time 
products  incorporating the technology  are  already  placed on the market  and  the price  uncertainty 
problem would not be solved. Moreover, SEP holders would then be in a stronger negotiating position 
vis-à-vis implementers, shifting the negotiation power to the benefit of the SEP owner. A royalty-
free SEP licensing obligation was rejected because from an economic perspective whether or not a 
standard  should  be  royalty-free  depends  on  the  economic  interest  of  standard  contributors  to  be 
subject  to  such  IPR  policy  and  there  cannot  be  general  rules  that  would  determine  that.  Similar 
concerns  could  be  raised  in  case  of  a  uniform  SEP  royalty  per  standard  irrespective  of  how  the 
standard is implemented. This applies because a too high price could limit the usage of the standard 
by certain lower value implementations, while a too low one would reduce incentives to participate 
in standard setting for SEP holders. For options 1 to 5 a sub-option to cover all past standards (e.g. 
3G)  was  discarded  as  too  costly,  because  of  the  large  number  of  patents  that  would  need  to  be 
registered, and having the effect of reducing legal certainty for existing contracts. Finally, regarding 
the choice of an organisation to run the Competence Centre, the EPO was not chosen as changing its 
mandate would require consent of all 39 member countries, including 12 non-EU countries which 
are not bound by the EU SEP policy goals. SDOs were not selected as this would mean a dispersed, 
rather than centralised register, as well as because the EU does not have jurisdiction over non-EU 
based SDOs.  

6.  WHAT ARE THE IMPACTS OF THE POLICY OPTIONS? 

This chapter presents impact of the options considered as viable. The analysis is qualitative and to 
the extent possible quantitative.  As options build on each other and to  avoid  double counting we 
present only quantification of additional features of each option. Quantifications are based on several 
assumptions and estimations since data on SEP licensing is largely not observable (as explained in 
the  problem  definition).  The  purpose  of  quantifications  is  to  allow  comparison  of  options  and  to 
present  relative  impacts  on  affected  groups  rather  than  to  provide  an  accurate  figure.  The  fees 
presented below are just an indication of the fees that would cover the costs of the Competence Centre 
(based on an initial cost prognosis by the EUIPO). Details on quantitative analysis as well as all the 
assumptions used for calculations are presented in Annex A7.1. 

6.1. 

PO1: Voluntary guidance 

SEP guidelines are necessary to provide clarity on the most problematic and contentious issues in 
SEP negotiations.  Those proposed under  PO1  will be voluntary, thus  not limiting the negotiating 
flexibility and customisation of terms and conditions to the specific needs of both parties. At the same 
time, they will shed light on current best practices and solutions, and can thus serve as a reference 

Circuit ruled on 28 February 2022 that the supplier does not have a legal right to a licence and that Avanci and its licensors 
have not breached their FRAND obligations, No. 20-11032. See Questions on FRAND in Annex 9.  
158 During the webinar on enforcement from the 463 registered participants only 4 responded that they were involved in 
arbitration and only 3 responded to have been involved in mediation. 20% were involved in settlements and 65% in court 
cases. 
Patents, 
series 
https://ec.europa.eu/newsroom/growth/items/701874/en.  

GROWTH, 

Essential 

Standard 

Webinar 

on 

35 

 
                                                 
point especially for less experienced parties in negotiations (e.g. SMEs). The Guidelines could also 
be relatively easily and frequently updated to reflect e.g. new court rulings, or market developments.  

The  Competence  Centre  will  centralise  information  from  diverse  public  sources  (e.g.  different 
licensing  policies,  published  or  otherwise  revealed  (e.g.  in  court  judgements),  FRAND  terms, 
conditions and SEP rates/royalties, SEP judgements etc.), produce  ad hoc studies to identify SEP 
holders  and  their  share  in  different  standards,  promote  WIPO  Alternative  Dispute  Resolution 
mechanisms,159 give trainings and advise SMEs on SEP negotiations (e.g. around 80% of SMEs in 
our  survey  noted  that  they  do  not  know  strategies  to  defend  themselves  in  SEP  negotiations).160 
Therefore,  it  may  become  the  first  place  to  be  visited  by  potential  SEP  implementers,  especially 
SMEs, who are not experienced with SEPs.  

In order to limit operational costs, it is proposed that all activities are carried out in English only. The 
technology  firms  applying  modern  standards  are  most  likely  already  dealing  with  most  of  the 
technical specifications in that language, consequently using only one language is not expected to 
become an access barrier.  

It is estimated that around 400 firms (including up to 80 EU based SMEs), 261 SEP holders and up 
to 500 other users (e.g. judges, legal counsels) would use services of the Centre each year. The annual 
costs of operating the  centre are estimated at  EUR 0.6 million  per  year.  The  benefits  users  could 
derive from the centre’s activities such as trainings or studies are estimated at EUR 5.9 million (based 
on cost of buying such services commercially).161 

While guidance will be important and will help to improve transparency and knowledge about SEP 
licensing, including by providing specific advice to SMEs, it will not be sufficient to help resolve 
disputes around FRAND royalties.  

The  public  consultation  clearly  revealed  several  major  issues:  e.g.  lack  of  transparency  about  the 
FRAND royalties (68% of all respondents, 100% of implementers and 19% of SEP owners), lack of 
transparency about the SEP landscape (67% of all respondents, 97% of implementers and 13% of 
SEP owners) or no guidance on FRAND concepts (57% of all, 93% of implementers and 19% of SEP 
owners).162 

The Competence Centre can gather all public information about pricing but much of it is under non-
disclosure agreements. A guidance is not capable of promoting more transparency in this respect. 
The Competence Centre may also commission SEP landscape studies on a regular basis, but it will 
need to use existing third parties’ commercial solutions with their limitations. The limitations concern 
both the information available to these third parties (e.g. missing data and over-declaration mentioned 
above)  and  the  different  methodologies  they  use.  Such  methodologies  are  deemed  commercial 
secrets, have a different level of robustness, and thus may lead to different results. 

Finally, while  the  WIPO  Arbitration  and Mediation  Centre is  reporting some positive results, the 
public consultation revealed that only 35% of all respondents consider mediation useful. Two key 
concerns are (i) implementers may not be able to obtain information regarding comparable licenses 
and other relevant data from SEP holders (available through discovery proceedings in certain judicial 
proceedings),  and  (ii)  the  proceeding  itself  as  well  as  the  resulting  decision  is  maintained  as 

159 WIPO informed us that since 2021 there have been 65 SEP related mediation cases and over 60% of parties to WIPO 
SEP ADR proceedings are companies based in the EU. As of January 2023, most of these cases were still pending. In 
many other cases, requests for WIPO Mediation prompted renewed licensing negotiations between parties with potential 
settlement outside the mediation procedure. Source: WIPO Arbitration and Mediation Centre. 
160 See Annex A8.2: Q12 (16 out of 19 replies). 
161 See Annex A7.1. 
162 See Annex 9, Q19. 

36 

 
                                                 
confidential and is not publicly available, so it has limited precedential value for future FRAND-
related cases. 

In order to offer valuable information to interested parties on the SEP landscape, FRAND licensing 
and  royalties,  the  Competence  Centre  would  need  to  develop  its  own  data  on  the  basis  of 
independently conducted essentiality assessments and FRAND determination procedures, which this 
option is unable to achieve.  
This option bears similarities with SEP Expert Group Proposal 28 on three licensing principles.163 

6.2. 

PO2: SEP register with essentiality checks 

This option is expected to bring more clarity to the SEP landscape. The register under this option will 
not  replace  SDO  databases,  the  purpose  of  which  is  to  create  transparency  ex-ante  during  the 
standardisation process. It will be created ex-post, after the publication of the standard for the purpose 
to facilitate licensing negotiations and will be updated regularly. As such it is complementary to the 
activities of the SDOs. 

SEP holders will have to register their SEP(s) in order to be able to enforce their patents and/or collect 
FRAND royalties for the past. This is reasonable given that on average the SEP holder invites the 
implementer to conclude a licensing agreement within 2 to 4 years after the publication of a given 
standard.  The  registration  will  be  simple  (comparable  to  the  declarations  at  ETSI)  and  provide 
information to implementers about the identity and contact details of SEP owners. Moreover, details 
provided (e.g. link between standard and patent) should help an implementer to judge if the patents 
cover  the  functionality/technology  it  uses  (as  not  all  implementers  are  using  the  full  potential/all 
functionalities of a standard).164  

The initial stock of patents that could be registered is estimated at maximum up to  72 000 patent 
families.165 Some of the new standards may need to include older technical documents (for example 
a  5G  mobile  phone  will  need  to  also  support  4G).  So,  all  SEPs  relating  to  those  older  technical 
documents will also have to be registered. The register will serve a dual purpose. First, the register 
will be used to prove that a SEP holder has true SEPs. Second, the register will provide additional 
information regarding the size and value of the SEP owner’s portfolio, if the SEP holder registers all 
its SEPs.  

Since the register may include patents that are not truly essential to the standard, it is necessary to 
have a mechanism for essentiality checks to ensure the quality of the register. With regard to 4G, 
experts claim that only between 25% and 40% of SEPs declared to ETSI are truly essential.166 It is 
unlikely that the essentiality rate of the new register will be so low. This is because the ETSI database 
includes  patents  and  patent  applications  made  during  the  standardisation  process.  Some  of  those 
technologies were not accepted in the standard and some of those patents were not granted or their 
scope was reduced so that they do no longer fall under the scope of the standard.  

Expert 

Group’ 

(E03600): 

Contribution 

163 Baron, J., Geradin, D., Granata, S., et. al., Group of Experts on Licensing and Valuation of Standard Essential Patents 
‘SEPs 
2021, 
https://ec.europa.eu/docsroom/documents/45217. 
164 Between 70 and 80% of all respondents to the public consultation considered that the following information should 
be provided publicly: Patent and application number; contact details of the SEP holder; the relevant standard, version, 
section of the standard; transfer of ownership, if any; licensing programs; Standard FRAND terms and conditions. 
165 This is a generous estimate which includes an estimate of 60 000 patent families and a 20% increase in SEP patenting 
rate. 
166 Expert Group on Licensing and Valuation of SEPs, Contribution to the Debate on SEPs, Section 4.2. 

Debate 

SEPs, 

the 

on 

to 

37 

 
                                                 
The new register will be created after the publication of the standard and will require that the SEP 
holder  indicates  the  section  of  the  standard  to  which  its  patented  technology  refers.  The  rate  of 
essentiality would thus be higher. However, it cannot be excluded that patents that are not essential 
are also included. One should note that no assessment can give 100% assurance that a patent is truly 
essential until a court has ruled on the essentiality (even then, the court would rely on experts). A 
recent JRC study found that assessors correctly identify as essential or not around ¾ of patents they 
check. However, the authors also explain that this share will be higher in practice due to improving 
routines, and because identifying non-essentiality of the patents in the experiment was particularly 
difficult  (the  examiners  had  a  lot  of  limitations, including  no  access  to  support  tools  and  support 
group).167 
The cost of an essentiality check is estimated at EUR 5 000 per one patent from a patent family.168 
There is no need to check the other members of the family as most European patents have the same 
claims being examined by the European Patent Office. The cost should also cover the peer evaluation 
process for some of the patents already checked for essentiality.  

A SEP holder will be given the opportunity to submit a claim chart (a document linking the standard 
to the patent), if a registered SEP is selected to be checked for essentiality.169 According to experts, 
all  SEP  holders  who  proactively  license  or  cross-license  their  SEPs  have  claim  charts  or  internal 
expertise to create them. The most impacted will be the patent assertion entities that buy the patents 
from others solely to license for revenue. We estimate that for about half of the patents selected for 
random essentiality checks, SEP holders will decide to update or produce new claim charts at a cost 
similar to the one indicated above.  

In  sub-option  (i)  all  registered  SEPs  will  be  checked  for  essentiality.  This  will  result  in  the  most 
accurate SEP landscape analysis (subject to the uncertainties mentioned above, including the portion 
of  SEP  patents  registered  by  owners).  72 000  patent  families  are  likely  to  be  checked  in  the  first 
year(s)  (registering  only  those  of  the  family  members  that  are  in  force  in  the  EU).  Following  a 
negative assessment, SEP holders are likely to request re-check for up to 40% of patents.170 In the 
following years, the number of patents registered and checked is expected to drop to 10% of the initial 
numbers.  

To implement this option the back-office costs of the Competence Centre are estimated at around 
EUR 5 million initially and EUR 1.5 million in subsequent  years. In order to cover this cost SEP 
holders will be charged a registration fee of around EUR 140 per patent family registered. 

The average total cost to SEP holders of registration and essentiality checks is estimated at EUR 1.9 
million and EUR 94.5 million per year respectively. Additional indirect cost of filling the forms and 
production/update of claim charts is estimated at EUR 2.7 million and EUR 34 million respectively 

167 According to experiments by Bekkers et al., 74% of patents  with claim charts checked by examiners  working for 
patent offices were consistent with checks done by a patent pool. Regarding different types of possible errors: an essential 
patent has 17% probability of not being found essential in a check, and a non-essential patent has 38% probability of 
being found essential. See Bekkers, R., Henkel, J., Tur, E. M., et al., Pilot study for essentiality assessment of standard 
essential patents, Publications Office of the European Union, 2020, pp. 76-78, https://data.europa.eu/doi/10.2760/68906. 
168 The evaluators will be remunerated by fees established by the Commission through an implementing act. Assessment 
of one SEP per patent family was supported by two thirds respondents to public consultations (54% of implementers and 
71% of SEP owners). See Annex 9, Q32. 
169 Many or most existing claim charts may relate to foreign, in particular US members of global potential SEP families. 
In such cases claim charts would have to be produced/updated for European patents. 
170 Baron, J., Essentiality Checks for Potential SEPs – Framework for Assessing the Impact of Different Policy Options, 
European Commission, DG GROW, 2023. 

38 

 
                                                 
per year.171 Around 15% of that cost will be borne by SEP holders based in the EU. As indicated in 
the market description almost all EU based SEP holders are large companies. 

The  register  is  expected  to  give  a  fairly  accurate  overview  of  the  number  of  true  SEPs  and  their 
ownership. 

In sub-option (ii), the same number of patent families will be registered but not all will be checked 
for essentiality. The checks will be done based on two complementary steps. First, the SEP holders 
may  select  up to  100 patent  families  of which one patent from  a family  will be the subject  of an 
essentiality check. These are expected to be patents they use often in licencing negotiations (typically 
up to 15 patents are discussed according to experts, an average of 49 SEPs was indicated by SEP 
holders  in  the  public  consultations).172  Having  checked  patents  might  also  facilitate/encourage 
participation in patent pools as some require essentiality checks. Under this step, it is expected that 
up  to  3 550  patents  will  be  initially  submitted  with  355  added  each  year.  Following  negative 
assessment  around  25%  re-check  requests  are  expected  (lower  percentage  than  in  sub-option  i) 
reflects better quality of SEPs used in negotiations). Second, the Competence Centre will select a 
random sample from all SEPs registered by each SEP owner, including those designated by the SEP 
holders under the first step. This is necessary to ensure a statistically valid sample. The Commission 
will commission a study to develop the sampling methodology that would render the most optimal 
results.  If  the  sampling  includes  a  patent  also  selected  by  the  SEP  owner,  there  will  be  only  one 
essentiality check. Our study173 finds that the effects of checks conducted based on sampling from 
the register will be similar to those discussed under sub-option (i) with an acceptably low margin of 
error. However, sub-option (ii) will limit the number of checks to around 10 000.  

To implement this option the back-office costs of the Competence Centre are estimate at around EUR 
3.7 million initially and EUR 1.1 million in subsequent years (figures lower than in i) due to lower 
workload). In order to cover this cost SEP holders will be charged a registration fee of around EUR 
100 per patent family registered. 

The average total cost to SEP holders of registration and essentiality checks is estimated at EUR 1.35 
million  and  13.7  million  per  year  respectively.  Additional  indirect  cost  of  filling  the  forms  and 
production/update of claim charts is estimated at EUR 2.7 million and EUR 6.4 million respectively 
per year.174 Around 15% of that cost will be borne by SEP holders based in the EU. 

The register is expected to give as accurate overview the number of true SEPs as in sub-option i). 
However, except for patents in the “up to 100” list only a percentage of essential patents in a SEP 
holder’s  portfolio  will  be  indicated.175  Additionally,  the  register  will  reflect  any  decisions  of 
essentiality by courts and for patents that are examined by an independent examiner of a patent pool 
prior to the creation of the register. This is however sufficient to allow comparison between portfolios 
of different SEP owners. 

Since sub-option i) is ten times more expensive than sub-option ii) and provides only a marginally 
more accurate picture, the preferred choice should be sub-option ii). 

171 Average cost over ten years: including initial year with a higher number of patent registrations/essentiality checks and 
subsequent nine years with the number of registrations/essentiality checks at 10% of the initial figures. For more details 
see Annex A7.1 
172 See Annex 9, Q6. 
173 -Baron, J., Essentiality Checks for Potential SEPs – Framework for Assessing the Impact of Different Policy Options, 
European Commission, DG GROW, 2023. 
174 See footnote 171. 
175 The percentage will indicate the date on which it was produced and the number of patents checked and in the register 
at  that  time.  This  is  to  avoid  a  situation  when  a  SEP  holder  registers  initially  only  its  best  patents  to  obtain  a  high 
essentiality percentage and subsequently adds more patents of potentially lower quality. 

39 

 
                                                 
Implementers  and  interested  stakeholders  will  have  free  access  to  some  basic  information  (for 
example the list of SEP owners, number of registered SEPs, etc.) but they will be required to pay a 
fee to access detailed SEP information in the register and the various databases of the Competence 
Centre. This requirement has two objectives. First, it will enable the development of high-quality 
data that can be used for aggregate royalty and bilateral FRAND determinations. Second, it will give 
SEP  holders  the  reassurance  that  the  data  they  provide  is  accessed  by  persons  interested  in  SEP 
licensing and their representatives, and to  specialised professionals. We estimate that at least  380 
firms that conduct license negotiation per year will buy access. The fees will cover cost of activities 
of the Competence Centre described in PO1 and at minimum should amount to around EUR 1 700 
for large firm and EUR 850 for an SME for an annual subscription. 

SEP holders are likely to withdraw non-essential patents from the register following negative checks 
and  save  on  patent  maintenance  fees.  This  should  be  considered  beneficial  to  all  parties  –  SEP 
implementers will have more certainty in negotiations in which only essential patents are presented 
to them. On the other hand, if the register will be perceived by SEP holders as a means of indicating 
portfolio strength (and e.g. used in negotiations to determine the share of aggregate royalty applicable 
to them), they may increase the number of registered patents.176 Under sub-option i) as all patents are 
checked, the withdrawals are likely to be higher than new registrations. This is expected to produce 
net  savings  for SEP holders  of EUR 11.6  million per  year (15% applicable to  the EU based SEP 
holders). The savings to SEP holders are losses to the EPO and EU patent offices. In case of sub-
option ii) in which a lower number of patents is checked, the opposite is expected. SEP holders are 
likely  to  patent  more  than  to  withdraw,  with  a  net  impact  of  EUR  29  million  in  new  patent 
registration/maintenance  fees  to  the  benefit  of  the  EPO  and  EU  patent  offices.  Nevertheless,  the 
impact on the number of patents is uncertain and may not materialise (see also common impacts on 
patent offices below). 

The costs mentioned above should be seen in comparison to an average license revenue a SEP holder 
gets on its patents. An average worth (net present value) of a positively assessed patent family would 
be approximately EUR 6 to 10 million (EUR 1 to 1.7 million net present value if the effect of the 
checks is limited to the EU only).177 

The objective of the register is to have all SEPs in force in the EU registered, irrespective of who the 
SEP  holder  is.  With  the help  of  essentiality  checks,  implementers  will  know  approximately  what 
share of the registered SEPs are truly essential. This will determine the scope of the negotiations. 

SEP holders will receive a powerful argument when approaching implementers with a licence offer 
that they have truly essential SEPs and are thus more certain to have the right to ask for royalties. 
The evidence from the register will allow a SEP holder to justify the FRAND rate demand, and the 
implementer  can  better  determine  whether  the  offered  rate  is  FRAND.  SEP  holders  with  smaller 
portfolios, who could not afford the costs of licensing until now, would be able to license. 

176 This does not necessarily mean new innovation though. 
177 Study estimates that there currently are approx. 60 000 potential SEP families, generating approx. EUR 18bn annual 
royalty revenue (EUR 300 000 per patent family). If, on average, a potential SEP family will generate significant royalties 
for approx. 10 years, the net present value of a potential SEP family early in life would be approx. EUR 2.5 million. If 
FRAND royalties are determined by apportionment among confirmed SEPs only, and 25 to 40% of the potential SEPs 
are confirmed essential, the average NPV of these confirmed SEP families would be EUR 6 to 10 million (whereas non-
confirmed potential SEPs have no value). Proportional to the EU’s share in world GDP, we estimate that approx. one 
sixth  of  that  value  is  attributable  to  the  licensed  use  of  SEPs  within  the  EU.  See  -Baron,  J.,  Essentiality  Checks  for 
Potential SEPs – Framework for Assessing the Impact of Different Policy Options, European Commission, DG GROW, 
2023. 

40 

 
                                                 
The option also provides efficiency gains as implementers will no longer need to assess essentiality 
on their own or negotiate without that knowledge. With an estimated around 575 new SEP licensing 
agreements signed per year (and associated negotiations), the value of information in the register to 
implementers and SEP holders is estimated at EUR 6.2 million each.178 These benefits could increase 
if the number of SEP licensing contracts is going to accelerate due to, among others, a growth in 
importance of IoT. Almost two thirds of respondents to public consultations (93% implementers and 
24% SEP owners) considered that a system of essentiality checks would be useful if assessors are 
independent.179  

Moreover, it is expected that the registered SEPs will reflect better the size of the SEP holder portfolio 
than currently. This  is  because the  SEP holders  will have  to  review their declarations  to  ETSI or 
review their portfolio if they made a blanket declaration and register only those SEPs whose claims 
can be linked to the standard. Since the registration will require them to also indicate the section and 
features of the standard  to  which the SEP relates, it will  make it easier to  determine  which SEPs 
pertain to core features of the standard and which to optional parts of the standard. This will  help 
level the playing field among SEP holders. 

Finally, conditioning patent enforcement or licensing on registration (with no possibility to collect 
royalty for the period before registration) might be considered an encroachment on property rights. 
This is, however, a justifiable and a very limited restriction. First, the main problem is that either SEP 
holders do not declare each of their SEPs to the SDO or they over-declare. The choice is made based 
on  the  individual  business  strategy  of  the  SEP  owners,  but  it  is  detrimental  to  the  SEP  licensing 
system as a whole. Because of the lack of transparency, some SEP owners’ portfolios are devalued, 
and  others  are  over-valued;  furthermore,  implementers  face  business  uncertainty.  The  lack  of 
predictability has a direct impact on both contribution to a standard and standard implementation. 
Second, the registration  is  simple and corresponds  to  what  the  SEP holders  already  committed to 
declare in the ETSI database but do so with a various degree of rigorousness. The registration will 
normally  not  impact  on  any  negotiations  as  it  can  be  done  much  earlier  than  the  start  of  the 
negotiations. Pursuant to the public consultation, negotiations start on average 2 to 4 years after the 
publication of the standard and last for an average of 3 years. 

This option will benefit SEP holders by reducing delays resulting from implementer requests for, or 
need  to  obtain  their  own,  essentiality  checks  and  technical  documents.  This  in  turn  reduces  the 
amount of negotiation time resulting in SEP holders starting to collect royalties earlier. 

Around two thirds of all respondents (around 85-89% of implementers, and between 24 and 41% of 
SEP owners) named the following benefits of a system for essentiality checks: better  information 
regarding the actual SEP exposure of a given product; reduction of the resources spent on licensing 
of  SEPs;  it  may  help  to  smoothen  licensing  negotiations;  easier  negotiations  of  a  fair  royalty 
(preventing  over-pricing);  trustworthy  and  reliable  overview  of  the  share  of  each  SEP  holders’ 
essential patents.180 

This Option bears similarities with SEP Expert Group Proposals 7, 8, 11, 13 and 14 on introducing 
essentiality checks by an independent body for those SEPs that SEP holders intend to commercialise. 
All those proposals received support with 4 out of 5 stars by the experts. It also bears similarities 
with  Proposals  50  and  51  that  when  a  SEP  holder  asserts  its  SEP,  it  should  disclose  certain 

178 Value per licensing negotiation estimated as cost of essentiality checks of 15 patents (number typically negotiated 
according to experts) – and amounts to EUR 60 000. Those typically negotiated patents are likely to be among the “up to 
50” group of patents registered by the SEP holder under sub-option ii). 
179 See Annex 9, Q30. 
180 See Annex 9, Q31. 

41 

 
                                                 
information on those SEPs and high-level claim charts.181 Those proposals were supported with 4.5 
out of 5 stars by the experts. 

6.3. 

PO3: SEP register with essentiality checks and conciliations 

Conciliation is a process for a FRAND rate determination between a SEP holder and an implementer 
(prospective  licensee).  The  objective  of  the  conciliation  is  to  facilitate  a  settlement  between  the 
parties before resorting to court. For example, WIPO reports that 70% of its mediations and 33% of 
arbitrations end up in settlement.182  

53%  of  the  respondents  to  the  public  consultation  considered  arbitration  useful  and  35%  of  the 
respondents considered mediation useful. Some of them explained that the problem with arbitration 
and mediation is that the results are not published. For mediation, an additional disadvantage was 
that  the  mediator  has  no  authority  to  request  information  and  no  authority  to  make  a  price 
recommendation.183  

The conciliation thus has all the additional features that have the potential to address those concerns. 
It  provides  powers  to  the  conciliator  to  (i)  request  relevant  information  and  documents  from  the 
parties, (ii) propose a recommendation for a FRAND rate and (iii) to issue a non-confidential report 
(containing the methodology for the calculation of the FRAND rate). 

EU phone producing SME: “For an SME it is difficult to estimate whether the offered terms are 
FRAND, particularly if the terms are not published.”184 

Since  conciliation  will  likely  take  place  before  concluding  a  licence  agreement,  and  it  will  be  a 
mandatory step before initiating a patent infringement proceeding or a FRAND assessment before a 
court,  it  can  be  even  a  more  effective  tool  in  limiting  the  number  of  court  cases.  The  ability  to 
negotiate a FRAND rate with the assistance of an independent conciliator without the threat of an 
injunction  is  important  for  any  implementer.  Conciliation  can  also  help  SEP  holders  (e.g.  when 
negotiating with large multinationals). The SEP holder who has made a FRAND offer confirmed by 
the  conciliator  will  increase  its  credibility  also  for  future  negotiations.  Credibility  is  important  as 
evidenced  by  this  example:  The  WIPO  Centre  has  seen  one  party  make  systemic  use  of  WIPO 
Mediation  –  filing  numerous  requests  for  WIPO  Mediation  as  one  way  of  demonstrating  its 
willingness to take a licence.185 

Moreover, the conciliation would be more acceptable than arbitration to the parties (where a decision 
is  final)  as  a  conciliator  only  issues  a  non-binding  suggestion  and  report  on  FRAND  terms  and 
conditions.  The  conciliation  report  will  contain  a  factual  summary  of  the  process  before  the 
conciliator and include information whether the SEP holder has made a FRAND offer and whether 
the implementer has responded to that offer. This summary will de facto also cover the information 
needed to assess whether the SEP holder engaged in the Huawei v. ZTE process with an implementer. 
The  conciliator’s  suggested  FRAND  royalty  could  also  be  used  by  both  SEP  holders  and 
implementers  to  determine  the  appropriate  amount  of  the  security  that  the  implementer  needs  to 
provide under the Huawei v ZTE process. The non-confidential report (or notice of termination of the 

Expert 

Group’ 

(E03600): 

Contribution 

181 Baron, J., Geradin, D., Granata, S., et. al., Group of Experts on Licensing and Valuation of Standard Essential Patents 
‘SEPs 
2021, 
https://ec.europa.eu/docsroom/documents/45217.  
182 Out of 900 mediation, arbitration and expert determination cases during 2012-2021 concerning patents, copyrights, 
trademarks.  
183 Public consultation – responses and comments to questions 53 and 54. 
184 See SME survey in Annex 9. 
185https://www.wipo.int/wipo_magazine/en/2022/04/article_0007.html?utm_source=WIPO+Newsletters&utm_campaig
n=a4eeca0fb5-DIS_MAG_EN_201222&utm_medium=email&utm_term=0_-a4eeca0fb5-%5BLIST_EMAIL_ID%5D. 

Debate 

SEPs, 

the 

on 

to 

42 

 
                                                 
procedure) could also be used before customs to support a request for customs action with regard to 
goods infringing SEPs.186 

Although  the  conduct  or  commencement  of  the  conciliation  will  be  obligatory  before  initiating  a 
court action, it will be up to the parties to decide on their level of engagement (e.g. participation in 
meetings,  providing supporting documents on request  by the conciliator).  In an extreme case, the 
conciliator  could  draw  up  an  opinion  based  on  input  from  just  one  party  if  the  other  decides  to 
‘boycott’ the process. This is why it is important that a conciliator has access to the SEP register, the 
databases of the Competence Centre and confidential reports from other conciliations, so (s)he can 
receive information on the concerned patents in any event.187  

During  the  webinar  series  on  SEP  enforcement,  it  was  underlined  that  parties  prefer  to  agree  on 
FRAND terms rather than having a third independent party determining the FRAND rate for them, 
even  if  it  would  be  not  binding.  Furthermore,  the  participants  in  the  webinar  noted  the  need  of 
specialised knowledge for FRAND determinations.  

Mandatory  conciliation  should  benefit  both  SEP  holders  and  implementers  in  reaching  a  licence 
agreement faster without costly court proceedings. Since the procedure would be limited to maximum 
nine months, it would expedite the negotiation process thus making delaying tactics on either side 
less attractive. This should be especially useful for SMEs (according to WIPO in 94% of SEP ADR 
at least one party was an SME).188  

On the other hand, the procedure may potentially lead to delays in licence payments. However, past 
payments are either resolved in the license agreement or the SEP holder can request damages for past 
use  before  the  court,  albeit  depending  on  national  laws  requiring  commencements  of  national 
proceedings before Member States’ courts of choice.  
An indicative hourly wage of a conciliator is about EUR 500.189 We estimate that a conciliator would 
spend on average around 40 hours per case (e.g. as a conciliator may need to come to a conclusion 
and draw up a report in case the parties do not settle). With estimated around 70 conciliation cases 
per year (35 based on the current number of FRAND related court cases in the EU and another 35 
not related to court proceedings), the cost of back-office support to conciliation is estimated at EUR 
800 per case. Thus, the total cost of a conciliation should amount to around EUR 20 800. This is eight 

186 If a note of termination of conciliation were required to be submitted to customs to effectively request customs' action 
with regard to SEPs, this would require: 
1. An amendment of the Implementing Regulation 1352/2013 establishing the forms provided for in Regulation (EU) 
No. 608/2013 of the European Parliament and of the  Council concerning customs enforcement of intellectual property 
rights (OJ L 341, 18.12.2013, p. 10); 
2. IT developments in the following IT systems: - anti-Counterfeit and anti-Piracy Information System (COPIS) used to 
process,  store  and  manage  information  from  applications  for  action  (AFAs)  and  decisions  between  right  holders,  the 
Commission, the European Union Intellectual Property Office (EUIPO) and customs authorities of the Member States; - 
IP Enforcement Portal (IPEP); national IT systems of DE, ES, IT, PL, CZ, NL. 
3.  Additionally,  the  EU  anti-Counterfeit  and  anti-Piracy  Information  System  COPIS  (established  by  Regulation 
608/2013) used for the processing and management of all AFAs would need to be adapted accordingly, as well as the 
national  systems  linked  to  COPIS  used  by  certain  Member  States.  The  EUIPO  database  IPEP  (Intellectual  Property 
Enforcement Portal), which is one of the trader portals offered to right holders to lodge electronic AFAs would also be 
impacted and would need to be adapted accordingly. 
187 Conciliation could also be introduced without SEP register, in that case however the conciliator could end up with no 
information to draw an opinion in case one party is unwilling to provide documents. 
188 Source: WIPO Arbitration and Mediation Center. 
189 “The WIPO Center often sees mediations where a mediator spends approximately 15 hours on a case. With indicative 
mediator 
the  parties”, 
https://www.wipo.int/wipo_magazine/en/2022/04/article_0007.html?utm_source=WIPO+Newsletters&utm_campaign=
a4eeca0fb5-DIS_MAG_EN_201222&utm_medium=email&utm_term=0_-a4eeca0fb5-%5BLIST_EMAIL_ID%5D. 

and  USD  600  per  hour 

rates  between  USD  300 

split  between 

fee 

43 

 
                                                 
times lower that the average SEP court cost in the EU of EUR 170 000.190 Based on WIPO experience 
(70% settlement rate) we estimate that up to 24 court cases could be avoided. Additionally parties 
could  receive  help  on  FRAND  terms  determination  in  at  least  35  cases  per  year.  Altogether  the 
additional benefits of this option are conservatively estimated at EUR 6 million and could increase 
further as the mechanism becomes more known and used.  

This  Option  bears  similarities  with  the  Expert  Group  Proposals  68  and  70  on  establishing  an 
independent  board  of  experts  for  determining  FRAND  royalty  upon  request  and  a  specialised 
mediation institute for FRAND licensing disputes.191 Proposal 68 was supported with 4.5 out of 5 
stars and Proposal 70 was supported with 4 out of 5 stars by the experts. 

6.4. 

PO4: Aggregate royalty for SEPs 

Aggregate royalty can be considered a total potential cost of licensing a standard.192 Economically, 
an  aggregate  royalty  makes  sense  because  implementers  value  the  standard  as  a  whole,  not  a 
collection of inventions represented by an incomplete portfolio of SEPs. It may also help to overcome 
problems of royalty stacking, a modern version of Cournot’s (1838)193 well-known problem that the 
independent pricing of complementary goods – here: licenses to different SEP portfolios on the same 
standard – leads to excessive prices, above those that a single party offering all those goods jointly 
would charge. As Contreras (2017)194 notes, “[t]op-down approaches [i.e. aggregate royalty] avoid 
many drawbacks associated with bottom-up approaches in which royalties for individual SEPs are 
assessed, often in an inconsistent and piecemeal manner, without regard for the other SEPs that cover 
the standard.”  

70% of all respondents to the public consultation and 100% of implementers considered that it is 
important  to  know  the  aggregate  royalty.  Views  of  SEP  holders  were  mixed,  with  more  (40%) 
considering it not important, than those who thought it was (20%). Moreover, 70% of all, 93% of 
implementers,  and  25%  of  SEP  holders  considered  it  important  to  have  a  transparent  process  for 
aggregate royalty determination (38% of SEP holders disagreed). 195 

Knowing  it  for  different  applications  would  simplify  cost  planning  for  SEP  implementers  and 
assessment, if their business model is profitable. As Henkel (2022, Section 4.1) shows, these are very 
real  concerns  for  SMEs  implementing  SEPs:  “During  the  development  of  an  IoT  device,  it  is 
unknown which demands for SEP royalties will surface later, so innovators cannot make reliable cost 
calculations.” For SEP holders it will allow to decide if they wish to contribute their technology to a 
standardisation process and help estimate potential future revenues.  

Under this option standard contributors may announce jointly an aggregate royalty to the Competence 
Centre. Finding an agreement among contributors might however be a challenging task due to often 
opposing  interests  of  contributors.  Some  may  also  be  implementers  and  thus  are  likely  to  favour 
lower royalties, while others are “pure” SEP holders whose primary source of income is licensing 

Expert 

Group’ 

(E03600): 

190 Please note this is an average court cost, but there are court cases where one party costs can approach millions of euros 
(See example in Annex 2). 
191 Baron, J., Geradin, D., Granata, S., et. al., Group of Experts on Licensing and Valuation of Standard Essential Patents 
‘SEPs 
2021, 
https://ec.europa.eu/docsroom/documents/45217. 
192 An implementer is unlikely to pay the full aggregate rate since not all SEP holders will be seeking royalties, or it may 
enter into cross-licenses. 
193  Cournot,  A.  A.,  Recherches  sur  les  principes  mathématiques  de  la  théorie  des  richesses,  L.  Hachette,  1838, 
https://gallica.bnf.fr/ark:/12148/bpt6k6117257c.texteImage. 
194  Contreras,  J.  L.,  ‘Aggregated  royalties  for  top-down  FRAND  determinations:  revisiting  “joint  negotiation”’,  The 
Antitrust Bulletin, 2017, Vol. 62, Issue 4, pp. 690-709, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3051502. 
195 See Annex 9, Q44 and Q45 respectively. 

Contribution 

Debate 

SEPs, 

the 

on 

to 

44 

 
                                                 
and  who  are  interested  in  higher  aggregate  royalty  levels.  To  help  contributors  in  reaching  an 
agreement,  the  Competence  Centre  upon  request  may  appoint  a  conciliator  to  facilitate  their 
discussions. Finally once royalty is set, it will not be for ever, there will be a mechanism to adjust the 
aggregate royalty to reflect changing market conditions (e.g. the fact that a standard ages with time).  
The aggregate royalty could be irrespective of the level of licensing196, and it should be possible to 
pass the cost of the licence downstream without a mark-up (the commission usually charged by the 
various levels in the value chain on top of the price). As per PO1 guidelines, the industry is expected 
to figure out the appropriate level of licensing to avoid the so called “double dipping” (collecting 
royalties twice for the same SEPs). 

From the point of view of an implementer, one risk could be that the aggregate royalty announced by 
the standard contributors is too high. SEP holders might set it high strategically in order to have room 
for negotiation.  

SEP holders publish maximum expected royalties in order to be able to negotiate. Stasik (2010) 
found that the sum of individually published handset royalty rates for 4G amounted to 14.8% of 
the sales price – representing only 60% of declared SEPs. 

This may, however, dissuade implementers from taking a licence, which should have a self-limiting 
effect  on  SEP  holders,  as  wide  implementation  of  the  standard  is  of  interest  to  the  SEP  owners. 
Nevertheless, in order to cater for such situations, a group composed of standard contributors and/or 
implementers  may  ask the Competence Centre  for a non-binding expert opinion  on the aggregate 
royalty. The process will be inclusive where any interested party would be able to submit its views. 
We estimate that around three such requests will be coming each year and that the cost of delivering 
one expert opinion (consisting of approximately 240 working hours of experts’ time and Centre’s 
back-office support) is estimated at around EUR 135 800. The costs would be shared by requesting 
parties. 

Besides predictability, this option is also expected to facilitate SEP license negotiations. Asked about 
problems in negotiating with SEP owners, 90% of respondents to the SME survey rated a fair price 
for SEPs as either a “very important” or an “important” issue.197 In fact, SEP licensing negotiations 
are mainly about royalty rates. By combining an aggregate royalty with a SEP owner’s share in all 
essential patents for a standard (from PO2), one obtains a proxy (albeit imperfect) of a royalty level 
to  be  expected.  This  could  establish  a  reference  point  to  help  negotiating  parties  in  reaching  an 
agreement.  It  might  be  especially  useful  for  smaller  and  SME  implementers  (who  have  limited 
resources to conduct own research or gather evidence), but also for (smaller) SEP holders who could 
underpin their FRAND offer with additional, publicly available evidence.  

With  an  estimated  575  SEP  licensing  negotiations  taking  place  in  the  EU  each  year,  we 
conservatively  estimate  the  value  of  publicly  known  aggregate  royalty  rates  at  approximately 
EUR25.3 million per year. 

In case licensing negotiations fail, an aggregate royalty would also facilitate the work of conciliators 
and judges by providing a clear reference maximum price for using a standard. This will not prejudice 
the use of other valuation methods in bilateral FRAND determination processes. For instance, during 
any conciliation process, the conciliator may choose the methodology (s)he uses to propose a FRAND 
rate and may also choose to look at the aggregate royalty. The non-confidential version of the report 
will be published and will inform any future discussion on an aggregate royalty.  

196 68% of the respondents to the public consultation consider that the fair and reasonable terms should not depend on the 
level of licensing – see question 40. 
197 See Annex A8.2, Q12. 

45 

 
                                                 
The publication of aggregate royalties is not expected to impact on innovation by SEP owners, as 
exemplified by the following research: 

In 2007, the patent policy of VITA198 (SEP on critical embedded computing architectures) was 
revised to require ex-ante disclosure of maximum patent royalty rates. Contreras (2011) finds that 
this policy change had no detrimental effect on the output and participation at VITA. As measures 
of  output  and  participation,  Contreras  looked  at  the  number  of  disclosures,  the  number  of  new 
standards-development activities that were initiated, the number of standards that were approved, 
the average time between the introduction of a draft standard and its final approval, the number of 
members participating in VITA, and the number of citations for newly approved standards.199 

For a more developed analysis of economic rationale for an aggregate royalty please consult Annex 
A7.2. 

This  Option  bears  similarities  with  SEP  Expert  Group  Proposals  38  and  42  on  encouraging  SEP 
holders to announce ex-ante most restrictive licensing terms and determine a reasonable aggregate 
royalty.200 Both proposals received support with 4 out of 5 stars by the experts. 

6.5. 

PO5: SEP clearing house 

This option depends on an aggregate royalty established above, and adds a clearing house facility, or 
one-stop-shop for implementers to acquire SEP licenses with a single (annual) payment and without 
any negotiations.  

PO5 would be most helpful for mid-caps and SMEs developing solutions in the IoT as it will enable 
them to simply deposit the aggregate royalty in an escrow account and then just sign standard deals 
with SEP holders.201 One third of respondents to the SME survey quoted too much efforts to enter 
license agreements  with  all  SEP holders  as  a reason for not  obtaining  a license;  and around 80% 
complained they did not have sufficient resources to negotiate with SEP holders.202 However, any 
implementer  may  always  choose  not  to  use  the  clearing  house  and  negotiate  with  SEP  holders 
bilaterally instead, to receive better conditions.   

The  initial  escrow  account  would  be  based  on  the  estimated  volume  and  value  of  sales  by  the 
implementers. Once SEP holders are informed by the Centre, those that are interested in a licence 
will reach out to the implementers concerned to conclude a licensing agreement on standard terms. 
This agreement will detail the sales and the monitoring mechanism and will regulate the relationship 
between the SEP holder and the implementers. The amount allocated to SEP holders that chose not 
to conclude a licensing agreement will be returned to the implementer within one year of the deposit. 

Given the fragmentation of the IoT and the large number of potential licensees this option should 
also benefit SEP holders. In particular, those SEP holders with small portfolios (e.g. SMEs) who have 
limited resources to engage in bilateral negotiations with many (or larger) implementers. The clearing 

198 VITA is accredited as an American National Standards Institute (ANSI) developer. Website: VITA - Home. 
199 CRA, De Coninck, R., von Muellern, C., Zimmermann, S., and Mueller, K., SEP Royalties, Investment Incentives and 
Total Welfare, 2022, p. 16, quoting: Contreras, J.,  An Empirical Study of the Effects of Ex-ante Licensing Disclosure 
Policies on the Development of Voluntary Technical Standards, National Institute of Standards and Technology, GCR 
11-934, 2011, https://www.nist.gov/system/files/nistgcr_11_934_empircalstudyofeffectsexantelicensing2011_0.pdf. 
200 Baron, J., Geradin, D., Granata, S., et. al., Group of Experts on Licensing and Valuation of Standard Essential Patents 
‘SEPs 
2021, 
https://ec.europa.eu/docsroom/documents/45217.  
201 It should be noted that 75% of all, 73% of implementers and 88% of SEP holders indicated that “Providing a security 
at a fair and reasonable amount” is a relevant behaviour of an implementer, which indicates willingness to take a license. 
See Annex 9, Q49. 
202 See Annex A8.3: Q8 (9 out of 26 answers) and Q12 (18 out of 22 answers) respectively. 

Contribution 

(E03600): 

Group’ 

Debate 

Expert 

SEPs, 

the 

on 

to 

46 

 
                                                 
house  would  allow  them  to  reach  a  wider  audience  of  implementers  at  limited  cost.  All  money 
transfers will be dealt with by the Competence Centre. 

There are two main challenges regarding this option. First, the aggregate royalty from PO4 would 
have to become binding on the parties. Consequently, a mechanism should be established to allow 
both updates and challenges of this royalty (e.g. in case it is set at too high level, or when the standard 
ages). However, changes to the aggregate royalty levels should not occur too often, as this would be 
rather disruptive to the licensing process, especially as regards predictability.  

Second, the problem is how to incentivise SEP holders to agree on the allocation of the aggregate 
royalty between them as they will be able to access escrow deposits only after doing so. In practice, 
it may not be possible for the SEP holders to agree on allocation methods because not all SEP holders 
license their SEPs for remuneration, and they may have diverging commercial interests. For some 
licensing is a business model, for others this is just a gateway for building business relationships. To 
get to an agreement SEP holders may use services of Centre’s facilitator. We estimate that on average 
there would be three such request per two years. Remuneration of facilitator(s) is estimated at EUR 
120 000 per case and will be borne by the requesting parties. In any case however, it is likely that at 
least  some  SEP  holders  will  be  dissatisfied  either  with  the  level  of  binding  royalty  or  allocation 
method.  This  can  result  in  numerous  legal  challenges  against  both  the  Commission  and  the 
Competence Centre.  

Nevertheless, if the allocation is agreed upon, the transfer of royalties should be automatic without 
the need for individual negotiations. We estimate that the majority of implementers will want to use 
the clearing house for at least some of the standards they use. We estimate that this option has the 
potential to eliminate the need for up to 500 negotiations per year, producing net benefits of up to 
EUR 76 million annually. Fees for using the service and covering cost of the Centre are estimated at 
just below EUR 100 per payment.203 

A potential drawback of this option from the point of view of implementers is that more SEP holders 
(also those who did not actively seek royalties in the past) might register to get their share of royalties. 
So, it is likely that more SEP holders will decide to license their SEPs, e.g. once Avanci became 
known and used by vehicle manufacturers, the number of SEP holders grew from an initial five in 
2016 to around 20 in 2018).204 In practice this could mean that the implementers will pay (almost) 
the full aggregate royalty. Currently not all SEP holders seek royalties, so the implementers are likely 
to pay only to those who proactively request royalties. Second, it may happen that due to ease of 
licensing under the new system, standards that thus far were in practice royalty free could become 
royalty bearing.  

This option bears similarity (but is different from) Proposal 74 from SEP Expert Group “On demand 
collective licensing agencies”.205 This proposal received 2 of 5 stars support from the experts. To the 
extent  that  it  bears  similarities,  the  objections  to  that  proposal  would  apply.  Those  include  that 
mandatory patent agencies would create strong disincentives for companies to participate in standard 
setting and mandatory patent agencies would result in that SEP holders only licensing their SEPs 
defensively, would collect licence fees through the agency, contrary to their policy not to seek licence 
fees from other users of a standard. 

203 Fee based on an average number of payments per year during a ten year period, assuming that each year there’s also 
payment for licenses taken in previous year(s). See Annex A7.1 for details. 
204 https://en.wikipedia.org/wiki/Avanci. 
205 Baron, J., Geradin, D., Granata, S., et. al., Group of Experts on Licensing and Valuation of Standard Essential Patents 
‘SEPs 
2021, 
https://ec.europa.eu/docsroom/documents/45217.  

Contribution 

(E03600): 

Group’ 

Debate 

Expert 

SEPs, 

the 

on 

to 

47 

 
                                                 
6.6.  Common impacts 

The general objectives are to ensure that end users, including small businesses and EU consumers 
benefit from products based on the latest standardized technologies at reasonable prices; and to make 
the EU an attractive place for innovation and standards development. Ultimately, the initiative wants 
to ensure that both EU SEP holders and implementers innovate in the EU, make and sell products in 
the EU and are competitive in non-EU global markets.  

Specifically,  the  initiative  aims  at  providing  the  tools  for  the  parties  to  negotiate  and  conclude  a 
FRAND license agreement successfully. All options aim at facilitating SEP licence take-up in the 
EU by reducing information asymmetries and redundant transaction costs. The initiative is thus likely 
to  balance  the  negotiating  power  between  SEP  holders  and  implementers.  It  should  provide  SEP 
implementers with predictability as to their SEP exposure, allowing for proper business planning and 
usage of the latest technology in the EU. It should also ensure sustainable licensing income for SEP 
holders thus enabling them to continue participating in standard development. It would promote a 
level playing field for SEP holders with good quality SEP portfolios.  

A  SEP  holders  has  been  negotiating  the  renewal  and  extension  of  its  existing  patent  license 
agreement with a Chinese implementer that is also a SEP holders. The Chinese company did not 
accept FRAND offers and did not make a FRAND offer to the SEP holders. The Chinese company 
provided  very  limited  material  on  its  own  SEP  portfolio  and  it  sought  a  significantly  higher 
valuation,  which  was  also  inconsistent  with  a  third-party  analysis.  The  SEP  holders  offered  to 
engage in  neutral  mediation  or arbitration to  agree on FRAND rates,  but  the Chinese company 
rejected those offers. 

The precise impact of the options on SEP holders and on costs of implementers is difficult to predict. 
As transaction costs go down (progressively with each option) it will be easier for implementers to 
take a licence (options mainly reduce information asymmetry that implementers currently face) and 
thus, not to infringe on patents. SEP holders would also benefit from such wider market increasing 
their licensing income base.  

Impact on fundamental rights 

This initiative may impact the right to intellectual property of patent  holders (article 17(2) of EU 
Charter), if it is viewed as a restriction on the ability to enforce individual patents within a standard 
for which a FRAND commitment was made, but that has not been registered. The same may apply 
to the requirement to conduct a conciliation procedure before enforcing individual patents. IP rights 
are not absolute rights and limitations to the exercise of these rights are allowed under the EU Charter, 
provided that the proportionality principle is respected. According to settled case-law, fundamental 
rights can be restricted, provided that those restrictions correspond to objectives of general interest 
pursued  by  the  European  Union  and  do  not  constitute,  with  regard  to  the  aim  pursued,  a 
disproportionate  and  intolerable  interference,  which  infringes  the  very  essence  of  the  rights 
guaranteed.206 In that respect, this initiative is in the public interest in that it provides uniform, open 
and predictable information and outcome on SEPs for the benefit of SEP holders, implementers and 
end  users,  at  EU-wide  level,  and  in  that  it  aims  at  promoting  technological  innovation  and  the 
dissemination  of  technology  to  the  mutual  advantage  of  the  SEP  holder  and  implementers. 

206 Case C-44/79 Hauer of 13 December 1979, para. 32; ECJ Case C-265/87 Schräder of 11 July 1989, para. 15, and 
Case C-5/88 Wachauf of 13 July 1989, paras. 17 and 18. 

48 

 
                                                 
Furthermore, the rules concerning the conciliation procedure and the determination of the aggregate 
royalty are aimed at improving and streamlining the process, but are not ultimately binding. 207 

The initiative should also improve the conduct of business for both SEP holders and implementers, 
and ultimately other businesses downstream (Article 16 of the Charter). 

The initiative is also entirely consistent with the right to an effective remedy and to access to justice 
(Article 47 of the Charter), as the implementer and the SEP holder fully retain that right. In case of 
failure to register, the exclusion of the right to effective enforcement is limited and necessary, and 
genuinely  meets  objectives  of  general  interest,  described  above  (see  the  first  paragraph  of  this 
Section).208  

Impact on innovation 

Reducing uncertainty about costs and legal exposure will have a positive effect on implementer-level 
innovation. Reasonable SEP licensing costs and a reduction of negotiation delays will have a positive 
impact  on  SEP  holder  innovation.  Both  SEP  holders  and  implementers  may  experience  negative 
impact if a balance is not achieved in the determination of the FRAND terms.  

A more sustainable standardisation system and the availability of open standards to a wider range of 
implementers will have a positive effect on innovation that builds up on those standards.  

SEP  licensing  is  expected  to  remain  a  profitable  business  after  the  options  considered  are 
implemented. For instance, the total costs (including indirect costs and excluding benefits) for SEP 
holders of PO2 of EUR54 million annually account only for 0.3% of the estimated global royalty 
payments on cellular standards alone (EUR 18 billion).209 Thus, incentives to innovate are likely to 
continue.210  Two  thirds  of  respondents  to  the  public  consultations  considered  that  efficient  SEP 
licensing would foster innovations by implementers, including start-ups and SMEs.211 

Social and environmental impacts 

The options have no direct social impacts. Indirectly by facilitating take-up of new technologies they 
can help in the digital transition such as e.g. smart cities, connected cars, telework, etc. More jobs 
could emerge in the new technology sectors.  

The options have no direct environmental impacts. They comply with the “do no significant harm” 
to the environment principle. Indirectly, by facilitating application of new technologies they can help 
in  the  green  transition  e.g.  by  contributing  to  a  reduction  of  energy  usage  (via  smart  grid,  smart 
meters) or air pollution (e.g. connected cars avoiding traffic jams).  

207 The conciliation procedure follows the conditions for mandatory dispute settlement outlined in the CJEU judgments; 
Joint Cases C-317/08 to C-320/08 Alassini and Others of 18 March 2010, and Case C-75/16 Menini and Rampanelli v. 
Banco Popolare Società Cooperativa of 14 June 2017, taking into account the specificities of SEP licensing. 
208 Since  the alternative of excluding the  right  to collect past royalties absent a registration or the alternative to only 
require the initiation of the conciliation procedure before being able to enforce patent rights weighs less than the exclusion 
of enforcement, argumentum a maiore ad minus, would also be compliant with fundamental rights. 
209  CRA  converted  to  EUR  using  EUR1:USD1  rate,  see  CRA,  Régibeau,  P.,  De  Coninck,  R.  and  Zenger,  H., 
Transparency,  Predictability,  and  Efficiency  of  SSO-based  Standardization  and  SEP  Licensing:  A  Report  for  the 
European Commission, 2016, Section 3.2, p. 57, https://ec.europa.eu/docsroom/documents/48794?locale=en. 
210 - 
Baron, J., Essentiality Checks for  Potential SEPs – Framework for Assessing the Impact of Different Policy 
Options,  European  Commission,  DG  GROW,  2023:  “Essentiality  checks  may  accentuate  the  difference  between  the 
returns to essential and non-essential patents; thus increasing SEP holders’ efforts to produce truly essential patents. In 
the theoretical analysis of Wipusanawan and Schuett (2022), increasing the differential between the value of essential 
and non-essential patents increases potential SEP owners’ incentives to contribute to standards development”. 
211 See Annex 9, Q64. 

49 

 
                                                 
Two thirds of respondents to the public consultation considered that efficient SEP licensing would i) 
increase employment and keep a high level of competence in the EU and ii) foster the EU’s transition 
to the green economy.212 

Impact on SEP holders’ royalty income and availability and cost of products to customers 

Many implementers currently use standards without having a license. Thus, the effect on availability 
of SEP embedding products is unknown. We expect that lower transaction costs will promote license-
based applications and more implementers will take a license. It may be just a shift from unlicensed 
products  to  licensed  products,  or  real  increase  in  technology  take-up  resulting  in  more  SEP 
embedding products on the market (also due to expected increase in IoT applications).  

The  impact  on  SEP  prices  (royalties  paid  by  implementers)  is  also  unknown  (see  Annex  A7.1). 
Announcements of aggregate royalties and FRAND determination processes may (but do not have 
to) contribute to lowering the royalties paid by implementers.  

Consequently, we have two effects working in different directions: i) potentially more firms taking a 
license (increasing implementers costs, and income of SEP holders) and ii) potentially lower royalties 
paid (decreasing implementers cost and income of SEP holders). Finally, the impact on prices for 
customers will depend on the competition on a given product market.  Any change in royalties paid 
by producers may be internalized by a firm or passed on to final customers. 

Impact on national patent proceedings  

The additional information on essentiality shares, on aggregate royalty as well as information from 
conciliator reports are likely to facilitate judgements in SEP related cases. Moreover, mandatory pre-
trial conciliations are expected to reduce the number of SEP litigation by up to 70%. The benefits for 
the national judiciary are estimated at EUR 2.8 million in terms of access to information, and at EUR 
4  million  in  terms  of  reduction  of  the  number  of  court  cases.  In  the  analysis  these  benefits  were 
attributed to SEP holders and implementers. 

Impact on patent offices 

Options starting from PO2 may create additional demand for European patents, in case the share of 
SEPs in the register will become a reference point for aggregate royalty allocation. Especially larger 
stakeholders may take advantage of the fact that there is certain probability that a non-essential patent 
will be considered essential by evaluators.213 This effect however is likely to diminish as evaluators 
gain  experience.  Thus,  an  increasing  number  of  SEPs  in  the  register  may  improve  SEP  holders 
position vis-à-vis other holders. We estimate that in case this effect occurs, it may result in additional 
income to EPO/national patent offices of around EUR 29 million annually (in case PO2 sub-option 
ii) is chosen). 

Impact on SEP patent pools 

All options will have positive impacts on patent pool formation and patent pool licensing.  

First, all patent pools conduct essentiality checks for some or all patents included in the pool. In the 
future, SEP holders may include in the pool SEPs that were found essential under PO2.214 Merges 
and Mattioli (2016) e.g. estimate that the cost of these essentiality checks related to the MPEG Audio 

212 See Annex 9, Q65 and Q66 respectively. 
213 JRC found through experiment that the probability of marking a non-essential patent as essential stands at 38%. The 
study  noted  however,  that  errors  in  assessment  are  likely  to  diminish  as  assessors  gain  experience,  see  European 
Commission, Joint Research Centre, Bekkers, R., Henkel, J., Tur, E. M., et al., Pilot study for essentiality assessment of 
standard essential patents, Publications Office of the European Union, 2020, https://data.europa.eu/doi/10.2760/68906. 
214 It should be noted however that pools do not license just the evaluated patents  – they license the licensors’ entire 
portfolios of relevant SEPs (without having identified what or how many there are), but uses the evaluated patents as an 
proxy for showing licensees the composition of the licensor portfolios and the pool portfolio as a whole. 

50 

 
                                                 
pool represented USD 5 250 000, approximately two thirds of the total set-up cost of this patent pool. 
Patent pools may continue to do their own essentiality checks. 

Second, the requirement to announce an aggregate royalty is likely to promote patent pool formation 
as independent patent pool administrators have significant experience in pool formation. They also 
have internal revenue allocation mechanisms, which may increase transparency with regard to the 
share of the various SEP holders and facilitate their business planning.  

Finally, if a patent pool comprising all SEP holders relating to a given standard would be formed, it 
would replace the use of PO5. 

Impact on commercial database providers 

Providers  of  commercial  solutions  include  companies  such  as  LexisNexis  Patentsight,  Clarivate 
Derwent  Innovation,  Questel  Orbit,  Patsnap,  Minesoft  Patbase  and  many  others.  Recently  such 
companies have integrated SEP declaration information in their databases; i.e. patent datasets include 
a  flag  whether  or  not  a  patent  has  been  declared.  Some  solution  providers  such  as  IPlytics, 
PatentCloud  Inquartik,  Patently  or  Unified  Patents  have  created  designated  patent  declaration 
analytics solutions that allow searching across the full text of patent and standard documents.215 

These providers may have access to the register, use it in their commercial offers and build services 
on  top  of  that  data.  There  may  be  new  users  and  thus  enhanced  competition.  Providers  that  are 
currently focused on collecting  and curating the  currently missing or imperfect  data  available  are 
likely to lose that part of their business. The companies above, however, all offer additional services. 
While users may no longer need to purchase commercially produced reports on the SEP landscape, 
they may benefit from the price decrease and quality increase in new analytical commercial reports 
induced  by  the  free  availability  of  the  Competence  Centre’s  information  on  essentiality  rates  or 
aggregate royalty.  

Digital impacts 

The  SEP  database  may  be  used  for  research  purposes,  and/or  to  train  machine  learning  (ML) 
algorithms to recognize “true” SEPs among larger populations of potential SEPs. These methods are 
expected to significantly improve over the next years, and the policy options may further contribute 
to this evolution. The causal effects of improved ML approaches to essentiality determinations are 
complex, but potentially significant. Among others, it may limit significantly the costs of essentiality 
checks. 

7.  HOW DO THE OPTIONS COMPARE? 

Guidelines  and  support  measures  created  under  PO1  will  support  SEP  license  negotiations  and 
improve the SEP licensing environment mainly by increasing transparency and reducing some costs. 
Their impact, however, may be limited. The assistance package for SMEs can be seen as the biggest 
advantage of this option. As explained under PO1, much of the public information about pricing is 
under non-disclosure agreements. A guidance is not capable of promoting more transparency in this 
respect. Any SEP landscape study will suffer from natural limitations such as missing data and over-
declaration, and the  use  of different  methodologies  to  produce them, which  may lead to  different 
results. WIPO mediation will not address the key concern about transparency of the results of the 
mediation that are to benefit future comparable situations. In order to offer valuable information to 
interested parties, the Competence Centre would need to gather its own quality data through unbiased 
and transparent processes. This option is unable to achieve this. 

215 Baron, J., Arque-Castells, P., Leonard, A., et al.,  Empirical Assessment of Potential Challenges in SEP Licensing, 
European Commission, DG GROW, 2023, p. 30, Section 3.2.1.3. Commercial patent databases. 

51 

 
                                                 
By  making  registration  in  the  EU  register  mandatory,  and  enforcement  and/or  collection  of  past 
royalties  conditional  on  registration,  PO2  will  create  transparency  about  the  SEP  landscape 
(improving on objective 1). In addition, regular essentiality checks will guarantee the quality of the 
register. Essentiality checks will also give an indication on the number of truly essential patents per 
SEP holder. With time this might lead to creating a register of ‘truly’ essential patents. Implementers 
will have a (comparative) proxy of the shares that each SEP holder has in the respective technology. 
There will be benefits for both the SEP holders and the implementers. The SEP holders that register 
will demonstrate the legitimacy of their claims and see reduction of some costs related to the technical 
discussions  plus  shorter  negotiation  periods.  The  implementers  will  be  able  to  see  who  the  SEP 
holders are who may have legitimate claims on SEPs, what the potential strength of those claims is 
and  how  those  may  impact  on  its  business.216  They  will  economise  on  their  own  essentiality 
assessments  which  should  aid  in  negotiations  –  improvement  on  objective  2.  Nevertheless, 
implementers will still have to negotiate licence and royalties individually with each SEP holder with, 
in most cases, no aggregate royalty available as a reference. PO2 also includes all impacts of PO1. 

By adding an obligatory pre-litigation conciliation, PO3 is expected to speed up dispute resolution 
and lower its cost as compared to court proceedings, thus significantly improving on objective 3. A 
conciliator would also propose FRAND conditions including royalty, thus further helping especially 
implementers and improving on objective 2. 

PO4 is going to solve one of the key issues in SEP licensing negotiations by adding an aggregate 
royalty to the SEP register and providing a reference price for using a standard – thus significantly 
improving on objective 2. It should speed up license negotiations and dispute resolution, thus further 
improving on objective 3. It will especially help smaller SEP implementers, facilitate production cost 
planning and profit calculations. It will also restrict room for exploitation by SEP holders by setting 
reasonable maximum royalty rates. 

By  creating  a  one-stop-shop  for  obtaining  SEP  licences,  PO5  eliminates  the  business  uncertainty 
about the aggregate royalty. It gives the opportunity to implementers to sign licence deals with many 
SEP holders. For SEP holders it gives clarity about their share of the aggregate royalty and facilitates 
licensing  with  implementers  who  choose  to  use  the  one-stop-shop.  This  option  will  reduce  the 
licensing costs in a similar way as for pools. Given that all SEP holders will be covered by this option, 
it  would  represent  an  improvement  in  comparison  to  a  pool.  This  option  radically  improves  on 
objective 2 and could eliminate the majority of disputes, thus improving on objective 3. However, 
the SEP burden on implementers might increase as transaction costs get very low, more SEP holders 
than currently might want to participate in SEP licensing (including those that were not licensing thus 
far, or even those that had a royalty free policy might change to royalty bearing licensing). PO5 would 
eliminate the issue of licensing in the value chain as any implementer may use the one-stop-shop and 
its customers will be licensed. Finally, for PO5 to work, SEP holders have to be incentivised to agree 
on a mechanism for royalty allocation. This is a very complex exercise because of the many diverging 
interests of SEP holders (those whose main business is using the standard, those whose main business 
is SEP licensing and those who do both). It is very likely that they will fail to agree, and the issue 
will be referred to the FRAND determination process. This option has an impact on the freedom to 
conduct business.  

216 As with time new SEP holders might register, it may be necessary to check the register regularly to have up-to-date 
picture on the SEP holder landscape. 

52 

 
                                                 
Table 2: Comparison of policy options against the effectiveness and efficiency criteria 

Provide 
ownership and essentiality 

information 

on 

Effectiveness 

SEPs 

Provide clarity on FRAND royalty 

Facilitate dispute resolution 

Cost efficiency (EUR) 
only quantifiable costs and benefits 
for all stakeholders  
(see next table for details) 
0 

Options 

Baseline 

PO1 Voluntary guidance 

PO2: SEP register + essentiality check 
(on  up  to  100  patents  +  random 
sample) 

PO3: Register and conciliation 

PO4: Aggregate royalty for SEP 

PO5: SEP clearing house 

0 

0 
(0/+) clarification of key issues in SEP negotiations in guidelines, effectiveness 
depending on market uptake. 
(+)  Competence  Centre  landscape  studies,  collection  of  case-law  and  rules 
worldwide, and help/training to SME implementers. 
(++)  Clarity  on  which  SEPs  can  be 
enforced  and 
(optionally:  which 
damages for past use can be collected) 
(those in the register only), who owns 
them and how many essential patents 
there are per SEP holder. 

(+) as in PO1 + proxy of SEP shares 
of  each  SEP  holder  based  on  patent 
count 
(++) as in PO2 + conciliator’s opinion 
on  royalty  facilitates  negotiation  and 
conclusion of SEP licence (potentially 
global).  

(+++) as in PO3 + clarity on total SEP 
cost (aggregate royalty). 

(++++) as in PO4 + clarity on split of 
aggregate 
royalty  between  SEP 
holders. 
(--)  implementers  may  face  higher 
SEP  cost  if  more  SEP  holders  than 
currently decide to license for royalty. 
(--) SEP holders could likely disagree 
with the mandatory aggregate royalty 
and apportionment method 

0 
(0/+) promotion of WIPO ADR tools.  Net effect (+)5.3 million 

(0/+)  as  above  +  register  is  another 
source of evidence in WIPO ADR. 

Mandatory 

commencement 

conciliation 
(+) 
(optionally: 
of 
procedure)  should  limit  costly  court 
cases by up to 70% 
Additional  evidence  for  SEP  holders 
in case of an application for customs’ 
action. 
(++) as in PO3 but conciliation/licence 
negotiations  should  be  faster  when 
aggregate royalty is available. 
(+++) 
disputes, otherwise as in PO4.  

substantially 

reduce 

can 

Benefits 5.9 million  
Cost 0.6 million 

Net effect (-)12.3 million 
Benefits 41.5 million 
Cost: 53.8 million 
Net effect (+) 6 million 
Benefits 7.5 million 
Cost 1.5 million 

Net effect (+) 24.9 million 
Benefits 25.3 million 
Cost 0.4 million 
Net effect (+)75.2 million 
Benefits 75.6 million 
Cost 0.4 million 

Note: Only additional quantifiable costs and benefits of each option presented. Options build on each other thus for instance impact of PO3 consist of impact of PO1, PO2 and PO3. 
 Quantifications are only indicative based on several assumptions. Not all impacts are quantifiable, notably impact on SEP licensing revenue. See annex A7.1 for details.  

53 

 
 
 
 
Table 3: Comparison of the impacts of policy options on stakeholders (including quantifiable costs and benefits) 

SEP implementers 

SEP holders 

Courts / lawyers 

Baseline 
PO 1:  

No. affected  Around 230 EU based implementers and around 
implementers  with 

based 

non-EU 
190 
subsidiaries in the EU 
0 
(+)  Guidelines  will  provide  definition  and 
interpretation on issues posing most problems in 
remain 
SEP  negotiations  – 
voluntary 
Competence Centre will do landscape studies on 
SEPs,  have  a  repository  of  cases,  and  rules 
worldwide that should facilitate negotiations 
SMEs will benefit from free advice 

though 

they 

Altogether around 260 with more than 10 SEP families. 
Around 31 from the EU (owning 15% of potential SEPs)  

Around  35  FRAND  related  court 
cases per year 

0 
(+) Guidelines could smoothen negotiations 
(+) Access to landscaping studies  
(-) Implementers due to information/resources from the 
Competence Centre can become more assertive 
negotiators 

0 
(0/+) guidelines, database of case 
law  and  landscape  studies  can  be 
used in court judgements;  

Costs (€)  0 (0.6 million, cost covered by fees of PO2) 

Benefits (€)  3.4 million 
Net (€)  3.4 million 

PO 2:  
Sub-option 
ii) up to 50 
checks + 
sampling 

(++) clarity on which SEP holders may enforce 
and  (optionally  only)  collect  royalties  for  past 
damages in the EU and share of essential patents 
they have. 
Likely  to  reduce  cost  of  internal  investigations 
licence 
implementer  engaged 
of  each 
negotiations; provides indication on the share of 
SEP royalty based on patent count, but also gives 
an indication of value as the register will create 
transparency as to how the patent relates to the 
standard. 

in 

0 
2.5 million 
2.5 million 
(0,-)  SEP  holder  risks  that  (some  of)  its  patents  will  be 
assessed  as  non-essential  to  a  standard.  Patents  in  the 
register may be subject to invalidation procedures which 
might lead to weakening of SEP holder’s patent portfolio. 

(+)  SEP  holder  will  gain  credibility  that  it  has  essential 
patents which should facilitate approaching implementers 
for a licence. 

(+) SEP holders with a higher essentiality rate from their 
registered SEPs will improve their negotiating position in 
all SEP negotiations (also cross-licensing) 

0 
0 (benefit of 2.4 million)* 
0 (2.4 million)* 
(+) information on registration and 
essentiality  should  facilitate  SEP 
judgements 
(0,-)  increased  number  of  patent 
invalidation claims 

Costs (€)  0.6  million  (access  fee:  €1  700  for  large  and 

€850 for SME) 

Benefits (€)  6.1 million 
Net (€)  5.5million 

PO 3:  

(+++) as in PO2 + up to 70% of SEP conflicts 
could be solved without court involvement (due 
to mandatory pre-trial conciliation). 
Especially  smaller  implementers  could  benefit 
from  help  conciliator  provides  in  negotiations 
with SEP holder. 

53.2 million (including 38 million of indirect costs) (filing 
fee 100 per patent, essentiality check 5 000 per patent) 
6.4 million 
-46.8 million 
(++)  as  in  PO2  +  up  to  70%  of  SEP  conflicts  could  be 
solved without court involvement (due to mandatory pre-
of 
[optionally 
trial 
procedure]) 

commencement 

conciliation 

0 

0 (benefit of 0.4 million)* 
0 (0.4 million) 
(++) Reduction of SEP court cases 
by up to 70%. 
(+) In case of a trial, courts can use 
the  non-confidential  report  of  the 
conciliator  (on  e.g.  FRAND  rate 
assessment)  in  SEP  judgements. 

54 

Patent Offices (PO) and commercial 
data providers 
EPO,  27  NPOs  and  about  20  data 
providers  (including  4  main  patent 
and 4 main SEP specific) 
0 
(0) No impact on patent offices 
(0/+) Case law database of the centre 
and produced studies are not 
expected to impact on database 
providers but can be another free 
source of analysed information. 

number 

face 
opposition 

0 
0 
0 
(0,-)  Patent  Offices  may 
increased 
procedures 
(+) providers may have access to the 
register,  use  it  in  their  commercial 
offers  and  build  services  on  top  of 
that  data.  There  may  be  new  users 
and thus enhanced competition. 
(-)  providers 
that  are  currently 
focused  on  collecting  and  curating 
the  currently  missing  or  imperfect 
data  available  are  likely  to  lose  that 
part of their business. 
0 

29 million in additional patent fees 
29 million 
(0)  No  impact  on  patent  offices 
(+)  Providers  may  re-use  public 
outcomes of conciliation procedures 

 
 
 
 
 
SEP implementers 

SEP holders 

Courts / lawyers 

Patent Offices (PO) and commercial 
data providers 

(+)  Conciliation  report  would  be  used  to  support  an 
application  for  customs’  action  with  regard  to  goods 
suspected of infringing SEPs. 
(-) Obligatory conciliation [optionally commencement of 
procedure] might delay SEP holder’s going to court. 
0.7 million 
3.7 million 
3 million 
as in PO3 but  
(-) Freedom to negotiate SEP royalty will be reduced by 
the announced maximum SEP royalty. Implementers  are 
likely to try to negotiate price down 
(+) SEP holder will still be able to claim it has the most 
important patents and should get the largest chunk of the 
aggregate royalty 
(+) Depending on the mechanism by which the aggregate 
royalty  is  set,  the  aggregate  royalty  may  in  the  end  be 
higher than under the current system. 
(-) potential dissatisfaction with the aggregate royalty set 
might trigger more conciliation requests  
0.2 million 
12.7 million 
12.5 million 
(+) Potential for smooth licensing without negotiations or 
disputes, i.e. increase of licensing base  
(-) potential disagreements on aggregate royalty allocation 
method 
(-) In case negotiations take place, impacts as in PO3 but 
freedom 
limited  by  published 
aggregate royalty and allocation shares 

to  conduct  business 

Costs (€)  0.7 million 
Benefits (€)  3.7 million 

Net (€)  3 million 

PO 4:  

(++++)  as  in  PO3  +  Implementers  will  know 
maximum price of a standard (aggregate royalty)  
(0/-) Risk that aggregate royalty announced will 
be too high,  
(+) mitigated by possibility to request an expert 
opinion,  with 
royalty 
published in the register 
(0/-) Risk that each SEP holder approaching an 
implementer  will  demand  a  bulk  share  of  the 
aggregate royalty, which might increase need for 
conciliations/trials 

resulting  aggregate 

Costs (€)  0.2 million 
Benefits (€)  12.7 million 
Net (€)  12.5 million 

PO 5:  

(++++) as in PO3 +  
+  One  stop  shop  will  allow  taking  a  licence 
without negotiating with individual SEP holders 
+ any implementer can take a licence regardless 
of its level in the value chain 
(0/-) Risk that aggregate royalty announced will 
be too high. 
(--) Risk that more SEP holder holders will join 
“public pool” and seek royalties, risk that royalty 
free standards will become royalty bearing 

The  court  can  also  use 
the 
confidential  report,  if  the  parties 
agree. 

0 
0 (4 million)* 
0 
(+)  Courts  can  benefit  from  the 
publicly  announced  aggregate 
royalty 

0 
0 
0 
(0) No impact on patent offices 
(+)  Providers  may  use  the  data  to 
offer 
to 
customers. 

additional 

solutions 

0 
0 
0 
(0) No impact 

0 
0 
0 
(+)  Potential  to  reduce  most  of 
SEP court cases. 
(+)  Courts  can  benefit  royalty 
allocation between SEP holders in 
addition  to  the  benefits  listed 
under the previous POs. 
(-) SEP holders may challenge the 
allocation 
before 
conciliators 

method 

Costs (€)  0.3 million 
Benefits (€)  37.8 million 
Net (€)  37.5 million 

0.2 million 
37.8 million 
37.6 million 

0 
0 
0 

0 
0 
0 

* added in equal shares to benefits of SEP implementers and holders 
Note: Only additional costs and benefits of each option presented. Options build on each other thus for instance impact of PO3 consist of impact of PO1, PO2 and PO3. 
Quantifications are only indicative based on several assumptions. Not all impacts are quantifiable, notably impact on SEP licensing revenue. See annex A7.1 for details. 

55 

 
 
 
7.1.  Compliance with the proportionality principle  

None of the options goes beyond what is necessary to achieve the identified objectives. The options 
are characterized by progressively increasing market intervention, which is justified to balance the 
distorted balance of power and information asymmetry, and to reduce unnecessarily high transaction 
costs  in  licensing  negotiations  between  SEP  holders  and  implementers,  especially  with  smaller 
(including SMEs) implementers and ensure that the principle of FRAND licensing is implemented. 

7.2.  Coherence with other EU legislation 

The options are coherent with the application of EU competition policy as regards the enforcement 
of  the  FRAND  obligation  arising  from  Article  102  TFEU.  Other  instruments  in  the  area  of 
enforcement of intellectual property rights are not impacted by this initiative. 

Possible  legal  instruments  for  implementing  the  policy  options  are  in  case  of  PO1  an  EU 
recommendation for setting the guidelines and  a  regulation to create the Competence Centre (e.g. 
adding  new  tasks  to  the  EUIPO).  In  case  of  PO2  to  PO5,  an  EU  regulation  would  be  required, 
supplemented by delegated or implementing acts (e.g. establishing the methodology for essentiality 
checks,  criteria  for  essentiality  assessors,  criteria  for  aggregate  royalty  determination,  rules  for 
conciliation).  

7.3.  Coherence with international obligations (WTO rights) 

Certain proposed limitations on the rights of a SEP holder, including requirements to (i) register its 
patents  in  a  designated  register,  and  to  (ii)  conduct  a  specified  FRAND  determination  process 
(conciliation) in order to be able to enforce their patents and/or collect FRAND royalties for the past, 
could be considered a legitimate limited exception as stipulated in Article 30 TRIPS to the exclusive 
rights conferred on SEP holders under Article 28 TRIPS (a more detailed assessment is provided in 
Annex 8). 217 There is only limited guidance on Article 30 TRIPS, which on the one hand seems to 
allow only a narrow curtailment of the legal rights of a patent holder, but on the other hand suggests 
that public interest objectives stated in Articles 7 and 8(1) TRIPS, are legitimate objectives permitting 
encumbrance on the use of intellectual property.218 

The temporary exclusion of the right to effective enforcement of exclusive rights may be considered 
to be limited. The inclusion of a patented technology in a standard gives the SEP holder dominant 
market power over an implementer of the standard, as they cannot design their products around SEPs 
because the technology is essential for implementing the standard. SEPs  holders benefit from  the 
adoption of the standard and therefore usually tolerate the infringement of their patents to ensure the 
standard  is  widely  used  in  products.  When  SEP  holders  commit  to  FRAND  licences  in  order  to 
promote adoption of the standard, their objective is not to stop the sale of infringing products but to 
collect  royalties  from  such  sales.  The  exceptions  to  the  exclusive  rights  of  SEP  holders  are  thus 
consistent with the objectives of the TRIPs agreement to promote technological innovation and the 
dissemination of technology to the mutual advantage of the SEP holder and the user of the technology 
(Article  7).  It  would  also  be  consistent  with  its  principles  of  preventing  the  abuse  of  intellectual 
property rights and adopting measures for public interest reasons (Article 8). 219   

217 The registration of patents in a designated register could also qualify as a procedure concerning the maintenance of 
intellectual property rights under Article 62 of the TRIPS Agreement. 
218 The detailed assessment of the permissibility of the exceptions under Article 30 of the TRIPS Agreement and the 
interpretations by WTO adjudicating bodies is set out in Annex 8 WTO/TRIPS compatibility. 
219 The  temporary exclusion of  the  right to effective enforcement also reflects the FRAND commitments of the  SEP 
holders that involves a period of negotiation with potential licensees during which it is premature for the SEP holders to 
launch enforcement procedures. 

56 

 
                                                 
The exception to the exclusive right would not conflict with the normal exploitation of the patent. 
The normal exploitation of the patent in the context of standard-compliant products is to be able to 
collect FRAND royalties. Thus, exploitation rights should be more strictly defined or limited because 
of concerns regarding potential restrictions to fair competition and discrimination. 

Furthermore, the legitimate interests of the patent holder would not be unreasonably prejudiced either 
since enforcement would be possible following registration and would also include royalties due for 
the conciliation period. Conciliation would only temporarily suspend the enforcement and neither the 
conciliation result nor the published aggregate royalty would be binding upon the parties. Moreover, 
the  proposed  initiative  takes  full  account  of  the  legitimate  interests  of  third  parties,  notably 
implementers and end users. 

Article  40  of  the  TRIPS  Agreement  on  the  Control  of  Anti-competitive  Practices  in  Contractual 
Licences provides  that  the TRIPS Agreement  does  not  prevent  Members from  specifying in  their 
legislation  licensing  practices  or  conditions  that  may  in  particular  cases  constitute  an  abuse  of 
intellectual  property  rights  having  an  adverse  effect  on  competition  in  the  relevant  market.  The 
proposed FRAND determination process (conciliation and aggregate royalty setting) is intended to 
address, among other issues, concerns about whether the demanded royalty is truly FRAND, which 
may have potential anti-competitive effects. Such anti-competitive effects may impede the adoption 
of the standardised technology mainly by new entrants and SMEs that lack the resources to deal with 
such  demands  or  pay  potentially  non-FRAND  royalties.  Any  potentially  abusive  practices  in  the 
licensing of IP rights may result in harm to the consumer and public interest. Therefore, the proposed 
registration  of  SEPs  in  a  designated  register  prior  to  enforcement  and  the  FRAND  determination 
process are likely to fall under Article 40 of the TRIPS Agreement. 

Furthermore, the introduction of a conciliation is not unreasonably expensive or burdensome, given 
the specific SEP practices, and is thus in line with the obligation in Article 41(1), (2) TRIPS, which 
requires WTO members to ensure that the different types of proceedings relating to IP enforcement 
shall be available under the respective national laws. SEP holders benefit from the adoption of the 
standard and therefore usually tolerate the infringement of their patents to ensure that the standard is 
widely used in products. When SEP holders commit to FRAND licences in order to promote adoption 
of the standard, their objective is not to stop the sale of infringing products, but to collect royalties 
from  such  sales.  As  such,  the  FRAND  determination  (conciliation)  process  cannot  be  considered 
a restriction of the SEP holder’s right to enforce its patent against an implementer220. 

8.  PREFERRED OPTION 

Option 4 is the preferred option – a mandatory register for SEPs with essentiality checks, a process 
for  determining  an  aggregate  royalty,  and  a  mandatory  pre-trial  conciliation,  combined  with 
voluntary  guidance  on  SEP  licensing  and  a  central  Competence  Centre  offering,  among  other 
services, also assistance to SMEs. 

This option is expected to strike the right balance between negotiating powers of SEP holders and 
implementers and at the same time allow sufficient room for private negotiations between them, with 
more relevant information at hand. The option reduces information asymmetry between a SEP holder 
and an implementer by providing the latter with information who the relevant SEP holders are, how 
many patents they have registered in the register and what their essentiality rate is (derived from a 
representative random sample of all registered SEPs) and what the potential [or maximum] total cost 
of using a standardised technology (aggregate royalty) is. A pre-trial obligatory conciliation is likely 
to  reduce  SEP  dispute  settlement  costs  to  about  1/8  as  the  conciliator  will  assist  both  parties  in 

220 Since  the alternative of excluding the  right  to collect past royalties absent a registration or the alternative to only 
require the initiation of the conciliation procedure before being able to enforce patent rights weighs less than the exclusion 
of enforcement, thus, argumentum a maiore ad minus, this would also be coherent with WTO/TRIPS obligations. 

57 

 
                                                 
reaching an agreement. A Competence Centre will provide objective information, guidance, trainings 
and  support  to  SMEs  in  relation  to  SEPs  and  SEP  licensing.  Moreover,  SMEs  will  benefit  from 
reduced administrative fees and/or financial support from existing facilities such as the SME Fund to 
cover e.g. conciliation costs.  

The option is likely to reduce the time for negotiation and the cost of the negotiation for both parties. 
Transparency  will  inject  trust  into  the  system.  SEP  holders  are  likely  to  reach  a  wider  set  of 
implementers  therefore  securing  adequate  remuneration  on  their  innovation,  and  incentivising 
participation in future standard setting. Implementers (especially smaller ones) will be able to plan 
their business costs and make their risk assessments.  

Finally, the initiative will cover future standards (or generations of standards) and there may be a 
possibility  to  request  the  inclusion  of  older  versions  of  the  standards,  such  as  LTE,  of  particular 
importance to the roll-out of the IoT. The option will complement and not replace the Huawei v ZTE 
process. It is expected not to impact licences that are already in force. 

As far as quantification is possible, and under several assumptions, the net benefits of the preferred 
option are estimated at around EUR 24.5 million per annum. In terms of distribution of costs and 
benefits, the majority of net benefits (estimated at around EUR 24 million) will be directed to SEP 
implementers localised in the EU (split almost equally between firms with headquarters in the EU or 
non-EU firms with subsidiaries on the territory of the EU). With an approximate number of less than 
600 new SEP licensing contracts signed per year in the EU, net benefits are estimated on average at 
around  EUR  40 000  per  negotiation.  SEP  holders  are  expected  to  bear  the  brunt  of  costs  of  this 
initiative mainly due to the cost of SEP registration and essentiality checks. The costs for this group 
amounts to EUR54 million, with 85% of these costs applicable to non-EU based SEP holders. The 
estimated benefits to this group account for around half of costs, so the net effect is negative (EUR 
29 million). It should also be noted that a large part of SEP holders’ costs (EUR 29 million) is due to 
an expected increase in patent fees due to an expected increase in number of patents. This impact is 
uncertain and thus may not materialise, in which case the overall impact on SEP holders would be 
neutral. However, if it were to happen, it would constitute a new income to the European and National 
Patent Offices. In terms of geographical distribution of impacts in the EU, it is expected that firms 
from all but three (FI, SE and LU) Member states are likely to experience net benefits, with DE, IT 
and FR accounting for 75% of benefits. Finally, it should be noted that certain impacts, such as e.g. 
a change in SEP licensing revenue are difficult to predict, thus are not included in the cost/benefits 
calculation. For discussion of those impacts as well as for details on all calculations see Annex A7.1. 

The table below summarises costs and benefits of the preferred options: 

Table 4: Ten-year-average total approximated annual costs and benefits of the preferred option per 
affected party and localisation (EUR million) 

SEP implementers 

Costs 
Benefits 
Net 
Costs 
Benefits 
Net 
Subtotal (net effect for implementers and holders) 
EPO/NPO benefit 

SEP holders 

Total net benefit 

EU 

non-EU 

Total 

-0.77 
12.89 

-8.13 
3.79 

29.0 

12.11 

-4.33 
7.8 

36.8 

-0.77 
13.03 

12.26* 

24.4 

-46.04 
21.50 

-24.54 
-12.3 

-12.3 

-28.9 
-4.5 

24.5 

-1.5 
25.9 

-54.2 
25.3 

29.0 

* concerns non-EU implementers with subsidiaries in the EU 
Note: numbers rounded which may affect totals 
Source: Own assessment based on studies and assumptions. See annex A7.1 for more explanations 

58 

 
 
 
8.1.  REFIT and One-in-one-out 

This initiative is not part of the REFIT simplification effort as there are currently no EU rules on 
SEPs that could be simplified or made more efficient. The administrative costs of filing the forms 
necessary for SEP registration, estimated at EUR 200 per patent or around EUR 2.7 million annually 
over a decade are considered eligible for one in one out calculations. 

9.  HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED? 

The legislation to be proposed would include a provision requiring evaluation every five years. 

Table 5: Monitoring indicators 

Research question 

Indicators 

Specific Objective 1. Provide information on SEPs ownership and essentiality 

Has access to 
information on 
SEPs improved? 

- Number of standards with SEPs registered in the database 
- Number of SEP holders registered 
- Number of essentiality checks conducted (overall, per SEP holder, per standard) 
- Is database up to date (when SEP is registered, is information updated) 
- Number of times database is used (access rate) and how it is used (e.g. new private services 

built on these data) 

- Perception of quality of register and essentiality checks 
- Results of peer evaluations (number of confirmed essentiality checks) 
- Cost/quality of the central system in comparison to available private solutions 

Specific Objective 2. Provide clarity on FRAND royalty 

Has information on 
FRAND price, 
terms and 
conditions 
improved? 

- Number of studies done by Competence Centre 
- Number of SMEs receiving assistance 
- Perception of quality of studies, assistance 
- Number of standards, and their applications  
- Number of aggregate royalties announced, or expert opinions provided  
- Perception of the aggregate royalty rate  setting process/and rate itself by implementers and 

holders; use in court cases/judgements 

- Frequency of changes of the aggregate royalty  
- Cost/quality of the Competence Centre services in comparison to available private solutions 

Specific Objective 3. Facilitate dispute resolution 

How the new 
systems changed 
dispute resolution 

- Usage of conciliation (number of cases per year, duration, quality assessment by courts, usage 
in court proceedings and in judgments; usage in support of applications for customs’ action) 

- Change in SEP litigation cost/duration due to conciliation 
- Usefulness of guidelines (perception by stakeholders, usage in court cases,) 

information:  Competence  Centre  database;  Feedback/Surveys  of  new  system  (Competence 
Sources  of 
Centre/register/conciliation/guidelines) users such as e.g. SEP holders and implementers, judges, essentiality checkers; 
Court cases/judgements/injunctions analysis; dedicated evaluation studies; public consultations; desk research 

General objectives 

Impact on SEP 
owners 

Impact on SEP 
Implementers 

- Number of SEP holders based in the EU 
- Number of SEPs registered by SEP holders based in the EU 
- Length of licence negotiations, number of licensors 
- Contribution of EU firms in standard development activities 
- Localisation of production/R&D of such products/services (EU/third countries) 
- Cost of SEP licence for EU firms, effort of obtaining a license  
- Percentage of SEPs covered through licensing. 
- Competitiveness of EU firms making SEP implementing products/services in the EU and third 

countries. 

- Localisation of production/R&D of such products/services (EU/third countries) 
- Contribution of EU firms in standard development activities 
- Time of introduction of new products/services using latest standards in the EU in comparison 

Impact on EU 
customers 
Sources  of  information:  Surveys,  official  statistics  (e.g.  Eurostat’s  “Enterprises  using  IoT”,  isoc_eb_iot),  dedicated 
evaluation studies; public consultations; desk research. 

to other countries, price of such products 

59 

 
60 

 
 
 
ANNEX 1: PROCEDURAL INFORMATION 

1)  Lead DG, Decide Planning/CWP references 

DG for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW). 

2)  Organisation and timing 

This proposal is scheduled for adoption by the Commission in the second quarter of 2023.  

Inter-service  group  meetings  took  place  on  23.09.2021,  12.10.2021,  23.11.2021,  09.12.2021, 
20.06.2022, 19.09.2022, 11.10.2022 and 27.01.2023. 

The following Commission services were invited to participate: DG AGRI, CNECT, COMP, ENER, 
JRC, MOVE, RTD, SJ, SG, TAXUD, TRADE, and GROW. DG JUST was consulted on specific 
issue with regard to mediation. The EUIPO was also involved with regard to the institutional aspects. 
Those  services  were  actively  consulted  throughout  the  project,  including  in  discussions  with 
consultants.  

3)  Consultation of the RSB 

A  meeting  with  the  RSB  took  place  on  15.03.2023.  On  17.03.2023  the  RSB  delivered  a  positive 
opinion. The table below shows RSB comments and how they were addressed in the revised text. 

RSB comments 
(1) The report does not provide a clear overview of 
all the measures to minimise the negative impacts on 
Small  and  Medium  Enterprises  (SMEs)  nor  their 
combined impact. 
(2) The report does not sufficiently disaggregate the 
costs  to  allow  the  administrative  costs  to  be 
identified  for  the  purpose  of  the  One  In,  One  Out 
approach. 

DG GROW replies 
Overview of SME measures was added to the SME 
test (annex A8.2). It is now more prominent in the 
main text including in options description and in the 
chapter on the preferred option.  
Disaggregation of costs with a view to identify one-
in-one-out  costs  was  added  (to  the  main  text,  and 
annex  3).  Additional  tables  with  more  details  on 
costs and benefits were added to annex A7.1. 

4)  Evidence, sources and quality 

The analysis presented in this impact assessment is based on the following key sources: 

-  Baron, J., Arque-Castells, P., Leonard, A., Pohlmann, T., Sergheraert, E., Empirical Assessment of 

Potential Challenges in SEP Licensing, European Commission, DG GROW, 2023; 

-  Baron, J., Essentiality Checks for Potential SEPs – Framework for Assessing the Impact of Different 

Policy Options, European Commission, DG GROW, 2023; 

-  Charles River Associates, Transparency, Predictability, and Efficiency of SSO-based Standardization 
2016, 

Commission, 

GROW, 

DG 

and 
Licensing, 
https://ec.europa.eu/docsroom/documents/48794; 

European 

SEP 

-  Commission webinar series on Standard Essential Patents (2020 – 2021); 
-  Baron, J., Geradin, D., Granata, S., et. al., Group of Experts on Licensing and Valuation of Standard 
Essential  Patents  ‘SEPs  Expert  Group’  (E03600):  Contribution  to  the  Debate  on  SEPs,  2021, 
https://ec.europa.eu/docsroom/documents/45217; 

-  European Commission, Joint Research Centre, Bekkers, R., Henkel, J., Tur, E. M., et al., Pilot study 
for essentiality assessment of standard essential patents, Publications Office of the European Union, 
2020, https://data.europa.eu/doi/10.2760/68906; 

-  Number of other studies and research papers are used and references are provided in the footnotes; 
-  Submissions  to  the  call  for  evidence,  the  public  consultation,  the  survey  of  SMEs  and  numerous 
interviews with stakeholders and papers submitted in confidential and non-confidential format to the 
Commission; 

-  The  Options  considered  all  contributions  of  the  Expert  Group,  the  suggestions  made  during  the 

webinar series and contributions by practitioners, academia and judiciary.  

Additionally, the following data sources were used in order to perform in-house analysis: 

61 

 
 
IPLytics Platform – data extracted in 2022; 

 
  Experts analyses based on contracts with the Commission. 

The remaining sources are provided in the footnotes, whenever they are referred to in the text. 

62 

 
 
 
ANNEX 2: STAKEHOLDER CONSULTATION (SYNOPSIS REPORT) 

The public consultation took place between 14 February 2022 and 09 May 2022. During that period 
74 replies were submitted using the EUSurvey tool.  

This  annex  presents  summary  of  results,  a  detailed  question  by  question  analysis  is  presented  in 
Annex 9. All received responses are published.221 

1)  Respondents’ characteristics 

Respondents were asked to provide basic information about themselves, such as country of origin, 
area of activity, and registration in the transparency register. 

Two thirds of the replies came from the European Union. The highest number of EU replies came 
from Germany. The remaining one third of the replies came from third countries, with the highest 
number coming from the USA. The graph below (Figure 6) presents responses per country of origin. 

Six out of ten replies came from companies (39 replies) or business associations (7). Followed by 
seven replies from academia, two from public authorities, one from a non-governmental organisation 
(NGO) and one from trade union. Six replies came from EU and non-EU citizens (see Figure 7). 

Among the 39 companies, 77% were large entities and 23% were small and medium-sized entities 
(SMEs).  

30% of the respondents identified themselves as both SEP holders and implementers, 13% as only 
SEP implementers and 4% as only SEP owners. Around 50% identified themselves as “other” (which 
consists of for instance attorneys, advisers, academia…).  
Around half of the respondents (35) are registered in the transparency register.222 The transparency 
register is a tool to allow European citizens to see what interests and on whose behalf the respondent 
represents. 

Figure 6: Distribution of responses per country of origin of respondent 

Source: Commission own analysis 

221 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13109-Intellectual-property-new-
framework-for-standard-essential-patents_en. 
222 https://ec.europa.eu/transparencyregister/public/homePage.do. 

63 

2365322221111115511110510152025 
 
                                                 
Figure 7: Distribution of responses by type of respondent 

Source: Commission own analysis 

2)  Summary of replies 

Participants to this consultation were invited to provide answers on the following blocks of questions: 
general questions, questions on the licensing process and related problems, questions on transparency 
of  SEP  licensing,  on  essentiality  of  SEPs,  on  fair,  reasonable  and  non-discriminatory  (FRAND) 
licensing terms and finally questions on SEP enforcement. Below is a short quantitative summary of 
the responses based on selected questions per block. 

Replies to general questions. 

Around  60%  of  the  respondents  considered  that  the  current  legal  framework  sufficiently  protects 
against  implementers  “hold-out”  (e.g.  unreasonably  delaying  the  conclusion  of  a  licence  by  an 
implementer).  Around  30%  had  opposing  views.  The  responses  showed  a  similar  pattern  across 
different  stakeholders’  groups  (companies,  associations,  academia,  respondents  from  the  EU  and 
non-EU countries).  

Respondents  were  divided  on  the  issue  whether  the  current  legal  framework  provides  sufficient 
protection against SEP holders “hold-up” (broadly opportunistic behaviour by SEP holders, such as 
using their market power to extract excessive rents or terms from implementers) with 43% agreeing 
and  48%  disagreeing.  Companies,  citizens,  and  non-EU  respondents  mainly  disagreed.  While 
academia/authorities/NGOs/others, and EU based respondents tended to agree with that the current 
legal framework provides sufficient protection against SEP holders “hold-up”. 

The final question in this section asked about the impact of the current SEP licensing framework on 
SMEs and start-ups. Around half of all respondents assessed the impact as negative, a third thought 
there  is  no  impact,  and  around  5%  deemed  it  positive.  Responses  showed  similar  patterns  for  all 
analysed  groups,  except  for  associations,  implementers  and  SEP  holders.  Around  half  of  the 
associations and SEP holders considered that there was no impact, while around 80% of implementers 
thought that the impact is negative. 

64 

Company/business organisation, 53%Business association, 9%Academic/research institution, 9%EU citizen, 8%Non-EU citizen, 8%other, 7%Public authority, 3%NGO, 1%Trade union, 1% 
 
Questions on the licensing process 

SEP implementer perspective: Around half of the respondents reported seeking a licence before a 
SEP holder approaches them. SEP holders usually contacted the respondents around 3 years after the 
first  implementation  of  a  standard  in  a  product.  Licence  negotiations  with  a  large  SEP  holder  on 
average concerned around 60 patents. 

Almost three quarters of the respondents request a licence in order not to infringe a SEP and 60% to 
be able to plan production and costs. 

Reported  costs  of  estimating  SEP  exposure  per  product  amounted  to  on  average  around  EUR 
230 000. 

In terms of consequences of the current SEP licensing practices: Two thirds of all respondents and a 
majority  of  implementers  try  to  share  SEP  cost/risks  with  their  suppliers.  Around  40%  of  all 
respondents, and two thirds of the implementers will try to settle with the SEP holder as quickly as 
possible to avoid litigation or will search for an alternative to SEP (another technology or royalty free 
standard). Around a third of the respondents (and half of the implementers) will increase prices and 
may become less competitive. 

SEP  holder  perspective:  The  main  reasons  for  licensing/having  SEP  are  securing  the  return  on 
investment (70% of answers), followed by use of SEP for defensive/bargaining purposes (60%) and 
participation in the standardisation process in the future (40%). 

On average SEP holders said they start contacting implementers two years after the publication of a 
standard. Around 70% do not reach out to all SEP implementers though. On average around 60% of 
the contacted implementers reply within one year. Around 70% take a licence without any litigation. 
It takes on average 3 years and 3 months to conclude a licence. 

Questions on the problems related to SEP licensing 

Lack  of  transparency  on  the  FRAND  royalty  rate,  on  the  SEP  landscape  (who  owns  SEP)  and 
divergent court rulings were named as the key problems by three quarters of all respondents (and 
almost all implementers). From the SEP owners’ point of view the main problems were hold out and 
anti-suit injunctions.  

Questions on SEP transparency 

Respondents asked for more public information on SEP as regards “patent and application number” 
(88% of all responses), “relevant standard, version, section of the standard” (80%), “contact details 
of SEP owner” (80%), “transfer of ownership” (77%), “licensing programs” (76%) and “standard 
FRAND terms and conditions” (72%). 

Patent  pools  should  disclose  “standards  subject  to  pool  licensing”  (100%),  “product  royalties  per 
programme” (94%) and “list of SEP owners” (87%). 

Around 70% of  the  respondents  considered that  a confidential  repository of  licensing agreements 
could  help  judges  and  arbitrators  to  determine  a  FRAND  rate.  Such  repository  should  contain 
information on “licensed SEPs” (96%), “royalties” (96%) and “methodology used to calculate the 
royalty” (94%). 

Questions on essentiality 

Around  60%  of  all  respondents  and  90%  of  the  implementers  supported  third-party  essentiality 
checks  as  long  as  independent  experts  do  them.  Only  24%  of  the  SEP  holders  supported  such  a 
solution. A third of all respondents considered that essentiality checks should serve only an advisory 
role with no legal consequences. 

Around two thirds of all respondents and around 80% of the implementers thought that essentiality 
assessment might help in assessing SEP exposure of a product and deciding whom to negotiate with, 

65 

 
smoothen licensing negotiation and prevent over pricing. More than half of the SEP holders disagreed 
with these impacts but agreed that checks might provide a reliable overview of the share of each SEP 
owners’ essential patents. 

As  regards  practical  implementation,  the  respondents  preferred  that  the  European  Patent  Office 
(EPO) conducts the checks (63% of all replies) on just “one SEP per SEP family” (63%). 

Questions on FRAND 

Between 55% and 75% of all respondents and between 85% to 100% of the implementers, consider 
that SEP holders cannot refuse a licence following a request from an implementer. The majority of 
SEP holders were of the opposite view. 

60% of all respondents and 93% of the implementers consider that licensing could take place at any 
level of the value chain. Around 70% of the SEP holders consider that it should be at one level only 
(level allowing for the best monitoring of applications). 

Around three quarters of respondents (93% of SEP owners) agreed that fair and reasonable terms and 
conditions might depend on functionalities of the standard implemented in a product. Around 70% 
thought these terms could depend on the level of licensing. 

For non-discrimination assessment, it matters if companies that use the same functionalities of the 
standard in similar applications are put at a competitive disadvantage (around 75% of all answers, 
and 94% of holders’ answers). 

SEP  holders  considered  that  discounts  between  28%  and  40%  do  not  cause  discrimination.  For 
implementers reasonable discounts amount to between 5% and 10%. 

70%  of  all  respondents  and  100%  of  the  implementers  argued  that  it  is  important  to  know  the 
reasonable aggregate royalty rate for a product. Only 20% of SEP holders shared that view. 

Questions on enforcement 

Respondents  estimated  that  court  costs  could  range  from  approximately  EUR  2.1  million  for 
essentiality, EUR 6.6 million for injunction and EUR 7.1 million for FRAND disputes. 

Arbitration  (53%  of  all  answers)  was  deemed  more  useful  than  mediation  (35%)  for  FRAND 
assessment, especially by SEP holders and academia/authorities/NGOs. 

Two thirds of the respondents were of the opinion that efficient SEP licensing would foster innovation 
by implementers, increase employment and allow for keeping high level of competence in the EU as 
well as foster transition to the green economy. 

3)  SMEs survey 

Internet survey targeting SMEs was active from 25/10/2022 until 27/12/2022. It used EUSurvey tool. 
It is not representative but gives an impression of the issues start-ups and SMEs face in the context 
of SEP licensing. A summary of replies is presented below, a detailed question by question analysis 
can be found in Annex A8.3 – SME survey. 

The sample is quite diverse with respect to geography, sectors, and standards used.  

In total, 39 firms responded to the survey. They are mostly start-ups and SMEs (37), from 17 different 
countries, mostly from the EU (30). They are active in ICT (24) and  various other ICT- and IoT-
using  industries.  In  the  sample,  cellular  standards  are  the  most  widely  used  or  developed  (by  24 
firms), followed by Wi-Fi (21), LPWAN (15), NFC (12), and video/audio codecs (10).  

Implementers dominate the sample; standards are very important for them.  

Most firms (35) are implementers of existing standards, e.g. by producing or buying components that 
incorporate a standard. 12 stated that they participate in standard setting. Asked about the importance 
of the respective standard, 24 out of 30 responding considered the standard very important for their 
66 

 
business. Seven firms are SEP licensees, for cellular standards (4), video and audio codecs (4), Wi-
Fi (3), and other technologies.  

SEP licensing is difficult for SMEs, due mostly to resource constraints, lack of expertise, uncertainty 
about infringement, and the fragmentation of SEP ownership. 

Most  respondents  have,  when  buying  or  importing  components  that  incorporate  standardized 
technologies, a clear preference for components with all IP rights fully licensed (25 out of 34 prefer 
this solution “in most cases”). One respondent described it as “ridiculous that patent pools should 
come after each company doing some modern radio technology, rather than settle cost per module 
with manufacturer.” The main stated reasons not to take a SEP license are: (i) the assumption that 
purchased components are fully licensed (15); (ii) difficulties to find out the SEP holders (10); and 
(iii) an excessive effort to enter license agreements with all SEP holders (9). Related, the main stated 
problems in negotiating with SEP holders are: (i) lack of knowledge what would be a fair (FRAND) 
royalty (15); (ii) lack of resources to negotiate or engage in court proceedings (14); (iii) uncertainty 
if own product infringed the patents at hand (13); and (iv) the firm’s ignorance how to defend against 
SEP holders (13). Few (8) have in-house patent specialists.  

For SMEs, device-level licensing was acceptable only if it was efficient (ideally one-stop), at publicly 
known  royalties,  and  consistent  across  all  implementers  (which  given  their  fragmentation  seems 
difficult to achieve). Respondents consider the best solution for SMEs to be upstream SEP licensing, 
to module or component makers. 

Respondents stated that the uncertainty about SEP licensing would affect their business in various 
ways. Most frequently, they stated: Royalty payments will affect the firm’s competitive position on 
the market (18); potential future SEP payments may make the firm unable to compete (13) – however, 
if competitors pay the same royalties, licensing will not affect the business significantly (13); the firm 
tries  to  use  alternatives  available  on  the  market  in  order  not  to  pay  for  SEPs  (e.g.  older  or  free 
technology) (12). In open comments, respondents expressed wishes among others for  licensing to 
component makers. Failing this, efficient licensing through pools, ideally one-stop, rather than having 
multiple licensors per standard and even portfolio split-ups to several NPEs. Publicly known royalty 
rates that are paid consistently by all and protection from abusive licensors.  

About 40 percent of firms in the sample contribute in some way to standard development, though 
very few own SEPs. The majority does not contribute, mostly for lack of resources.  

Of the respondents, 15 participated in standard setting, though mostly not to complex ICT standards, 
such as cellular and Wi-Fi. Only 2 firms own SEPs. Motives to contribute to standard development 
comprise  improving  the  standard,  influencing  the  direction  of  standard  development,  facilitating 
adoption  of  the  firm’s  own  technology,  learning,  and  networking.  Reasons  not  to  contribute  to 
standard development comprise a lack of resources and expertise, and the domination of SDOs by 
large firms.   

4)  Interviews with stakeholders 

During the course of 2021-2022, the Commission services met with various SEP holders and SEP 
implementers  in  order  to  assess  the  problems  they  face  with  SEP  licensing.  As  these  meetings 
concerned  confidential  information  based  on  licensing  negotiations,  below  we  present  selected 
stylised summaries of issues raised that combine the experience of several parties we interviewed. 

Problems faced by SEP implementers 
A  manufacturer  of  medical  devices  for  the  treatment  of  critical  health  disorders  may  wish  to 
implement  cellular  communication  functionality  in  its  products  to  enable  remote  patient  health 
monitoring and efficiently improve patient adherence to treatment. Considering the multi-year (e.g. 
5-10 years) medical device development process for homologation and certification from network 

67 

 
 
operators, the company needs certainty at an early stage regarding the aggregate FRAND royalty 
for  SEP  licenses  as  it  must  take  such  factors  into  account  during  the  development  and 
commercialization phase and as it considers total cost and alternative technologies. In addition, the 
inability to negotiate with dozens of SEP holders individually and the prospect of being excluded 
from  the  market  for  an  infringement  of  a  single  SEP  is  a  further  disincentive  for  using  the 
connectivity  standards  risking  the  continued  access  of  patients  to  telehealth  services  which  are 
crucial for public health. 

A smart meter manufacturer is invited to take a licence from a SEP holder not only for the future 
but  also  for  5  years  back.  The  smart  meters  are  purchased  by  utility  companies  by  public 
procurement contracts in order to promote the reduction of energy consumption under the EU Gas 
and Electricity Directives. The smart meter manufacturer buys communication components, which 
it integrates in its products. It directs the SEP holder to its supplier and the SEP holder prefers to 
negotiate with the smart meter manufacturer as it is its understanding that it can choose who to 
license. The smart meter manufacturer requests its supplier to indemnify it for the SEP royalties as 
per supply contract. The royalties are higher than what the supplier is willing and able to pay. The 
supplier expresses its wish to take the licence itself as it used to have such licences in the past. 
However, it is unable to get such a licence at the conditions that are acceptable to it. Its (non-EU) 
competitors continue promising indemnifications to their customers. The supplier is pressured by 
all its worried customers manufacturing not only smart meters but also payment terminals, wireless 
charging, medical devices, tracking devices, etc. to keep the indemnification clauses and bear the 
risk of SEP licensing.  

An EU SME developed a robot assisting in construction works. It is innovative due to an inventive 
electro-mechanical structure of the robot arm, wheel drive and motion control. The user controls 
this  robot  with  a  tablet  comprising  a  specific  Human-Machine-Interface.  The  communication 
between tablet and robot could be wired or preferably wireless. The most desired option would be 
WiFi,  but  due  to  the  SEP  license,  Bluetooth  fully  licensed  at  chip  level  will  be  implemented. 
Another  option  is  a  wired  USB  connection,  which  also  works  but  does  not  meet  customers’ 
expectations. 

An EU SME developed a smart home appliance for energy consumption control in a household. It 
can lower energy cost and optimise usage of renewable energy (solar, wind…). Collected data is 
sent to the company’s central server for analysis. Initially WiFi was considered to connect to a 
router in a household. The company was not aware that WiFi is subject to a SEP licence. To avoid 
SEP costs/litigation they chose a wired connection to a router instead. 

An EU SME developed a smart meter which is now implemented in hundreds of projects. Data 
between meters is sent using mostly Bluetooth, but for remote locations a chip with WiFi and 4G 
functionality was embedded. The company was not aware that the chip was not licensed for WiFi 
and 4G. If faced with litigation it will disable this chip in all its devices. 

An EU SME developed a product to help individuals track their health metrics and report results 
to their doctors in real-time. The SME and its competitors had a choice of technologies to choose 
from when developing their product regarding wireless connectivity. After unsuccessful attempts 
to license various wireless technology directly from known patent holders, the company built the 
product.  After  a  robust  and  successful  market  developed,  and  after  the  point  in  time  when  the 
product  design  was  “locked”  in  and  could  not  be  changed,  numerous  wireless  patent  holders 

68 

 
 
 
 
 
approached the company and demanded they take a license. This effectively deprived the SME of 
choosing an alternative wireless technology and the patent holder did not consider other wireless 
technology that could have been used as a comparable value when deciding the royalty rate that 
was demanded. 

An EU Global Navigation Satellite System (GNSS) receiver designer and wireless cellular modem 
designer was asked by customers to reduce the “footprint” of their modules that were used in an 
end product.  The EU design company could not  accommodate the request because it could not 
directly license patents from the patent holders and the “have made” rights held by the end product 
company did not allow the designer to innovate. It could only “make” the product design given to 
it by the end product company. A non-EU competitor of the GNSS receiver and wireless cellular 
modem designer seized the opportunity.   

An EU Global Navigation Satellite System (GNSS) receiver designer and wireless cellular modem 
designer was asked by its EU customers to reduce the “footprint” of their modules that were used 
in an end product. The EU design company had a license with several cellular patent holders and 
took  on  the  project.  However,  the  EU  end  product  company  was  warned  there  would  be  a 
significant price increase because their cellular patent license royalties were based on the average 
sales  price  of  the  module/modem  and  the  combined  GNSS/cellular  module  average  sales  price 
would be 3X higher. The EU end product company asked why the GNSS function was considered 
when  determining  cellular  royalty  owed  and  not  removed  from  the  average  sales  price.  They 
learned it was standard practice in wireless licensing. The EU end product company abandoned 
the design improvement request.   

An  innovative  EU  IoT  wireless  module  company  that  had  been  licensed  for  years  by  cellular 
wireless patent holders is now being denied licenses. The patent holders are changing to licensing 
only  at  the  end  product  level.  The  patent  holders  claim  the  value  of  the  patents  they  hold  has 
increased by 4-6 times what the previous licenses demanded in royalties although many of the 3G 
and 4G patents have expired/are expiring and new high-speed 4G patents are not needed by the 
EU IoT company. The patent holders are demanding that the EU IoT companies license patents 
from their patent pool and that the EU IoT company acts as an agent between their customers and 
the patent pool, receiving a “kick-back” for doing so. 

Supplier explained that its sales teams regularly get questions from prospective Cellular and Wi-
Fi IoT customers about “patents”, “IP rights” and “indemnification”. They consider themselves in 
a vacuum because there is no easy way to obtain a licence or to even know the price of such licence. 
It is unable to sell its products with all IP rights included, nor is it able to indemnify its customers 
should they receive an infringement or license claim in the future. The company has lost several 
Cellular  IoT  business  opportunities  to  both  EU  and  non-EU  competitors  making  misleading  or 
false statements with regards to “selling a licensed product” or “providing full indemnification”. 

Supplier: “Our company has seen several potential Cellular IoT module customers either choose 
other wireless technologies, delay or even cancel development projects, because the license cost 
for using the standards  (LTE-M /  NB-IoT) is  totally unknown  and also  impossible to  estimate. 
Unless you sell high price products, like smartphones or automobiles, how are you going to build 
a business case for a sensor device priced at EUR 15 when you have an unknown licence fee?” 

69 

 
 
 
 
 
 
Supplier: Not having SEP license adds to uncertainty both for us and for our customers. If we make 
provision for estimated royalties and our competitors do not, we are at a disadvantage. Our module 
customers  generally  do  not  understand  the  technology  and  want  a  solution  with  SEP 
indemnification  as  they  feel  unable  to  navigate  the  licensing  process.  If  we  do  not  offer  such 
indemnification and our competitors do, we are at a disadvantage. 

EU electric vehicle equipment manufacturer told us “Complex and often lengthy SEP negotiations 
lead  to  delays  and  uncertainty  in  the  development  phase  of  our  products  as  well  as  to  legal 
uncertainty which artificially inflates the product costs.” 

Smart  electric  vehicle  chargers  of  an  EU  SME  need  to  communicate  with  cars,  phones  and 
electricity networks to increase energy savings. Threats from one SEP holder are causing further 
concerns to the firm that there may be other SEP holders claiming royalties. The company is now 
reconsidering whether to include cellular functionality in its future accessories or products. The 
firm says that SEP uncertainty is delaying technology adoption, hindering innovation and engaging 
resources that could be productively used. 

EU SME: It is said that large SEP holders ‘do not target SMEs’, our case shows that this is clearly 
inaccurate. Even if some do not, the financial uncertainty SMEs face is unreasonable and unfair: 
an SME has to wait and fear that any SEP holder can approach it at any time (perhaps when SME 
becomes larger) and ask for payment of past royalties. 

During negotiations for a FRAND licence for SEPs, a potential licensee offered binding arbitration 
to the SEP holder for a global FRAND SEP cross-licence. The SEP holder, however, refused to 
substantively engage in discussions over arbitration terms. 

In 2020, a non-practicing entity (NPE) asserted 4G standard-essential patents against a potential 
licensee.  The  NPE  had  acquired  its  4G  portfolio  from  another  SEP  holder,  which  had  split  its 
portfolio and divested a small portion of its patents to the NPE. The NPE demanded more than 12 
times the amount of royalties as the original SEP holder – even though the NPE held only a tiny 
fraction of the number of patents that the original SEP holder retained. Despite ongoing licensing 
negotiations, the NPE filed a series of patent infringement actions in Germany, seeking injunctions 
on various SEPs in an effort to force the potential licensee to accept a non-FRAND licence. During 
the litigation, it was revealed that the NPE was actually a trust that had acquired its patents from 
the original SEP holder at a symbolic price and had assigned back the beneficiary share in the trust 
to the very same SEP holder. 

The Fair Standards Alliance (FSA) collected confidential testimonies from their members 

Below is a summary by FSA about some of the reported issues: 

Refusal to license 

The practice of refusing to license willing licensees higher in the value chain is a recent phenomenon 
and was not the industry practice when 2G and 3G were developed. The refusal to offer licenses in 
the value chain is damaging innovation in sectors using telecommunications standards – it is not a 

70 

 
 
 
 
 
 
 
 
prevalent practice in relation to other standards. When licenses are offered to component suppliers, 
these deals are incredibly efficient and meet the future needs of growth sectors, such as in the Internet 
of Things. 

Non-Disclosure Agreements  

The  use  of  non-disclosure  agreements  (NDAs)  to  protect  confidential  information  in  commercial 
discussions is standard business practice. However, the experience of FSA members is that NDAs by 
licensors in licensing negotiations are overly restrictive, and rather than protecting truly confidential 
information  are  oftentimes  used  as  an  excuse  not  to  share  important  information  that  should  be 
available or  to  refuse to  respond to  FRAND (counter) offers. The use of overly restrictive NDAs 
allows licensors to exploit information asymmetries in negotiations to lock licensees into unbalanced 
processes that lead to unfair outcomes. This in turn locks in unfair licensing terms that other potential 
licensees  are  later  compelled  to  accept.  What  is  evident  from  members’  testimony  is  that  NDAs 
should not be used to redact information, both from a pricing as well as a technical perspective, that 
potential licensees require to assess whether an offer is FRAND. It is evident from the testimony 
provided that NDAs are used so that patent holders can unfairly discriminate between licensees. It 
must be possible to share technical information within a supply chain so that companies are better 
able to assess the technical merits of the patent claim. 

Problems faced by SEP owners 

An EU SEP holder reached out in 2016 to a car producer who was using cellular connectivity in 
its cars. The SEP holder made several offers to the implementer which were rejected (for instance 
the implementer was  directing the SEP holder  to  license its  suppliers instead). The SEP holder 
spent tens of millions of euros on legal counsels and litigation – resources that could have been 
spent on R&D. The two firms signed a licence agreement in 2021. 

A smart meter producer began incorporating cellular technology in its products in 2014. A SEP 
holder  first  contacted  the  company  in  2017  to  suggest  the  need  for  a  SEP  licence.  While  the 
implementer raised the issue of licensing its suppliers, the main point of discussion was reducing 
the price. The offer-counteroffer phase of discussions took two years. A license agreement was 
concluded in 2022. 

A  SEP  holder  contacted  in  2015  a  producer  of  mobile  payment  terminals  which  uses  cellular 
connectivity. The implementer refused to enter negotiations for a cellular license and indicated that 
SEP  holder  should  speak  to  its  suppliers.  The  SEP  holder  reached  out  several  times  to  the 
implementer with little success. Only in 2022, under threat of litigation, the implementer began 
serious negotiations. 

Since  2017,  a  SEP  holder  has  been  in  discussions  with  X.  Despite  countless  emails, 
meetings/telephone conferences and a confidential third-party process X has not taken a licence. 
X has engaged in various delay-tactics, including arguing that it should not pay royalties for its 
past sales (meaning that X has a financial incentive to delay in concluding a licence for as long as 
possible). The SEP holder understands that X operates without having taken a licence from any 
European or Western SEP owner. 

71 

 
 
 
 
 
 
A  SEP  holder  has  been  negotiating  the  renewal  and  extension  of  its  existing  patent  license 
agreement with a Chinese implementer that is also a SEP owner. The Chinese company did not 
accept FRAND offers and did not make a FRAND offer to the SEP owner. The Chinese company 
provided  very  limited  material  on  its  own  SEP  portfolio  and  it  sought  a  significantly  higher 
valuation,  which  was  also  inconsistent  with  a  third-party  analysis.  The  SEP  holder  offered  to 
engage  in  neutral  mediation  or  arbitration  to  agree  on  FRAND  rates  but  the  Chinese  company 
rejected those offers. 

IP Europe collected a non-exhaustive list of negotiation delaying strategies based on case-law 

•  Strategy 1: Ignore notifications and other communications for months or years.223 

•  Strategy 2: Express willingness to take a FRAND licence – but only for each individual patent 

for which infringement and validity is confirmed by the courts.224 

•  Strategy 3: Insist on obtaining unreasonable amounts of information (e.g. a claim chart for 
every SEP in a portfolio) without appropriate confidentiality arrangements in place, and/or 
refuse or delay signing an NDA agreement as a hold-out tactic.225 

•  Strategy 4: Claim to lack information or to not understand the licence offer, or repeatedly ask 

for information that the SEP holder has already provided.226 

•  Strategy  5:  Table  counteroffers  that  are  obviously  unreasonable  and  unacceptable  for  the 
rights holder (e.g. a licensing rate of just 0.001 per cent per patent family), or table a counter-
offer only once litigation has been initiated.227 

•  Strategy 6: Refuse to enter into a global licence agreement despite having a global business 

for products that use standards.228 

•  Strategy  7: Direct the SEP holder to suppliers, or to a subsidiary or  holding company, for 

licences.229 

•  Strategy  8:  Insist  repeatedly  that  the  licence  offer  is  not  FRAND  without  providing 

substantive arguments to demonstrate why.230 

223 For examples of this delaying strategy in practice, as evidenced in European case law, see Saint Lawrence v Deutsche 
Telekom; Sisvel v ZTE; Tagivan (MPEG-LA) v Huawei; Philips v Wiko NL; Philips v Wiko DE; Sisvel v. Wiko; Sisvel v 
Xiaomi; Sisvel v Haier. 
224 See Sisvel v Haier; Nokia v Daimler. 
225 See Pioneer v Acer; Philips v Acer. 
226 See HEVC (Dolby) v MAS Elektronik. 
227 See Archos v. Philips; Fraunhofer-Gesellschaft (MPEG-LA) v ZTE; Tagivan (MPEG-LA) v Huawei; Philips v Wiko 
NL;  Nokia  v  Daimler;  Unwired  Planet  v  Huawei;  Sharp  v  Daimler.  See  Philips  v  Wiko,  the  Court  analyzed  Wiko's 
counteroffer to Philips, involving a licensing rate of just 0.001 per cent per patent family, based on the proportion of SEPs 
owned by Philips. 
228 See Saint Lawrence v Deutsche Telekom; Pioneer v Acer; Philips v Acer; Unwired Planet v Huawei. 
229 See Nokia v Daimler; Sharp v Daimler; Fraunhofer-Gesellschaft (MPEG-LA) v ZTE; Philips v Wiko NL. 
230 See Philips v Wiko NL; Unwired Planet v Huawei; Sharp v Daimler. 

72 

 
 
 
 
 
                                                 
ANNEX 3: WHO IS AFFECTED AND HOW? 

1)  Practical implications of the initiative 

This initiative introduces a register for SEPs with essentiality checks, a process for determining an 
aggregate royalty, and a mandatory pre-trial conciliation, combined with voluntary guidance on SEP 
licensing and a central Competence Centre offering, among other services, also assistance to SMEs. 

It is likely to reduce duration of license negotiations and the costs of the negotiation for both parties. 
Transparency  will  inject  trust  into  the  system.  Conciliation  should  limit  the  need  for  court  trials. 
Implementers are going to gain more predictability as regards their SEP exposure, allowing for proper 
business planning. SEP holders are likely to reach a wider set of implementers therefore securing 
adequate remuneration on their innovation. 

Cost and benefits quantifications presented below are based on several assumptions and estimations 
since data on SEP licensing is largely not observable (as explained in the problem definition). The 
purpose  of  quantifications  is  to  allow  comparison  of  options  and  presenting  relative  impacts  on 
affected groups rather than provide an accurate figure. Details on quantitative analysis as well as all 
the assumptions used for calculations are presented in Annex A7.1. 

2)  Summary of costs and benefits 

I. Overview of Benefits (total for all provisions) – Preferred Option 

Description 

Amount 

Comments 

Direct benefits 

Services  provided  by  the 
(e.g. 
Competence  Centre 
and 
assistance 
SME 
trainings,  studies,  case-law 
repository) 

Access to SEP register  with 
information  on  essentiality 
of  patents  and  SEP  owners’ 
portfolios 

EUR 5.9 million231 

Information provided for free. 

Free trainings and assistance to SMEs. 

Information of interest of both parties to license negotiations. 

EUR 12.5 million232 

Free  access  to  basic  information  (e.g.  SEP  holders  contact  details, 
number  of  SEP  registered).  Fee  based  access  to  information  on 
essentiality  of  individual  patents,  and  essentiality  rate  of  owners’ 
portfolio.  

Information of interest of both parties to license negotiations. 

Includes potential of up to 70% decrease in court cases; as well as 
value of advice on FRAND rate. 

Both parties to license negotiations are likely to benefit. 

Savings due to conciliation  EUR 7.4 million233 

Saving  in  negotiation  costs 
due  to  published  aggregate 
royalty 

Indirect benefits 

EUR 25.4 million234 

Published aggregate royalty should facilitate license negotiations. 

Both parties to license negotiations are likely to benefit 

EPO/NPO 

EUR 29 million 

Potential  additional  income  from  new  patents  (uncertain  if  it  will 
materialise) 

231 Sum of benefits of PO1 for SEP implementers and owner. See Table 3. For disaggregation see Table 13. 
232 Sum of benefits of PO2 for SEP implementers and owner. See Table 3. 
233 Sum of benefits of PO3 for SEP implementers and owner. See Table 3 
234 Sum of benefits of PO4 for SEP implementers and owner. See Table 3 

73 

 
 
                                                 
Administrative cost savings related to the ‘one in, one out’ approach* 

n/a 

SEP  licensing  is  not  regulated  in  the  EU.  Hence  there  are  no 
administrative cost savings 

II. Overview of costs – Preferred option 

Citizens/Consumers 

Businesses 

Administrations 

One-off 

Recurrent 

One-off 

Recurrent 

One-off 

Recurrent 

Direct  adjustment 
costs 

Direct 
administrative 
costs 

Action (a)   

Direct  regulatory 
fees and charges 

Direct 
enforcement costs 

Indirect costs 

Costs related to the ‘one in, one out’ approach 

Direct  adjustment 
costs  

Total   

Indirect 
adjustment costs 

Administrative 
costs 
offsetting) 

(for 

EUR  
17.6 million235 

EUR 
38.1 million236 

EUR 
million237 

2.7 

3)  Relevant sustainable development goals 

III. Overview of relevant Sustainable Development Goals – Preferred Option(s) 

235  Consists  of  the  following  average  annual  costs:  Register  access  fee  for  implementers  (EUR  0.6);  fees  for  SEP 
registration (EUR 1.4 million) and essentiality checks (EUR 13.7 million); cost of conciliations (EUR 1.5 million); cost 
of aggregate royalty expert determination (EUR 0.4 million). For details see tables in Annex A7.1. 
236 Consists of the following average annual costs for SEP owners: Cost of updates/preparation of claim charts for SEP 
registration/essentiality  checks  (EUR  6.4  million);  cost  of  filling  the  registration  forms  (EUR  2.7  million);  potential 
(uncertain) cost of registering and maintenance of additional patents (EUR 29 million). Cost in the initial year expected 
to be higher, while in subsequent years lower, hence  an average annual cost over a decade presented.  For details see 
tables in Annex A7.1. 
237 Consists of the following average annual costs for SEP owners: cost of filling the registration forms (EUR 2.7 million). 
Cost in the initial year expected to be higher, while in subsequent years lower, hence an average annual cost over a decade 
presented. For details see tables in Annex A7.1. 

74 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Relevant SDG 

Expected progress towards the Goal 

Comments 

SDG  no.  7  -  affordable  and 
clean energy, 13 - climate 

initiative  has  no  direct  environmental 
This 
impacts.  Indirectly,  by  facilitating  application  of 
new technologies it can help in the green transition 
e.g. by contributing to a reduction of energy usage 
(via smart grid, smart meters) or air pollution (e.g. 
connected cars avoiding traffic jams).  

Two  thirds  of  respondents  to  the  public 
consultation  considered  that  efficient  SEP 
licensing would i) increase employment and 
keep  a  high  level  of  competence  in  the  EU 
and ii) foster the EU’s transition to the green 
economy. See Annex 9, Q66. 

75 

 
 
 
 
 
 
ANNEX 4: ANALYTICAL METHODS 

This impact assessment is not using any econometric models. 

All the assumptions are presented either in the annexes where they are used (for instance assumptions 
on cost/benefit analysis are presented in Annex A7.1). 

Assumptions used in supporting studies are not repeated in this document. 

76 

 
 
 
 
ANNEX 5: ADDITIONAL INFORMATION IN SUPPORT OF PROBLEM SECTION 

A5.1 Market description 

SEP owners 

The number of companies that declared to own 10 or more patent families including potential SEPs 
was, in 2021, around 261 based on search in IpLytics database.238 There were around 31 companies 
from the EU.239 It was possible to match 27 of these companies to ORBIS database to obtain company 
characteristics. Information on employment was available for 16 firms and on revenue for 18 firms, 
out of which 3 were SMEs. Unfortunately, among these companies there are firms with huge turnover 
that seems to be from other activities than SEP licensing (for firms such as Bosch, Deutsche Telekom 
or Siemens), while for others with main activity in SEP licensing no data is available (e.g. Sisvel). 
Therefore,  below  we  present  information  only  on  two  companies  Nokia  (FI)  and  Ericsson  (SE). 
Although licensing SEP is not the main source of their income, they are the largest SEP holders of 
declared SEPs in the EU (responsible for around 80% of declared SEP). The two firms employed in 
2021 around 190 000 persons, sold goods and services totalling EUR 45 billion and invested in R&D 
around EUR 8 billion. 

Figure 8: Share of declared SEPs by EU firms by country 

Source: Commission own analysis based on IPLytics database (SEP holders with 10 SEPs or more only) 

It  is  estimated  that  approximately  1 700  SEP  licenses  are  concluded  worldwide  every  year  (the 
approximation is based on several assumptions as information on number of licensing deals is not 
observable).240 

SEP implementers 

There are no detailed statistics on the number of companies implementing SEPs into their products. 
In order to approximate the number of firms potentially affected, we have used Orbis database – a 

238 Baron, J., Arque-Castells, P., Leonard, A., et al.,  Empirical Assessment of Potential Challenges in SEP Licensing, 
European Commission, DG GROW, 2023, p. 17, Figure 5. Not all declared potential SEPs are standard-essential. This 
number does not include potential SEPs subject to blanket disclosures. 
239 Identification of headquarters of all companies was not always possible due to generic or ambiguous name available 
in the database. 
240 Baron, J., Arque-Castells, P., Leonard, A., et al.,  Empirical Assessment of Potential Challenges in SEP Licensing, 
European Commission, DG GROW, 2023, p. 138, Table 16. 

77 

0.2%0.2%1%2%6%8%33%50%0.0%10.0%20.0%30.0%40.0%50.0%60.0%ItalyIrelandLuxembourgFranceNetherlandsGermanySwedenFinland 
 
 
 
                                                 
database  containing  information  on  companies  worldwide.  We  have  searched  the  database  for 
keywords that can describe a potential SEP using company,241 and selected only manufacturing firms 
(NACE2 section C).  

The result was that in 2022 there were around 47 500 potential SEP implementers worldwide, and 
around 3 800 (8%) were located in the EU. Around a quarter of the companies were from DE, 13% 
from IT, 11% from FR, 8% from ES and NL, and 5% from PL. 

Among EU firms 16% were large and 84% were SMEs (based on employment). They employed 2.2 
million persons. Average employment for large firms was around 4 200 persons (median 650), and 
for SME – 50 persons (median 26). The combined turnover of these firms for the last available year 
amounted to around EUR 600 billion (numbers based on the last available year). Average turnover 
for large firms was around EUR 1.2 billion (median EUR 140 million) and for SMEs – EUR 21.5 
million (median EUR 6.5 million)  

For around 200 firms financial information on R&D expenses was available. Less than half (88 firms) 
of these firms had been spending on R&D (in the last available year). Together they spent EUR 26 
billion, on average 7% of their turnover, or around EUR 300 million per firm (median EUR 23 000).  

It should be noted however, that we cannot attribute neither the share of revenue, employment nor 
R&D expenses to products embedding SEP.  

Figure 9: EU SEP implementers by country (share of total number of firms) 

241 We have searched for '"IoT" or "Internet of things" or "smart meter" or "connected device" or "phone" or "mobile 
phone" or "TV" or "television" or "TV decoder" or "DVD player" or "connected car" or "connected lorry" or "connected 
truck"  or  "tracking  device"  or  "connected  machinery"  or  "connected  medical  device"  or  "payment  terminal"  or 
"semiconductor" or "ICT" or "4G" or "5G" or "LTE" or "Wi-Fi" or "WiFi" or "NFC" or "HEVC" or "MPEG"' in the 
following  fields  describing  a  company:  Description  and  history,  Full  overview,  Main  activity,  Primary  business  line, 
Product and services, Secondary activity, Secondary business line, Trade description. 

78 

0.1%0.1%0.1%0.2%0.3%0.4%0.5%1%1%1%1%1%2%2%2%2%2%2%3%4%4%5%8%8%11%13%27%0%5%10%15%20%25%30%CYLVLUEEMTLTSIDKHRBGPTSKROGRIEATHUBECZFISEPLNLESFRITDE 
 
                                                 
Note: Approximation based on key words search results. Total number 3 781 firms in the EU 
Source: ORBIS database 

Having an approximate estimate of the potential number of SEP implementers, we also wanted to 
estimate the number of firms that actually takes a SEP license per year.  

Based on public licensee lists of SEP patent pools we can estimate that around 20% of SEP licensees 
are firms with headquarters in the EU, and another 17% are non-EU firms with subsidiaries in the 
EU.242 This allows us to estimate that EU based firms conclude around 340 new SEP related licensing 
agreements per year and non-EU based firms with subsidiaries in the EU conclude around 290 such 
agreements. Subsequently, we assumed that among these firms, on average, per year one firm takes 
1.5 new licenses243 (this  is  a very strong  assumption and  generalisation of complex reality which 
includes large and small implementers producing devices implementing different number and type 
of standards and taking licenses not every year) which would mean that approximately 230 EU based 
firms and 190 non-EU based firms with subsidiaries in the EU conclude new license agreement per 
year. Furthermore, we estimate that around 33% of EU based firms taking a new license are SMEs244 
– resulting in around 80 EU SME. Many patent pools charge no royalty for small implementers,245 
thus  we  assume  that  half  of  those  SMEs  will  take  a  license  but  not  be  liable  for  any  royalty. 
Consequently, the number of new licenses granted per year to EU based firms is estimated at 285 and 
the  number  of  EU  firms  taking  new  license  per  year  and  paying  royalties  is  estimated  at  190 
(composed  of  150  large  and  40  SMEs).  It  is  important  to  stress  that  the  figures  presented  in  this 
paragraph are approximations based on several assumptions and should be treated with caution. 

A5.2 How standards are developed 

Baumol and Swanson (2005) noted that “standard-setting exercises normally arise only when there 
are technological  alternatives to select among, and so, almost by definition, are likely to occur in 
competitive – perhaps very competitive – technology markets. Even when conditions are competitive 
before the selection of a standard, however, the act of selection may lead to increased ex-post market 
power for owners of the IP necessary to practice the winning standard”.246 

“[…]  standards  are  set  (and  regularly  updated)  by  Standard  Setting  Organisations  (SSO).  SSOs 
include  large  established  organizations  –  such  as  the  European  Telecommunications  Standards 
Institute (ETSI) for communications or the Institute of Electrical and Electronics Engineers (IEEE) 
for electronics – but also a variety of ad hoc informal organizations – or industry consortia – that 
have  the  same  purpose  but  focus  in  general  on  complementary  topics  […].  They  are  open  to  all 

242 The contractor compiled the current licensee lists of nine SEP patent pools (2790 firms), and drawn a quasi-random 
sample from that list of 220 firms (quasi-random, as small pools were over-sampled, so that the sample is not dominated 
by the codec pools with very large number of licensees). The sample was matched with ORBIS firm database to produce 
a geographic distribution. This resulted in 199 (best) matches. It should be noted that best match may or may not be the 
global ultimate owner of a corporate group. The estimated EU share among pool licensees is around 19.6%. Pool licensees 
are  smaller  firms  than  other  SEP  licensees,  and  may  or  may  not  be  representative  of  SEP  licensees  more  generally. 
However as systematic data on licensees of bilateral SEP licenses is not available, this is the best possible estimate of the 
geographic distribution of SEP licensees. 
243 Based on expert judgement. 
244 In the sample of EU firms, 38% met SME definition (combination of employment below 250 and turnover below or 
equal  to  EUR  50  000).  As  share  of  pool  licenses  is  estimated  at  around  87%,  and  SMEs  are  unlikely  to  take  part  in 
bilateral licence negotiations of major SEP holders, the share is reduced to 33%. 
245 E.g. use of video coding standard AVC/H.264 for the  first 100 000 units, or first 100 000 subscribers per year is 
royalty-free. See https://www.mpegla.com/wp-content/uploads/avcweb.pdf. 
246 Baumol, W. J. and Swanson, D. G., ‘Reasonable And Nondiscriminatory (RAND) Royalties, Standards Selection, 
1-58, 
And 
https://www.jstor.org/stable/40843669#references_tab_contents. 

Control  Of  Market 

2005,  Vol. 

Antitrust 

Journal, 

Power’, 

Law 

73, 

pp. 

79 

 
                                                 
relevant stakeholders, have open and published processes, and typically publish and make standards 
documentation available for use by all without discrimination. […] 

Participants follow the standard setting process by regularly meeting in SSO working groups. They 
may develop proprietary (usually patented) technology ahead of these meetings, in order to submit it 
for  inclusion  in  the  standard  […].  SSO  members  then  discuss  the  technical  merits  of  available 
solutions and decide by consensus which one shall become a specification in the standard. 

The  Standard  Essential  Patents  (or  SEPs)  that  cover  established  standard  specifications  play  an 
important role in companies’ incentives to invest in standardization activities […] 

FRAND commitments are voluntary contracts between each SEP holder and the SSO, with standard 
implementers as third-party beneficiaries. Some SSO IPR policies tie the commitments with SSO 
membership  while  others  request  that  participants  disclose  the  patents,  they  believe  are  standard-
essential along with a FRAND licensing commitment for each disclosure. […]”247 

The table below explains the process in a basic manner. 

Table 6: SEPs: from development to adoption 

For 1 SEP 

Before 
standard 
development 

During standard development 

After standard adoption 

Innovator 1 

Invest in R&D  Contribution 

to 

Nothing 

Innovator 2 

Invest in R&D  Contribution 

to 

SDO 

SDO 

SDO 

Implementer 

ask 

May 
FRAND licence 

for 

Select 
contribution 2 

Implement 
contribution 2 

May 
FRAND licence 

need 

Original source: Putnam, J. L., Economic Determinations in “FRAND rate” – Setting: A guide for the Perplexed, 2018, Fordham 
International Law Journal, Volume 41, Issue 4 (modified) 

ETSI standard development process and SEP: 

During the proposal or development of a standard, ETSI members must inform in a timely fashion 
if they are aware that they hold any patent that might be essential. SEP holders are requested to 
provide an irrevocable undertaking in writing that they are prepared to grant irrevocable licenses 
on  Fair,  Reasonable  and  Non-Discriminatory  (“FRAND”)  terms  and  conditions.  The  ETSI 
database  allows,  for  information,  public  access  to  patents  which  have  been  declared  as  being 
essential or potentially essential.248 

In its Contribution to the Debate on SEPs, the SEPs Expert Group explains as follows: “Currently, 
there is a lack of transparency as to the ownership and number of true SEPs covering an adopted 
standard, which makes it difficult for implementers to determine what SEP licences they need for 
their  standard-compliant  products  or  services.  Some  standard  development  organization  (“SDO”) 
declarations provide virtually no data with regard to specific SEPs. Other SDOs, such as the European 
Telecommunications  Standards  Institute  (“ETSI”),  require  declarations  that  are  more  detailed  but 
these are not regularly updated to reflect changes in the SEP landscape. Patent applications may be 

247  Joint  Research  Centre,  Institute  for  Prospective  Technological  Studies,  Ménière,  Y.,  Fair,  Reasonable  and  Non-
Discriminatory (FRAND) licensing terms: research analysis of a controversial concept, Thumm, N. (editor), Publications 
Office, 2015, pp. 9-10, https://data.europa.eu/doi/10.2791/348818. 
248 https://www.etsi.org/intellectual-property-rights. 

80 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
rejected,  patents  may  be  invalidated  or  expire  or  lose  their  essential  character,  as  standards  are 
approved, supplemented or amended, affecting the accuracy of already-filed declarations.”249 

A5.3 Trends in standards development 

Standards  are  developed  through  the  R&D  efforts  of  a  large  and  diverse  set  of  companies 
participating in the process.250 Historically, standards have been used extensively in the information 
and communication technologies (“ICT”) sector, but they cover a variety of technology areas. The 
figure below provides an overview of key technology categories for which SEPs are declared and 
illustrates  that  such  SEPs  are  by  far  more  prevalent  in  the  digital  communication  and  computer 
technology areas, followed by audio and visual technologies. This is not surprising considering the 
need for interoperability to allow for (i) communication among devices and within networks, and (ii) 
use of audio and visual content across a broad spectrum of devices. New and upcoming areas where 
standards will be employed include medical technology, security and transportation, just to name a 
few. 

Figure 10: Number of declared SEPs as to technology category (IPlytics, 2022) 

According  to  IPlytics,  (a  third-party  source  of  aggregated  data  and  information  from  the  
ETSI  IPR  Database),  the  cumulative  number  of  self-declared  information  and  telecommunication 
(ICT)  SEP  families251  surpassed  74 000  in  2021,  indicating  a  five-fold  increase  in  just  10  years 

249 Baron, J., Geradin, D., Granata, S., et. al., Group of Experts on Licensing and Valuation of Standard Essential Patents 
‘SEPs  Expert  Group’  (E03600):  Contribution  to  the  Debate  on  SEPs,  2021,  Section  II.  Analysis  of  key  issues  and 
proposals for improvement, https://ec.europa.eu/docsroom/documents/45217. 
250 For example, the 3rd Generation Partnership Project (3GPP) was established in 1998 to offer a platform for seven 
telecommunications  SDOs  (ARIB,  ATIS,  CCSA,  ETSI,  TSDSI,  TTA,  TTC)  to  jointly  develop  protocols  for  mobile 
communications. As of April 2021, 3GPP had almost 700 individual members. Each year more than 3 000 delegates meet 
nearly 100 times in different working group configurations and engage in standard development activities which result 
in the submission of more than 84 000 technical documents annually.  
251 A patent family is a set of patents obtained at different patent offices, but which cover the same invention. 

81 

 
 
 
                                                 
(Figure above).252 The number of SEP holders included in the ETSI IPR Database has also risen from 
99 in 2010 to 261 in 2021.253 

Figure 11: Trends in SEP landscape  

Note(s): Number of owners indicate number of declaring companies (considering only the highest parent of larger corporate groups) 
with at least 10 declared patent families. Source: IPlytics Platform 2022 

The implementation of potentially large numbers of SEP-encumbered standards in a single product 
is no longer limited to traditional ICT industries. The automotive industry is one of the first sectors 
to  rely  on  Internet  of Things (IoT) technologies,  which connect  devices,  machines, buildings  and 
other  items  with  electronics,  software  or  sensors.  Interconnectivity  across  multiple  devices  and 
networks and interoperability of vehicle parts require the use of standards such as 4G, 5G, Wi-Fi, 
video  compression  (HEVC/VVC),  Digital  Video  Broadcasting  (DVB)  and  Near  Field 
Communication (NFC), just to name a few (Figure below). 

Figure 12: Connectivity standards implemented in vehicles 

Source: Tim Pohlmann, Intellectual Asset Management, May/June 2017, pp. 22-27 

With  the  introduction  of  the  5G  standard  into  ICT  devices  and  vehicles,  and  the  expected 
implementation  in  an increasing number of product  categories, the need for a more efficient SEP 
licensing regime has become more urgent. New issues in SEP licensing have emerged as a result of 

252 Because ETSI offers the most detail in its IPR Database, the SEPs data referenced below is limited to information 
gathered through that source and relates to cellular connectivity standards only. Similar analysis exists with regard to 
other standards but is more questionable with regard to source and accuracy. 
253 Baron, J., Arque-Castells, P., Leonard, A., et al.,  Empirical Assessment of Potential Challenges in SEP Licensing, 
European Commission, DG GROW, 2023. 

82 

 
 
 
 
 
                                                 
the broad applicability of the 5G standard to a wide variety of smart devices in countless industries.254 
Whereas  over  the  last  two  decades  most  high-stakes  SEP  disputes  have  centred  around  mobile 
communication  devices  (i.e.,  smartphones),  we  are  already  witnessing  more  disputes  in  the 
automotive sector and expect other IoT sectors to be similarly affected.  

A5.4 Transparency of FRAND rate 

The FRAND commitment requires not only fair and reasonable royalties, but also non-discrimination 
among licensees. Non-discrimination does not mean that the exact same terms and conditions need 
to be offered to every single licensee but has been interpreted as treating similarly situated licensees 
similarly.255 Determining whether terms and conditions are fair, reasonable and non-discriminatory 
such that they comply with the FRAND commitment is difficult if not impossible without certain 
information. 

However, licensing negotiations and resulting license agreements are maintained under strict non-
disclosure agreements (“NDAs”). On the one hand, SEP holders are unwilling to share detailed claim 
charts (documents linking the standard to claims in the patents) with implementers without an NDA 
for  fear  that  those  patents  and  claims  will  be  examined  carefully  by  other  stakeholders  with  the 
objective to destroy either the claim of essentiality or the validity of the patents in question.  SEP 
holders  also  need  an  NDA  to  share  comparable  agreements  with  implementers  to  justify  their 
FRAND royalty demands. On the other hand, implementers want to sign an NDA before disclosing 
sensitive product information and value and volume of sales. 

There  is,  therefore,  very  limited  publicly  available  information  regarding  FRAND  terms  and 
conditions, mainly from the following256: 

ii. 

iii. 

i.  Leading SEP holders on occasion make ex-ante announcements with information on their 
intended  licensing  terms.  These  announcements  aim  to  provide  implementers  with  some 
indication of potential future licensing costs, and to contribute to more predictable and more 
transparent royalty rates. These announcements are rather rare, and often do not reflect the 
actual royalty rate the SEP holder is willing to offer (see below). 
Some SEP licensors offer ‘Standard licensing terms’, which they disclose on their websites.  
Again, these may not be the actual terms they ultimately sign with particular licensees. 
In  the  absence  of  a  licensing  program  with  informative  standard  licensing  terms, 
implementers  may  rely  on  (limited)  publicly  available  information  as  indication  of 
(FRAND)  licensing  terms  that  they  are  likely  to  be  offered.  Publicly  available  data  on 
licensing  deals  are  scarce  and  incomplete  due  to  strategic  considerations.257  Publicly 
available data may come from compulsory disclosures, e.g. earnings reports to the Securities 
Exchange Commission (SEC) and from court cases in the UK and the US.  

254

 In 2019, there existed 7.6 billion Internet of Things (IoT) connected devices worldwide. The overall number of IoT 
connected devices is forecast to grow from 7.6 billion in 2019 to 24.1 billion by 2030 with the share of devices connected 
to cellular networks gradually increasing. McKinsey estimates that by 2030 IoT could enable $5.5 trillion to $12.6 trillion 
in value globally, including the value captured by consumers and customers of IoT products and services.  
255 Baron, J., Geradin, D., Granata, S., et. al., Group of Experts on Licensing and Valuation of Standard Essential Patents 
‘SEPs  Expert  Group’ 
the  Debate  on  SEPs,  2021,  Part  3.3,  Section  6, 
https://ec.europa.eu/docsroom/documents/45217. 
256 Baron, J., Arque-Castells, P., Leonard, A., et al.,  Empirical Assessment of Potential Challenges in SEP Licensing, 
European Commission, DG GROW, 2023.  
257  Generally,  it  is  neither  in  the  licensor  nor  the  licensee’s  best  interest  to  disclose  information  on  licensing  deals. 
Licensors may want to preserve their bargaining position and capacity to price discriminate in subsequent negotiations. 
Licensees may want to avoid revealing information to competitors on inputs that conform their competitive advantage.   

(E03600):  Contribution 

to 

83 

 
 
                                                 
iv. 

Implementers  can  expect  to  receive  a  licensing  offer  at  the  beginning  of  SEP  licensing 
negotiations, in which SEP holders describe proposed licensing terms, and explain why these 
terms  are  FRAND. The  level  of information that is  voluntarily  disclosed  through bilateral 
negotiations  may  often  fall  short  of  the  level  of  disclosure  on  comparable  licences  that 
potential licensees may achieve through FRAND litigation in a judicial system with pre-trial 
discovery (such as the US or UK).258 

Publicly available information is patchy, disaggregated, and of inconsistent quality. Any comparison 
of the available data points, let alone aggregation of such information, is challenging due to the lack 
of visibility to the varying terms and scope of the underlying licensing agreements.259  

Patent pools may provide more information on FRAND royalties, if such are formed and typically 
after standard implementing products are sold on the markets. Whether this information would be 
sufficient  depends  on  how  many  SEP  holders  participate  in  the  pool.  It  also  depends  on  whether 
implementers have participated in the FRAND royalty determination as pools that do not manage to 
offer an acceptable royalty may have difficulties to license. 

There  are  at  least  two  main  reasons  why  it  is  important  to  have  more  information  about  existing 
FRAND terms and conditions: 

  Stakeholders  (both  SEP  holders  and  implementers)  should  be  able  to  estimate  the  aggregate 
royalty, i.e. the sum of all FRAND royalties they would have to pay to SEP holders (individually 
or as one or more groups) if they were to obtain rights to all SEPs covering a particular standard. 
For example, if there are 10 SEP holders and each of them charges EUR 1, the aggregate royalty 
will be EUR 10. Even though implementers would usually not have to pay all SEP holders for a 
given  technology260,  the  total  landscape  of  SEPs  needs  to  be  considered  in  determining  the 
aggregate FRAND royalty. 

  Stakeholders should be able to assess whether the offer is discriminatory or not. Without access 

to information on existing licences and licensees, this is difficult, if not impossible. 

Table 7: Number of declared 5G patents per SEP owner, with publicly announced royalty levels 

SEP holder  

5G 

Declared 
patent 
families  (pending  and 
granted) 

Declared  5G  patent 
families (granted in 
at least one office) 

Price 
Multi-mode 
handset 

5G 

Price  5G  multi-
mode  for  200 
USD handset 

Huawei Technologies 

                               6 954  

                       5 717   max 2.5 USD261  max 2.5 USD 

QUALCOMM Incorporated 

                               5 051  

                       3 559   max 3.25%262 

max 6.50 USD 

Samsung  Electronics  Co. 
Ltd. 

                               4 848  

                       3 487  

LG Electronics Inc. 

                               4 141  

                       3 040  

ZTE Corp 

                               3 747  

                       1 911  

258 As an example of the scope of comparable licenses information available during a FRAND trial in the US, the Court 
of Appeal of the Federal Circuit rejected the District Court’s decision to unseal the financial terms of 109 licenses between 
Uniloc and third parties, which were disclosed to the parties during litigation opposing Uniloc and Apple.  
259 Terms that may vary from one license agreement to another, even if generally related to the same technology area, 
include royalty structures, the definition and scope of covered technology or technologies, the geographical scope of the 
license  rights  and  the  definition  of  licensed  patents  (e.g.,  SEPs,  non-SEPs,  individual  patents  or  families,  patent 
portfolios).  
260 Consider that the implementer may have its own relevant SEP portfolio and therefore will not have to pay itself, and 
there may be SEP holders that for various reasons may not seek royalties. 
261 Huawei Releases White Paper on Innovation and Intellectual Property 2020 – Huawei. 
262 qualcomm-5g-nr-royalty-terms-statement.pdf. 

84 

 
  
  
  
  
  
  
                                                 
SEP holder  

5G 

Declared 
patent 
families  (pending  and 
granted) 

Declared  5G  patent 
families (granted in 
at least one office) 

Price 
Multi-mode 
handset 

5G 

Price  5G  multi-
mode  for  200 
USD handset 

Nokia 

                               2 989  

                       2 192   max 3 EUR263 

max 3 EUR 

Telefonaktiebolaget 
Ericsson 

LM 

                               2 544  

                       1 467   2.5 to 5 USD264  max 5 USD 

CATT Datang Mobile 

                               2 431  

                       1 685  

Guangdong  Oppo  Mobile 
Telecommunications Corp. 

Vivo 
Communication Co. Ltd. 

Mobile 

                               2 245  

                       1 591  

                               1 827  

                       1 221  

Sharp Corporation 

                              1 644  

                       1 123  

NTT DOCOMO, Inc. 

                               1 573  

                          913  

Apple Inc. 

InterDigital 

                               1 280  

                          598  

                                  687  

                          417   max 0.60%265 

max 1.20 USD 

NEC Corporation 

                                  484  

                          333  

Total 

                             42 445  

                     29 254  

max 18.20 EUR 

 Source: IP Lytics and public statements as per footnotes 

The royalty stack of individual ex-ante announcements of only 5 SEP holders reported in above is 
maximum EUR 18.20 of the sales price of a handset costing 200 EUR, which represents ca. 9% of 
the  value  of  a  EUR  200  handset.  Those  5  SEP  holders  hold  13.352  declared  5G  patent  families 
(granted in at least one patent office) which represents 46% of all patent families granted in at least 
one patent office for 5G Release 15. The fact that the other SEP holders listed in Table above have 
not made ex-ante announcements does not mean that they will not license their SEPs on FRAND 
terms and conditions. Even if even some of those SEP holders may not ask for royalty payments and 
even if the 5 SEP holders who made announcements may claim to have a larger share in the aggregate 
royalty  than  their  share  in  the  total  number  of  SEPs,  the  “aggregate  royalty”  based  on  such 
announcements appears to be above EUR 30 for a EUR 200 handset.  

This issue is exacerbated in situations where a new market using the standard is developed and there 
is  no historical  data available, and  where new market  entrants,  especially SMEs, do not  have the 
resources to unilaterally obtain the necessary data on FRAND terms and conditions. 

The following sources provide limited guidance on the concept of FRAND:  

i.  General advisory documents by policy makers. Some more recent guidance documents, for 
example in Japan266, provide more specific interpretations. There may be inconsistency across 
different sources of guidance.267  

ii.  Most SDO policy provisions on FRAND licensing commitments are very general.  

263 Nokia licensing rate expectations for 5G/NR mobile phones | Nokia. 
264 Ericsson’s FRAND Licensing terms for 5G/NR in 3GPP Release 15. 
265 InterDigital – Create. Connect. Live. Inspire.  
266 In 2018, the Japanese Patent Office adopted a Guide to Licensing Negotiations Involving Standard Essential Patents, 
see https://www.jpo.go.jp/e/system/laws/rule/guideline/patent/document/rev-seps-tebiki/guide-seps-en.pdf. Japan is also 
the only government that took a position on those issues in its  Guide to Fair Value Calculation of Standard Essential 
Patents for Multi-Component Products. In July 2021, the Japanese Ministry of Economy, Trade and Industry (METI) 
formulated an interim report that indicates the results of the discussion in the Study Group on Licensing Environment of 
Standard Essential Patents and the direction of further consideration. 
267 Baron, J., Arque-Castells, P., Leonard, A., et al.,  Empirical Assessment of Potential Challenges in SEP Licensing, 
European Commission, DG GROW, 2023. 

85 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
                                                 
iii.  A  number  of  court  decisions  address  FRAND  licensing  commitments  and  more  generally 
different parties’ FRAND obligations. At the EU level, the existing guidance consists of the 
CJEU judgment Huawei v ZTE and is focused on the seeking of injunctions and the FRAND 
negotiation  process  rather  than  interpreting  the  concept  of  FRAND  in  general.  Significant 
heterogeneity exists in the implementation of this general framework by national courts.  

iv.  Although  an  impressive  amount  of  scholarship  has  analysed  or  interpreted  the  FRAND 
concept, this scholarship is characterized by persistent differences of opinion on key aspects 
of the FRAND concept such as royalty evaluation methods and obligations to license certain 
parts of the relevant industry. 

The two key aspects i.e., who should take a license and how FRAND royalty rates are determined – 
are  often  the  subject  of  contentious  licensing  negotiations  and  litigation  among  SEP  holders  and 
potential licensees.268 Those have not been resolved to date. 

A5.5 Level of licensing 

Royalty structure269 

The terms of a licence agreement governing royalties are one of the primary aspects of the agreement. 
A  royalty  payment  can  be  structured  in  different  ways  –  for  example,  as  a  one-time  lump-sum 
payment, periodical instalment payments, payments based on reported sales volumes or turnover, or 
combinations of any of this.  

In principle, a royalty amount may be determined using a royalty base and a royalty rate applied to 
that  base.  However,  in  many  instances,  the  final  royalty  amount  is  agreed  upon  by  the  parties, 
possibly using the “base x rate” formula as a guide or starting point.  

Royalty Base 

A royalty base is the unit-base to which the royalty rate applies. No single methodology is uniformly 
agreed upon by SEP holders and implementers. Thus, depending on the circumstances, the base could 
range from the value of the entire final product that includes the patented technology,270 to the value 
of the smallest saleable patent practicing unit incorporating the patented technologies (the SSPPU), 
or anything in between.   

Royalty 
The royalty can be set as a percentage of the royalty base (ad valorem royalties)271 or as a set amount 
per  unit.272  In  practice,  SEP  holders  and  implementers  may  adopt  hybrid  royalty  schemes,  for 
example, ad valorem royalties subject to (per-unit) royalty caps.273  

Licensing level 

Considerable debate exists regarding the right level of the value chain at which to license SEPs, and 
who should pay the royalty. For example, IoT includes a vast variety of products, and each may have 
a different value chain structure. For the communications function, as shown below, a chip may be 

268 See Baron, J., Geradin, D., Granata, S., et. al., Group of Experts on Licensing and Valuation of Standard Essential 
Patents ‘SEPs Expert Group’ (E03600): Contribution to the Debate on SEPs, 2021, Part 3.2 – Licensing in the value 
chain, https://ec.europa.eu/docsroom/documents/45217. 
269 Expert group report, Part 3.3, Section 3. The text contains excerpts from the expert group report. 
270 The value of sales could in principle be calculated in different ways, depending on whether unit prices are defined as 
ex-factory prices, FOB prices, net selling prices (NSP), average selling prices (ASP), retail prices, etc. 
271 For example, X% of the unit value of sales of the SSPPU or Y% of the unit value of sales of the end product. 
272 For example, €Z per SSPPU or end product unit. 
273 For example, X% of the unit value of sales of the SSPPU or Y% of the unit value of sales of the end product subject 
to a €Z per SSPPU or end product unit cap.  

86 

 
 
                                                 
supplied directly to an end product manufacturer or may be included in a component that is sold by 
a supplier to an end product manufacturer. In the automotive sector, the value chain is even more 
complicated. 

Figure 13: Examples of value chains 

Source: Continental AG 

The approach used to determine the royalty amount has a direct bearing on the volume of licensed 
products  captured  and  the  total  royalty  revenue  resulting  from  licensing  the  patents.  Below  is  an 
illustration of how royalties may differ depending on the level at which the license is granted and 
which method is applied. 

Table 8: Examples of methods for setting SEP royalties at different value chain levels 

Royalty base 

Price in EUR274 

Ad valorem royalty 

Chip 
Component 
End-product 

20 
200 
2 000 

1 % 
1 % 
1 % 

Royalty in EUR (per unit) 
0,20 
2.00 
20.00 

Royalty base 

Price in EUR 

Per unit royalty 

Chip 
Component 
End-product 

Source: Illustrative example 

20 
200 
2 000 

Expressed as a % of price 
50% 
5% 
0.5% 

10 
10 
10 

It is possible to have the same royalty using different royalty bases, i.e. a higher royalty rate applicable 
to a larger base or a higher rate applicable to a smaller base may result in the same royalty. 

274 These are fictitious prices for the purpose of illustration and have no relation to real prices. 

87 

 
 
 
 
                                                 
A5.6 SEPs and customs enforcement regulation 

Regulation  (EU)  No  608/2013275  concerning  customs  enforcement  of  intellectual  property  rights 
gives  the  right  to  any  patent  holder  to  request  customs  to  detain  or  suspend  the  release  of  goods 
suspected  of  infringing  its  patents.  The  Regulation  contains  solely  procedural  rules  for  customs 
authorities.  Accordingly,  it  does  not  set  out  any  criteria  for  ascertaining  the  existence  of  an 
infringement  of  an  intellectual  property  right.  In  that  sense,  it  is  different  from  an  infringement 
procedure  before  a  court  and  customs  authorities  are  not  in  the  position  to  ascertain  whether  the 
mandatory  negotiation  steps  set  out  in  the CJEU  judgment  in  Huawei  v. ZTE  were  followed  in  a 
specific case. 

Where the customs authorities suspect, on the basis of reasonable indications, that goods under their 
supervision or under their control infringe the intellectual property right, they will suspend the release 
of or detain the suspected goods. Customs will request the patent holder to confirm whether in his 
conviction the patent has been infringed. Customs will notify the declarant or the holder of the goods 
of  the  suspension  of  release  or  detention  of  the  goods,  requesting  its  agreement  to  destruction  of 
goods suspected of infringing the patent276. If the declarant or the holder of the goods oppose to the 
destruction or if customs do not deem it to have confirmed its agreement the patent holder has 10 
working days to  initiate legal  infringement proceedings. Otherwise, the  goods will be released or 
their detention will be put to an end by customs. In case court proceedings are initiated, suspected 
goods  will  remain  under  customs’  control  until  their  completion  of  the  court  proceeding,  unless 
certain conditions are fulfilled. Additionally, for certain IPR cases (and patents are concerned) where 
the customs authorities have been notified that proceedings have been initiated to determine whether 
the  concerned  right  has  been  infringed,  the  declarant  may  request  customs  to  release  the  goods 
(subject to the payment of a guarantee) before the completion of the proceedings. 

Customs enforcement provided for in Regulation 608/2013 already encompasses Standard Essential 
Patent  (SEP)  taking  into  account  the  broad  definition  of  patent  in  Article  2(1)(e)  of  Regulation 
608/2013: “a patent as provided for by national or Union law”. 

The Regulation  does not make  a distinction  between  a regular patent  and a SEP. A request  for a 
preliminary injunction was brought to a German court277 by an importer, whose goods were seized 
at customs at the request of a SEP owner. The court examined whether the SEP holder abused its 
dominant  position  by  using  the  customs  enforcement  regulation.  It  noted  that  such  an  abuse  is 
possible,  if  the  SEP  holder  used  the  customs  enforcement  regulation  in  order  to  circumvent  the 
negotiating steps set out in the CJEU judgement Huawei v ZTE. That would also mean that a SEP 
holder should have fulfilled the Huawei v ZTE conditions before applying for a customs action under 
Regulation 608/2013.  

The problem is that the customs enforcement regulation does not require such an examination. Such 
an obligation for customs would contradict the character and purpose of Regulation 608/2013 which 
establishes only procedural rules for customs authorities and not set out any criteria for ascertaining 
the existence of an infringement of an intellectual property right. Customs cannot distinguish between 
an essential and a non-essential patent and, most importantly, it is not an appropriate authority to 
assess if the guidelines of the CJEU have been complied with since it does not have the competence, 

275 Regulation (EU) No. 608/2013 of the European Parliament and of the Council of 12 June 2013 concerning customs 
enforcement  of  intellectual  property  rights,  OJ  L  181,  29.6.2013,  pp.  15-34,  https://eur-lex.europa.eu/legal-
content/EN/ALL/?uri=celex%3A32013R0608. 
276 Regulation 608/2013 solely contains procedural rules for customs authorities. Accordingly, this Regulation does not 
set out any criteria for ascertaining the existence of an infringement of an intellectual property right. 
277  Regional  Court  Düsseldorf,  Judgment  of  9  November  2017,  Samsung  v  3G  Licensing,  14d  O  13/17, 
http://www.justiz.nrw.de/nrwe/lgs/duesseldorf/lg_duesseldorf/j2017/14d_O_13_17_Urteil_20171109.html. 

88 

 
                                                 
se resources and expertise to establish whether the negotiating steps set out on the CJEU judgement 
Huawei v ZTE were conducted. 

In practice, this means that the recourse of customs detention, available to other patent holders, would 
be available to SEP holders only with the fulfilment of the negotiating steps set out on the CJEU 
judgement Huawei v ZTE. 

ANNEX 6: ADDITIONAL INFORMATION ON OPTIONS DISCARDED AT AN EARLY STAGE  

A6.1 SEP register without mandatory essentiality check (sub-option to PO1) 

The EU may set up a register and build up a system of voluntary essentiality checks. It will also adopt 
an EU methodology for conducting essentiality checks. SEP holders will be free to register their SEPs 
or not and do voluntary essentiality checks using the EUIPO’s administrative structure. SEP holders 
already  have  all  the  facilities  to  make  registrations  with  their  SDOs  and  to  conduct  essentiality 
checks.  And  currently,  the  majority  are  not  using  those  possibilities  as  explained  in  the  baseline 
scenario. There is no reason to believe that this will change, if the register and the essentiality checks 
are totally voluntary. 

A6.2 Voluntary conciliation (sub-option to PO3) 

Under  a  completely  voluntary  conciliation  there  will  not  be  any  possibility  for  any  reports  and 
recommendations without the agreement of both parties. This is currently the situation with regard 
to  both  arbitration  and  mediation.  It  is  questionable  to  introduce  yet  another  alternative  dispute 
mechanism to those already existing, if it does not bring any real added-value. Such an option will 
also  not  help  resolve  the  current  difficulty  in  the  implementation  of  the  customs  enforcement 
regulation.  Moreover,  currently  existing  voluntary  alternative  dispute  settlement  systems  are  not 
widely  used.  This  is  partly  because  parties  need  to  agree  on  the  procedure  of  the  mediation  or 
arbitration but also due to the fact that the results are not published and the arbitrators and mediators 
have  limited  powers  to  request  documents.  The  confidentiality  of  voluntary  alternative  dispute 
settlement has been identified as particularly detrimental to providing more clarity and transparency 
to the FRAND concept. Finally, with regard to costs and duration of the arbitration procedure is not 
advantageous compared to court proceedings. 

A6.3 Mandatory aggregate royalty after  the adoption of a standard SEP  (sub-option to 

PO4) 

The SEP owners’ ex-ante incremental contribution to the product value seems an appropriate upper 
bound for the FRAND royalty, for three reasons: 

•  First,  if  SEP  holders  obtained  more  than  their  incremental  contribution  in  a  scenario  of 
complementary inputs, downstream innovators will receive a smaller proportion of their incremental 
contribution, which may unduly suppress downstream innovation. 

• Second, the ex-ante incremental value is relevant, as otherwise there would be a risk that upstream 
innovators  are  over-rewarded:  the  ex-post  incremental  value  may  exceed  the  ex-ante  incremental 
value  because  technologies  included  in  the  standard  in  practice  cannot  be  replaced  by  alternative 
technologies  any  longer  after  standardisation.  Of  course,  from  a  welfare  perspective  it  would  be 
unreasonable to reward upstream innovators for the loss of competition from standardisation. 

• Third, if inventions can be pursued by multiple firms, granting a patent to the first successful firm, 
and setting the patentee’s reward equal to the social contribution associated with the invention (taking 
competing technologies  into account)  results in  wasteful  duplication of effort, and in  socially too 
strong  incentives  to  innovate.  The  lesson  from  the  relevant  research  is  that  the  reward  should  be 

89 

 
  
strictly less than the social benefit of an invention in a conventional patent system in which the first 
firm to achieve the invention receives a reward in the form of exclusive rights.278 This insight seems 
to  be  of  particular  importance  for  technologies  integrated  into  standards,  which  are  commonly 
protected by patents. 

It should be noted that before a standard is developed there are different technologies competing on 
a market, while after a standard is created usually one technology dominates the market.279  

Ex-post, all patents that are essential to the same standard are complements (at least with respect to 
the implementations of that standard). Knowing that their patents are now needed for the standard to 
be used, individual patent owners may expect higher royalties and the ex-post stack ends up being 
higher than the ex-ante stack as any possibility for substitution has been eliminated.280 Aggregate 
royalty negotiations at this stage will be extremely difficult and therefore, they need to involve the 
whole industry. 

Ex-post aggregate royalty determination is difficult also because the implementing products began 
using the standard without knowing or taking into account the need to pay FRAND royalties. This 
means that the FRAND royalties may have to be paid from profit expectations for those implementers 
that have not  provided  for such royalties in  their product  costs. Such implementers will naturally 
want the lowest possible FRAND royalties, whereas SEP holders (especially if not also implementers 
liable for paying royalties as well) will try to obtain the highest possible FRAND royalties. In this 
situation, it may be extremely difficult to bridge the interests and agree on an aggregate royalty. It is 
likely that the establishment of an arbitral panel would become the default option. 

A6.4 Oblige SEP holders to license their SEPs royalty-free (Option 6) 

Royalty-free  patent  policies  at  SDOs  may  promote  and  accelerate  innovation  and  competition 
upstream,  in  technology  for  standards,  and  downstream,  in  products  and  services  related  to  the 
standard.281  Consumers  would  thus  benefit  from  royalty-free  standards  because  the  prices  of 
downstream products are lower and investment in innovation may be higher.  

So why not a mandatory governmental policy for royalty free standards?  

From an economic perspective whether or not a standard should be royalty-free really depends on 
whether or not standard contributors have an economic interest to contribute based on such IPR policy 
and there cannot be general rules that would determine that. 

The factors that determine this decision include: (i) whether there is significant investment in R&D; 
(ii) whether there are a number of contributors that are not users of the standard; (iii) whether there 
may be potential alternatives of the standard and (iv) whether the cost of licensing (and litigation) 
would exceed any potential licensing revenue. 

278 See Shapiro, C., ‘Patent Reform: Aligning Reward And Contribution’,  Innovation Policy and the Economy, 2007, 
Vol.  8,  pp.  115-116,  https://www.nber.org/papers/w13141.  Intuitively,  the  R&D  effort  of  each  innovator  imposes  a 
negative externality on competitors working on a  similar innovation,  which each firm individually does not take into 
account. 
279 Baumol, W. J. and Swanson, D. G., ‘Reasonable And Nondiscriminatory (RAND) Royalties, Standards Selection, 
And 
1-58, 
https://www.jstor.org/stable/40843669#references_tab_contents. 
280  CRA,  Régibeau,  P.,  De  Coninck,  R.  and  Zenger,  H.,  Transparency,  Predictability,  and  Efficiency  of  SSO-based 
Standardization  and  SEP  Licensing:  A  Report  for  the  European  Commission,  2016,  Section  3.2,  pp. 28-30, 
https://ec.europa.eu/docsroom/documents/48794?locale=en. 
281 An economic analysis prepared by Charles River Associates (CRA) shows that royalty-free policies induce firms to 
reduce prices and sell more units of products and services that use the standard. 

Control  Of  Market 

2005,  Vol. 

Antitrust 

Journal, 

Power’, 

Law 

73, 

pp. 

90 

 
                                                 
Examples of royalty free standards are some internet standards, e.g., TCP/IP or HTML published by 
IETF, W3C or some OASIS standards; and several data exchange standards such as Bluetooth282 or 
USB (Intel). These standards are claimed not to be too R&D intensive. For example, USB establishes 
specifications  for  cables  and  protocols  for  connection,  primarily  focused  on  interoperability.  The 
USB 3.2 Standard comprises nine documents of about 2 000 pages.283   

Wireless cellular standards, in contrast, are claimed to be extremely complex and require long 10+ 
year cycles of R&D. Release 15 of the 5G Cellular standard, for example, comprises 1 131 separate 
documents totalling tens of thousands of pages and around 100 000 contributions.284 

Table 9: SEP for free or not? 

Technology 

Internet 

Examples 

Transmission Control Protocol (TCP); W3C, Extensible Markup Language 
(XML); Uniform Resource Locator (URL); Java Script 

Data storage and exchange 

CD, DVD 

USB 

Cellular standards 

2G, 3G, 4G, 5G 

Photo formats 

JPEG 

(Short-range)  wireless  data 
exchange 

WiFi, Near Field Communication (NFC) 

Bluetooth 

Video 
compression standards 

and 

audio 

MPEG, H.264/AVC, H.265/HEVC, H.266/VVC (Versatile 

Video Coding) 

VP8, VP9, VP10 

* Free – free of charge; Royalty – royalty bearing 
** Bluetooth requires membership and charges a small fee for its Bluetooth qualification process 
Source: Prof. Dr. Joachim Henkel, Adrian Göttfried (TUM) presentation “Royalty-free standards”, May 2022 

Status* 

Free 

Royalty 

Free 

Royalty 

Royalty 

Royalty 

Free** 

Royalty 

Free 

For SDOs to have something to standardize, contributors to the standard must first develop potential 
contributions. The SDO technical committee would review all technical contributions and select the 
best quality contribution. Table below explains the process in a basic manner. 

Table 10: Standard development and usage – actions by different parties involved 

For 1 SEP 

Before 
standard 
development 

During standard development 

After standard adoption 

Innovator 1 

Invest in R&D  Contribution 

to 

Nothing 

Innovator 2 

Invest in R&D  Contribution 

to 

SDO 

SDO 

SDO 

Implementer 

ask 

May 
FRAND licence 

for 

Select 
contribution 2 

Implement 
contribution 2 

May 
FRAND licence 

need 

Original source: Putnam, J. L., Economic Determinations in “FRAND rate” – Setting: A guide for the Perplexed, 2018, Fordham 
International Law Journal, Vol. 41, Issue 4 (modified) 

The  initial  investment  in  R&D  may  be  subject  to  high  risk,  in  particular  the  risk  that  the  related 
contributions  are  not  selected  into  the  standard.  This  is  a  simplification  that  needs  to  be  taken  in 

282 A fee is due under the Bluetooth qualification process. 
283 See https://www.usb.org/document-library/usb-32-revision-11-june-2022. 
284 https://www.3gpp.org/dynareport/SpecList.htm?release=Rel-15&tech=4&ts=1&tr=1. 

91 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
perspective.  For  a  large  contributor,  this  risk  would  be  somewhat  offset  since  some  of  its 
contributions will be accepted and some others will not.  

R&D Investment <= Expected ROI (Product) + Expected ROI (Licensing) 

If licensing royalties are zero, then there will be no licensing revenue from contributing technology 
to standards. In that scenario, firms contributing to standards – typically product leaders – incur R&D 
costs that their competitors – product followers – avoid.  

Royalty-free  patent  policies  at  SDOs  would  thus  facilitate  entry  and  promote  competition 
downstream because they reduce uncertainty about royalties and other license terms for SEPs and 
would thus benefit SMEs with limited or no SEP licensing experience. However, the product leaders 
must  be  able  to  gain  a  sufficient  first-mover  or  other  competitive  advantage  to  pay  for  the  R&D 
associated with standardization.  

Obligatory  royalty-free  licensing  may  thus  not  promote  the  participation  in  the  standardization 
process of companies that do not implement the standardized technology such as research institutes.  

Another consideration is whether certain product followers (implementers) of the dominant royalty-
bearing incumbent standard have an interest and ability to develop an alternative cheaper or royalty 
free standard to avoid paying royalties (e.g., FireWire).  

A decision to forego remuneration could also depend on the ability and cost related to licensing of 
SEPs. SEP licensing involves significant cost and successful licensing may depend on a number of 
factors such as ability to persuade implementers to take a licence.  

A6.5 A uniform SEP royalty per standard irrespective of the use (Option 7) 

In the public consultation a number of stakeholders call on the Commission to adopt an approach 
based  on  a  uniform  FRAND  royalty  for  a  commercial  standard,  irrespective  of  the  use  of  the 
technology.285 

Some  stakeholders  fear  that  differentiated  royalties  on  SEPs  could  allow  SEP  holders  to  extract 
excessive royalties from certain implementers of complex products, whose value encompasses much 
more than just the patented technology under the threat of injunctions.  

As  end  products  are  complex  and  include  many  innovative  technologies,  there  is  furthermore  a 
concern  that  a  differentiated  royalty  would  become  a  “tax  on  innovations”  carried  out  by 
implementers. If a technology standard constitutes an enabling technology, the value that the standard 
adds to different products depends i.a. on the value of the standard-compliant applications developed 
by  implementers.  Suppose  that  a  connectivity  technology  is  implemented  by  two  different  end 
product makers. One of these implementers develops innovative applications requiring the use of the 
connectivity  technology.  After  these  R&D  expenses  are  sunk,  the  connectivity  technology  adds 
greater value to the products that include these innovative applications. Nevertheless, allowing patent 
holders to charge the manufacturers of these enhanced products a higher rate reduces implementers’ 
incentives to invest in innovative implementations of a standard. If the different end product makers 
are  competing  with  each  other,  differentiated  rates  may  furthermore  unfairly  erode  some  of  the 
competitive advantage created by producers’ innovations.  

For this reason, some stakeholders consider that the same royalty should be charged for a particular 
standardised technology irrespective of its use. 

285 See Annex 9, Questions on FRAND. 

92 

 
 
                                                 
The above are valid concerns. On the other hand, price differentiation is, however, the predominant 
approach  in  SEP  licensing.  Price  differentiation  and  uniform  price  could  be  explained  with  the 
hypothetical examples below. 

Different  market  segments  have  different  willingness-to-pay  for  a  SEP  license.  With  price 
differentiation, each segment A, B and C (illustration below) could be charged its willingness-to-pay. 
The coloured area shows the revenues (600 €).  

Figure 14: Example: Price differentiation 

Source: Illustrative example 

With a uniform price that ensures that all segments are served, revenues would be lower (300 €): 

Figure 15: Example: low uniform price  

Source: Illustrative example 

A uniform price of 2 € maximizes revenues to 400 €, but implies that segment C is not served: 

93 

 
 
 
Figure 16: Example: higher uniform price 

Source: Illustrative example 

On the one hand, uniform pricing may thus exclude certain implementations of innovative technology 
standards, and/or depress SEP owners’ royalty revenue such as to make the development of these 
standards unprofitable. On the other hand, differentiating the royalty by the value of the final product 
may  allow  SEP  holders  to  extract  the  returns  from  investments  undertaken  by  the  upstream  and 
downstream manufacturers, and thus undermine implementers’ incentives to invest in the first place. 

In its 2017 Communication, the Commission stated that FRAND terms and conditions should reflect 
the value that the technology brings, should not depend on the success of the product, and may be 
different from sector to sector. The public consultation indicated that there is a broad agreement that 
the FRAND royalty may depend on the functionalities of the standard that are being implemented so 
that a uniform price may not always be justifiable. 

A uniform price for a commercial standard may thus not be the optimal option, so that certain form 
of price differentiation may be necessary. However, it has to be underlined that licensing on FRAND 
terms and conditions is not equal to maximising SEP owners’ revenues. The royalty should be fair 
and reasonable to maintain innovation incentives for standard developing firms.  

It should be noted that price differentiation increases transaction costs. In the IoT price differentiation 
based on licensing to device makers (of which there may be more than 10 000 for cellular standards), 
would lead to increased transaction costs in comparison to licensing upstream. Price differentiation 
may be achieved not only on the device level but also on component level. Such an approach would 
combine the advantages of price differentiation with lower transaction costs of upstream licensing. 

94 

 
 
 
 
 
A6.6 Choice of organisation to run the Competence Centre 

The Competence Centre plays an important  role in  all the options considered.  It  will manage the 
register and pool of evaluators conducting essentiality checks (PO2), manage FRAND determination 
procedures and a  roster  of conciliators (PO3),  conduct  studies and SME support activities (PO1), 
publish  aggregate  royalties  (PO4)  and  act  as  one  stop  shop  in  PO5.  The  question  arises  which 
organisation should be tasked with these activities.  

Potential candidates include the European Union Intellectual Property Office (EUIPO), the European 
Patent Office (EPO) (both of which are specialised in granting IP rights) and Standard Developing 
Organisation (SDOs). When vesting an institution with the Competence Centre responsibilities a few 
criteria should be considered. First, the body should have the technical capacity to fulfil the role of a 
Competence  Centre,  which  includes  experience  with  managing  registers  and  alternative  dispute 
processes.  Second,  the  body  should  be  accountable  to  the  EU  public,  in  particular  the  European 
Parliament and should be under the jurisdiction of the CJEU. Third, the body needs to be aligned 
with the EU’s overarching political values and current policy priorities (e.g. support for SMEs).  

The  EPO  has  extensive  experience  in  examining  patents.  Some  of  its  patent  examiners  are  also 
familiar  with  standard  documents  and  can  conduct  essentiality  checks.  While  the  EPO  has  the 
required  expertise  in  managing  registers,  it  currently  builds  up  its  expertise  in  alternative  dispute 
resolution. The EPO thus has the technical ability to perform the functions of a Competence Centre.  

However, the EPO is not an EU body, it is an international organisation which has not been entrusted 
by its members with  any competence that would  enable it to  take the  functions of a  Competence 
Centre  and  conduct  essentiality  checks.  Such  a  mandate  can  only  be  granted  by  amending  an 
international agreement. The process for amendment of an international agreement under Article 218 
TFEU is different from the process of adopting a Regulation under Article 114 TFEU. This would 
require the consent of all members of the European Patent Organisation (39 countries, including 12 
non-EU  countries).  Being  an  independent  international  organisation,  the  EPO  is  not  directly 
accountable to the EU Public and the European Parliament, and its decisions are not the subject of a 
review by the CJEU. While it is aligned with overarching political values in the EU, it determines its 
own policies. A majority of two thirds of respondents to the public consultation suggested that the 
EPO is best placed to conduct essentiality checks, because it has the technical capacity, and it is likely 
to  produce  unbiased  results.  The  public  consultation  indicated,  however,  that  the  key  criteria  for 
selecting EPO were that it is a public body, and it is independent.  

Table 11: Which authority/body would be best placed for doing essentiality checks?  

The EPO 
The national patent offices 
Specialised law firms 
Other organisation, please specify* 
A combination of the bodies listed above. If so, please specify which bodies and why in your view 
both should be responsible for this task 

% replies 
63% 
28% 
28% 
25% 
11% 

No. of replies 

57 

* Other suggestions included: WIPO or creation of a board of experts” (BOE) at SDO level 
Source: Public consultations results, see Annex 9, Q33 

There are many different SDOs specialising in developing standards in specific field(s), e.g. ETSI 
(EU)  develops  communication  standards,  IEEE  (US)  develops  the  Wi-Fi  standards,  ITU-T 
(Switzerland)  develops  the  codecs  standards.  Therefore,  vesting  them  with  Competence  Centre 
responsibilities (or some of them, e.g. register with essentiality checks) would mean multiplication 
of costs (many dedicated registers), risks for quality (more difficult to maintain the same level of 
essentiality checks) and reduced user-friendliness (differently designed databases, implementers of 
different  standards  would  have  to  check  several  SDOs).  The  main  task  of  SDOs  is  standard 
development and not SEP licensing. Such organisations have no experience in essentiality checks 
95 

 
 
and alternative dispute resolution. They do not have experience in supporting SMEs with trainings 
nor negotiations. Except for ETSI, CEN  and CENELEC, all other relevant  standard development 
organisations such as the ITU, ISO or IEEE, are located outside of the European Union. The European 
Union does therefore not have jurisdiction over all relevant SDOs and consequently cannot impose 
obligations of Competence Centre on them (adoption of such obligation would be a voluntary choice 
of  non-EU  SDO).  This  means  that  regulation  would  not  be  able  to  cover  all  relevant  standards. 
Finally, decisions of the SDOs are not subject to the review of the CJEU, nor to the scrutiny of the 
European Parliament. 

When looking at experience in administering IP rights, the EUIPO would be well equipped to take 
up the role of the Competence Centre. EUIPO is already responsible, inter alia, for the single filing, 
examination, grant and registration of the EU trademark and the registered Community design, two 
unitary  intellectual  property  rights  valid  across  the  27  Member  States  of  the  EU.  It  also  offers 
alternative dispute resolution services such as mediation, conciliation, assisted negotiation and expert 
determination.286 Finally, EUIPO has already in place funding mechanisms to support SMEs, such 
as for instance the SME fund. The concerns regarding accountability and courts do not affect EU 
agencies such as EUIPO. 

Table 12: Merits of potential candidates for the Competence Centre 

EU body? 
Legal basis 
Supervision by 
the European 
Parliament?  
Accountability to 
the EU public 

EUIPO 
Yes 
Art. 114 
(+) Yes 

EPO 
No 
Article 218 TFEU 
(-) No 

SDOs 
No 
No legal basis  
(-) No 

(++) Full, EU agency 

(0/+) Some, indirectly, as EU 
MS have 70% of the votes 

Alignment with 
the EU policies 

(++) Implements EU 
policy/legislation (e.g. EU 
Trademarks or Designs)  

Technical 
expertise 

(++) experience with registers 
and ADR  

Decisions subject 
to review of the 
CJEU? 
Other 
considerations 

(+) Yes 

x 

(0/+) Policy reflects views of 
all 39 member states; changes 
require the majority of them 
to agree  
(+) expertise in European 
patents and registers, does not 
conduct essentiality checks 
right now. 
(-) No (EPO´s Board of 
Appeal, instead) 

(+) 63% support in public 
consultation 

(0/+) Limited for CEN, 
CENELEC and ETSI, 
(European Commission 
cannot vote) 
(0/+) CEN, CENELEC and 
ETSI develop European 
standards, others not 

(+) Expertise in technology 
and registers, currently do not 
conduct essentiality checks 
nor ADR 
(-) No 

(-) functions of the 
Competence Centre spread 
among many organisations 

The table above compares merits of different choices for the central authority. Against such a multi-
dimensional  backdrop  it  seems  that  the  best  result  in  terms  of  the  three  criteria  identified  at  the 
beginning of this section could be achieved by the EUIPO. The EUIPO is a trusted body with a lot 
of experience in managing registers and alternative dispute resolutions. It is an EU body able to build 
up  a  system  for  essentiality  checks  that  would  guarantee  lack  of  bias.  It  also  has  experience  in 
supporting SMEs in managing their intellectual property. 

286 https://euipo.europa.eu/ohimportal/en/adr-service. 

96 

 
 
 
 
 
                                                 
ANNEX 7: ADDITIONAL INFORMATION IN SUPPORT OF IMPACT ANALYSIS 

A7.1 Cost-benefit analysis 

As indicated in the problem definition chapter data on SEP licensing are scarce and rarely observable 
(available in public domain) as negotiated license agreements are sensitive corporate information. 
Hence,  the  below  cost  and  benefits  analysis  is  based  on  available  literature,  analysis  of  public 
information,  interviews,  consultations  and  SEP  experts  judgements  but  it  also  required  a  large 
number of assumptions. To our knowledge such estimates (e.g. as regards affected population size in 
the EU) are not available in the literature. The analysis is based on estimated averages which strive 
to  capture  the  situation  of  both  large  multinational  players  and  small  companies,  thus  standard 
deviation from these averages is expected to be large. Providing more granular information would 
require even more assumptions, however whenever possible we try to show impact on SMEs. Taking 
all the above into account the numbers presented below should be treated with caution. The purpose 
of  these  calculations  is  to  allow  for  comparison  of  different  policy  options  rather  than  precise 
estimation of impacts on each company affected.  

All assumptions are presented below (more in Annex A5.1 Market descriptions). Presented figures 
refer to  annual  cost  and  benefits.  Setup  and running cost  of the  Competence Centre are based on 
EUIPO  best  possible  estimations  at  this  moment  in  time.  EUIPO  has  vast  experience  with 
management  of  applications,  payments  and  registers  (e.g.  for  EU  Trademark  or  Registered 
Community  Designs),  studies  (European  Observatory  on  Infringements  of  Intellectual  Property 
Rights), ADR and support to SMEs (SME Fund). Setup cost is depreciated over ten years period and 
proportionally added to the annual running cost.  

It is important to note that the regulatory proposal will not set any of the fees. Instead, they will be 
established subsequently by an implementing act which will take into account not only calculations 
presented in this impact assessment but also political considerations. The fees presented in the IA are 
just an indication of the fees that would cover the costs of the Competence Centre (based on an initial 
cost prognosis by the EUIPO). SME SEP holders and SEP implementers will both receive a reduction 
in administrative fees. 

The  benefits  are  calculated  as  a  value  of  service  or  information  provided  to  stakeholders  (using 
average values, e.g. an average negotiation cost). Consequently, they do not necessarily represent 
actual cost savings (e.g. in case a company will not engage in negotiations). 

It is important to note that not all cost/benefits can be quantified due to uncertainties of outcomes. 
For  instance,  impact  on  licensing  revenue  of  SEP  holders  depends  on  whether  this  initiative  will 
trigger/contribute  to  changes  in  the  level  of  aggregate  royalties  for  standards  and  in  number  of 
implementers taking a license. Nevertheless, discussion of potential implications on revenues of SEP 
holders and final price for customers is also presented below.  

Since options build on each other (each option contains all the  elements  of an  earlier option) the 
analysis below looks  both at additional and cumulative costs and benefits of each option. Figures are 
rounded whenever this does not distort calculated totals. 

PO1: Voluntary guidance 

Costs: 

EUIPO  estimates  that  setup  cost  of  the  Competence  Centre  would  include  defining  scope  and 
procedures for new activities, including among others preparation of SEP related information and 
training materials, design of courses, identification of experts / setting up a framework for launching 
studies, screening and gathering existing public terms and conditions, licence agreements and case 
law  summaries.  IT  costs  would  include  creation  of  a  database  for  studies,  case  law  as  well  as 
Competence Centre’s webpage where all the information could be accessed.  

97 

 
The initial cost is estimated at around EUR 760 000 and IT setup at EUR 50 000. 

Annual running cost of the Centre is estimated at EUR 430 000 with IT maintenance cost of EUR 10 
000 and annual depreciation of the one-off costs of EUR 81 000. Cost of three studies per year is 
estimated at around EUR 30 000 each. Total annual cost amounts to around EUR 611 000. 

Since  services  of  the  Competence  Centre  will  be  free  of  charge,  in  case  this  option  is  the  only 
preferred choice a source for financing of setup and running expenses should be secured.  

Benefits: 

Based on estimated number of potential licensees per year, we expect that from 40 to 80 SMEs will 
seek advice, participate in trainings and use dedicated resources. Additionally, up to 230 EU based 
implementers and up to 190 non-EU based firms with subsidiaries in the EU, their legal counsels 
(380), judges or conciliators (around 35) and both parties to each trial (2x35) involved in SEP court 
cases, around 261 SEP holders as well as an unknown number of researchers, academia and other 
interested parties might use Centre’s resources. This adds up to an audience of around 1 200 per year. 
Value of a SEP licensing/negotiations training can be estimated at around EUR 1 500.287 Value of 
access to around three new studies per year, a database of license agreements and case-law summaries 
could  be  comparable  to  access  cost  to  lower  range  commercial  patent  databases,  around  EUR 
5 000.288 Thus, the annual benefits to users would amount to around EUR 5.9 million per year. 

Table 13: Average incremental annual costs and benefits of PO1 

PO1 (guidelines and Centre) 
SME trainings 
Implementers EU 
Non EU implementers with EU 
subsidiaries 
SEP owners 
judges/legal counsels/other 

Competence Centre costs 

Total 

no. affected 

benefit 

cost 

  80 
  230 
  190 

  261 
  480 

1 

 1 500 
 5 000 
 5 000 

 5 000 
 5 000 

0 
0 
0 

0 
0 

- 611 000 

Total  
(+ saving, - 
cost) 

 120 000 
1 150 000 
 950 000 

1 305 000 
2 400 000 

- 611 000 

5 314 000 

Source: Own assessment based on studies and assumptions 

Table  14:  Average  total  annual  costs  and  benefits  of  option  PO1  by  main  categories  of  affected 
parties and their origin 

SEP implementers 

SEP owners 

Costs 
Benefits 
Net 
Costs 
Benefits 

EU 

non-EU 

Total 

1 870 000 

1 550 000 

3 420 000 

1 870 000 

1 550 000 

3 420 000 

 375 750 

2 129 250 

2 505 000 

287 For instance cost of “Patent Licensing: Strategy and negotiation” delivered by French European Institute for Enterprise 
and Intellectual Property (IEEPI) costs around EUR 1300,  while course on  “Valuation  and exploitation of  intangible 
assets” costs EUR 2400. See: https://www.ieepi.org/en/formations/. 
288 Baron et al. report cost of access to commercial patent databases of between EUR 5 000 and 25 000, see Baron, J., 
Arque-Castells,  P.,  Leonard,  A.,  et  al.,  Empirical  Assessment  of  Potential  Challenges  in  SEP  Licensing,  European 
Commission, DG GROW, 2023, p. 32. 

98 

 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
   
   
   
   
                                                 
Net 
Subtotal (net effect for implementers and owners) 
Competence Centre 

 375 750 
2 245 750 

- 611 000 

2 129 250 
3 679 250 

2 505 000 
5 925 000 

- 611 000 

Total net benefit 

1 634 750 

3 679 250 

5 314 000 

* concerns non-EU implementers with subsidiaries in the EU 
Source: Own assessment based on studies and assumptions 

PO2: SEP register with essentiality checks 

Costs: 

Competence Centre’s initial  costs would include the following tasks:  creation and validation of a 
pool of SEP evaluators (including tasks such as drafting a call for interest, select candidates, creating 
a  process  for  updating  the  pool  of  experts,  create  a  process  to  regularly  communicate  with  the 
experts…); setting up a case management/distribution system, management of conflicts of interest; 
creating work instructions, templates and check lists; defining and implement quality controls (formal 
checks); setting up performance management system (define indicators, define measuring system and 
implement  automatic  measuring);  trainings  for  evaluators  (including  materials);  setting  up  SEP 
examination outcome review mechanism (substantive quality controls); setting up examiners/experts 
payment  system.  IT  cost  would include a database with  interface, e-application and  fee payment, 
connection to patent databases (e.g. of EPO). 

Recurring costs would include: admissibility check/formal checks of patents before registration; fees 
management, maintaining a pool/network of active SEP examiners; case management/distribution to 
examiners; conflicts of interest check; quality controls; performance management; trainings of SEP 
checkers; SEP experts payment; register users management. 

Assumptions:  
Both setup and running cost of this option will depend on the number of patent families registered289 
and checked for essentiality. In case the register would be only used by SEP holders to prove their 
right to enforce SEPs against EU implementers the expected number of registered patents is rather 
low and limited to patents most susceptible of being used in licensing negotiations (so called proud 
list of patents owned by a SEP holder). In such scenario the number of patents registered is estimated 
at 3 550 initially and 10% of it each year after. In case at least some SEP holders will use the register 
as an indication of their portfolio strength, while others will not; and neither courts nor other third 
parties will compel unwilling SEP holders to use the register to document their portfolio strength 
(e.g. as evidence in infringement cases) – the number of patents registered initially is estimated at up 
to 30 000 and 10% of that in subsequent years. Finally, in case the register becomes widely used by 
all parties in SEP negotiations, including for approximation on royalties allocation by SEP holders 
based on patent count, it is expected that nearly all patent families including European potential SEPs 
are registered (around 60 000) and companies will further add up to 20% patents in an attempt to 
improve  their  share  of  patents  essential  to  a  standard,  resulting  in  approximately  72 000  patents 
registered initially and 10% of that number in subsequent years. 290. Especially in case this option is 
selected in combination with options that follows, there’s higher likelihood that the register will be 

289 Even if European patent family consist of patents in several Contracting States, all European patents gives its owner 
the same rights as a national patent in each country for which it is granted. A SEP holder can register only one patent per 
family  and 
family  members  using  EPO  patent  database  Espacenet 
tag 
(https://worldwide.espacenet.com). 
290 Baron, J., Essentiality Checks for Potential SEPs – Framework for Assessing the Impact of Different Policy Options, 
European Commission, DG GROW, 2023. The study noted that the practice of numerical proportionality for allocating 
royalty payments in SEP pools resulted in an increase in number of patents related to the underlying standard. 

remaining  European 

the 

99 

 
 
 
                                                 
used to approximate stake of SEP holder in a standard during license negotiations and infringement 
cases, e.g. by conciliators or facilitators (in PO3, PO4 and PO5) and judges. Thus, for the analysis 
below we assume the maximum scenario of 72 000 patents registered.  In case  a lower number of 
patent families is registered, the EUIPO back office costs would remain roughly the same while costs 
of essentiality checks would be proportionally lower. 

Essentiality  check  by  an  expert  is  estimated  to  take  around  10  hours,  and  the  wage  of  expert  is 
approximately EUR 500 per hour, making the total cost of assessment EUR 5 000.291  

It is expected that claim charts for patents most susceptible of being used in negotiations are already 
available (so called business as usual cost).292 For the remaining patents we assume that SEP holders 
will perform a limited screening of their patents before registration but generally will tend to register 
all (potential) SEP they have. Claim charts may (but do not have to) be provided by SEP holder for 
the  patents  selected  for  essentiality  check.  Costs  of  producing  a  claim  chart  are  assumed  to  be 
equivalent to the costs of the essentiality check itself. We also assume that for roughly half of the 
patents selected for essentiality checks SEP holders will decide to produce or update a claim chart. 

Other costs of SEP holder including gathering all the information necessary for registration and cost 
of filling in the registration form are estimated at EUR 200 per patent. Some information necessary 
for registration should be already available to the SEP holders. For instance, some SDOs also require 
owners of potential SEPs to identify the patent numbers of potential SEPs and the number of the 
specifications  to  which  these  patents  relate.  Some  information  would  also  be  repeated  and  some 
would be identical for many different patents (e.g. name of the standard or nature of the licensing 
FRAND commitment).  

Sub-option i) Essentiality checks for all SEPs in the register 

One-off  costs  of  the  Competence  Centre  to  implement  this  option  are  estimated  at  around  EUR 
840 000 with associated IT costs of EUR 700 000, bringing total cost to around EUR 1.54 million.  

The annual internal cost of the Competence Centre in an initial year(s) is expected to be higher due 
to high number of patents that will go through the system. It is estimated at around EUR 5.2 million 
(including IT maintenance of EUR 140 000 and depreciation of one-off cost of EUR 154 000).  

We estimate that initially 72 000 patents will have to be checked for essentiality and that SEP holders 
following negative  essentiality outcome will demand recheck of up to  27 500 patents. Altogether 
around 99 500 patents will have to be checked, requiring engagement of around 565 assessors. Given 
the estimated number of experts in the field in the EU of 1 500 this should be feasible even in one 

and 

291 There are different estimates of the essentiality assessment costs. Bekkers et al. report that the typical fee charged by 
patent pools for essentiality assessments of a European patent is EUR 5 000-10 000, see Bekkers, R., Tur, E. M., Henkel, 
J., et al., Overcoming inefficiencies of patent licensing: A method to assess a patent’s essentiality for technical standards, 
2021,  https://pure.tue.nl/ws/portalfiles/portal/194804728/BEKKERS_et_al_2021_essentiality_assessments.pdf.  CRA 
estimated the cost of a “medium assessment” to be EUR 4 500, and the cost of a “full assessment” to be EUR 9 000, see 
CRA,  Régibeau,  P.,  De  Coninck,  R.  and  Zenger,  H.,  Transparency,  Predictability,  and  Efficiency  of  SSO-based 
Standardization 
2016, 
Report 
https://ec.europa.eu/docsroom/documents/48794?locale=en. According to survey by Baron, the average cost of such an 
assessment for the remuneration of the expert alone is EUR 4 159. Taking into account mass scale of assessment and 
resulting specialisation we have proposed a cost figure at the lower end of the estimates proposed, that is at EUR 5 000. 
Baron, J., Essentiality Checks for Potential SEPs  – Framework for Assessing the Impact of Different  Policy 
see - 
Options, European Commission, DG GROW, 2023. Additionally we estimate the number of working hours per year at 
1760. Meaning that one assessor could check 176 patents per year.  
292 Many or most existing claim charts may relate to foreign, in particular US members of global potential SEP families, 
and may have to be adapted to European patents. Source: Baron, J., Essentiality Checks for Potential SEPs – Framework 
for Assessing the Impact of Different Policy Options, European Commission, DG GROW, 2023. 

Commission, 

Licensing: 

European 

SEP 

the 

for 

A 

100 

 
                                                 
year, but it might take longer as well.293 The expert remuneration for assessing this amount of patents 
is estimated at EUR 498 million. 

In the subsequent years as the number of patents subject to checking is expected at 10% of the initial 
volume, the costs will also be lower. Centre’s total costs are estimated at EUR 1.5 million (including 
IT maintenance and depreciation as above) and remuneration of examiners at EUR 49.8 million. 

Consequently, over the course of ten years (initial year plus nine subsequent years) the average annual 
cost of this sub-option is estimated at EUR 96.4 million.  

An average registration fee for this option that should cover the cost of the Centre is estimated at 
EUR 140 per patent. Additionally, SEP holders will have to pay the cost of essentiality checks of 
EUR 5 000 per patent (only one per patent family). 

Internal costs of SEP holders connected to preparation of information necessary for registration and 
filling of forms for all 72 000 patent families is estimated at EUR 2.7 million annually on average 
during a decade. Additionally, SEP holders may want to submit claim charts for patents selected for 
essentiality check. This cost is estimated at around EUR 34.2 million annually on average over the 
course of 10 years. 

Sub-option ii) Essentiality checks for up to a fixed number (e.g. 50-100) of patents selected by SEP 
holder and a representative random sample of all SEPs. 

One-off  costs  of  the  Competence  Centre  to  implement  this  option  are  estimated  at  around  EUR 
710 000 with associated IT costs of EUR 700 000, bringing total cost to around EUR 1.41 million. 
Costs  are  lower  than  in  sub-option  i)  due  to  lower  number  of  expected  essentiality  checks  and 
associated reduced workload (e.g. selecting/training examiners). 

The annual cost of the Centre in an initial year(s) is expected to be higher due to high number of 
patents  that  will  go  through  the  system.  It  is  estimated  at  around  EUR  3.7  million  (including  IT 
maintenance of EUR 140 000 and depreciation of one-off cost of EUR 141 000).  

We estimate that initially around 13 550 patents will have to be checked for essentiality (3 550 patents 
selected by owners and additional 10 000 patents in order to estimate essentiality shares of patent 
portfolios  per standard  and per owner). SEP holders following negative  essentiality outcome will 
demand recheck of up to 885 patents from the self-selected group (patents selected for random check 
will not be rechecked in order to assure reliability of the sample).294 Altogether in the first year(s) 
around 14 500 patents will have to be checked, requiring engagement of around 80 assessors. The 
cost of assessing this amount of patents is estimated at EUR 72 million. 

In the subsequent years as the number of patents subject to checking is expected at 10% of the initial 
volume,  the  costs  will  also  be  lower.  Centre’s  internal  costs  are  estimated  at  EUR  1.1  million 
(including IT maintenance and depreciation as above) and remuneration of examiners at EUR 7.2 
million. 

293 Experts assess that in the EU the number of experts qualified in doing such an assessments stands at around 650 patent 
attorneys and 800 patent examiners. Based on EPO register of patent attorneys, number of EPO patent examiners and 
estimation on the number of examiners in the national patent office weighted by the share of EPO patent application in 
the technical field of telecommunication (IPC H04). 
294 Allowing for appeals to the assessments of randomly sampled patents produces few benefits, and significant costs – 
appeals  are  likely  to  correct  a  significant  share  of  random  assessment  error,  which  is  a  relatively  benign  and 
inconsequential error for purposes of assessing firms’ relative portfolio size (false positive and false negative random 
errors tend to cancel each other out). Appeals are however likely to exacerbate, rather than correct over-confirmation 
bias, as negative assessments are significantly more likely to be appealed. By reducing random error and increasing bias, 
appeals make the assessments of firms’ relative portfolio sizes less reliable. Source: Baron, J., Essentiality Checks for 
Potential SEPs – Framework for Assessing the Impact of Different Policy Options, European Commission, DG GROW, 
2023. 

101 

 
                                                 
Consequently, over the course of ten years (initial year plus nine subsequent years) the average annual 
cost of this sub-option is estimated at EUR 15.1 million. 

An average registration fee for this sub-option that should cover the costs of the Centre is estimated 
at EUR 100 per patent. Additionally, SEP holders will have to pay the cost of essentiality checks of 
EUR 5 000 per patent. 

Internal costs of SEP holders connected to preparation of information necessary for registration and 
filling of forms for all 72 000 patent families is estimated at EUR 2.7 million annually on average 
during a decade. Additionally, SEP holders may want to submit claim charts for patents selected for 
essentiality check. This cost is estimated at around EUR 6.4 million annually on average over the 
course of 10 years. 

Costs for users of the register 

The option assumes free access to the basic information in the register such as names of SEP holders 
and their contact details for licensing, the number of SEPs they have registered and the essentiality 
rate of all registered SEPs. There will be a fee however, for access to information on essentiality of 
concrete patents or portfolios. The fees for accessing the register should at least cover the costs of the 
Centre associated with its activities described under PO1 (which is also included in this option). Fees 
could for instance take form of an annual subscription. In such case we assume that all implementers 
that are likely to take a license will buy access. As described in Annex 5.1 these are expected to be 
around 150 large and 40 EU based SMEs, and 190 non-EU firms with subsidiaries in the EU annually. 
At this level of demand the minimum prices to cover PO1 costs are estimated at EUR 1 700 for large 
firms and EUR 850 for SMEs and total access for all firms per year at EUR 0.61 million. 

Benefits: 

Implementers  taking  a  license  will  benefit  from  information  if  patents  that  are  presented  to  them 
during  negotiations  can  be  more  safely  assumed  to  be  actually  essential.  In  the  same  vain,  SEP 
holders would find it easier to prove essentiality to their negotiating partners (also during the cross-
licensing  negotiations).295  We  estimate  that  essentiality  checks  may  constitute  up  to  10%  of  an 
average negotiation cost of EUR 108 000.296Consequently the average benefits (e.g. cost saved or 
value of information provided) amounts to up to EUR 10 800 (due to lower value of licenses entered 
by SME implementers we estimated their benefit at half of this value). With implementers and SEP 
holders entering an estimated 575 new SEP licenses in the EU per year, respectively, the cumulative 
value amounts to a maximum of around EUR 6.2 million per year for implementers and the same 
amount for SEP holders (this includes only licensing agreements concluded in the EU). It assumes 
that essentiality checks are conducted for every new SEP license that is signed, or that implementers 
that thus far were not conducting essentiality checks will use (benefit from having) such information 
during their licensing negotiations.  Moreover, free access to the database will be given to judges, 
with  around  35  cases  per  year  concerning  SEP  licensing  in  the  EU,  the  savings  on  expertise  on 
essentiality can amount to EUR 0.4 million. 

SEP holders can eliminate identified non-essential patents from their portfolio and avoid payment of 
patent renewal fees. Some patents would also be lost to validity challenges (as can happen to any 
other patent). On the other hand, use of patent count for determination of aggregate royalty division 

295 Non-monetary benefits of cross-licensing amount to EUR 4 billion per year, on top of monetary royalty income on 
cellular standards of EUR 18 billion per year. See Market description. 
296 Average negotiation cost for all SEP licenses granted per year (including both bilateral negotiations where costs can 
reach millions of EUR and licensing through patent pools where it is close to zero). Own calculations based on Baron, J., 
Arque-Castells,  P.,  Leonard,  A.,  et  al.,  Empirical  Assessment  of  Potential  Challenges  in  SEP  Licensing,  European 
Commission, DG GROW, pp. 138-139, Table 16. 

102 

 
                                                 
is expected to incentivise patenting and increase patent fees.297 In case of sub-option i) the net effect 
is reduction in the number of patents by around 300298 a year producing over a decade an average 
annual savings on patent fees of EUR 11.6 million (which are a loss of revenue to the EU patent 
offices). In case of sub-option ii) as only a sample of approximately 14% of patents will be checked, 
the number of patents eliminated is lower than the new patents put into the register. Approximately 
1 900299 new patents will be added to register a year producing over a decade an average annual fee 
cost of EUR 29 million (which will become a new revenue to the EU patent offices: covering patent 
examination cost, and net profit of patent offices).300 As explained in chapter 6, the materialisation 
of these costs/benefits is however, uncertain.  

Finally, it should be noted that only around 15% of the SEP holder costs presented above will apply 
to firms with headquarters in the EU (based on share of declared SEPs). 

Taking cost and benefits together sub-option i) is expected to deliver net costs at around EUR 121 
million per year over a decade, while sub-option ii) net cost of EUR 12.3 million. As benefits of both 
options (excluding the uncertain impact on the number of patents) are the same, option ii) is selected. 
See tables below for details. The first table shows costs and benefits in the initial year, the subsequent 
years and a ten-year annual average. The ten-year-average is used in the following tables as well as 
throughout  this  document  to  describe  impact  of  PO2.  This  is  to  facilitate  reading  and  ensure 
comparability with the impacts of other options (which are the same for an initial and subsequent 
years). 

Table  15:  Total  average  incremental  annual  costs  and  benefits  of  PO2  in  the  initial  year  and  in 
subsequent years as well as a ten-year-average (PO1 not included) 

no. licensing 
negotiations 

PO2 (common) 
Implementers large EU 
Implementers SME EU 
Non EU implementers with EU 
subsidiaries 
SEP owners 

Access fee large implementers (EU and 
non-EU with subsidiaries in the EU) 
Access fee SME implementers 

  No. of entities 

judges 

Initial year 
2 484 000 
 297 000 

Subsequent 
years 
2 484 000 
 297 000 

3 132 000 
6 210 000 

3 132 000 
6 210 000 

10 years 
average 
2 484 000 
 297 000 

3 132 000 
6 210 000 

- 578 000 
- 34 000 

 378 000 

- 578 000 
- 34 000 

 378 000 

- 578 000 
- 34 000 

 378 000 

  230 
  55 

  290 
  575 

  340 
  40 

  35 

i) PO2 (all checked) 
SEP holder (registration fee) 

patents 

-5 244 000 

-1 494 000 

-1 869 000 

297  It  should  be  noted  that  increase  in  patenting  is  not  necessary  connected  with  new  innovation,  but  rather  with  the 
number of patents that cover an invention. 
298  Discontinuation  of  around  2  600  patents  after  approximately  five  years  of  maintaining  them  and  registration  of 
approximately 2 300 new patents with intention to keep for 20 years (SEPs are kept longer than other patents due to their 
value). 
299  Discontinuation  of  around  400  patents  after  approximately  five  years  of  maintaining  them  and  registration  of 
approximately 2 300 new patents with intention to keep for 20 years. 
300  Based  on  EPO  website:  https://www.epo.org/applying/european/unitary/unitary-patent/cost.html  and  own 
calculations. We estimate that an average annual fee for obtaining a patent in four EU Member States and maintaining it 
for 20 years is around EUR 2 000. An average annual saving for discontinuing a patent after five years is around EUR 
2 400. In order to assure comparability with other figures in this annex we present average savings over a decade. This 
means that e.g. annual cost of a new patent acquired in the initial year applies for ten years, while annual cost of a patent 
acquired in the fifth year applies just for half of that period – calculation not presented. 

103 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
PO2 (common) 

SEP holder (essentiality checks) 
SEP holder, savings on patents 
maintenance cost 
SEP holder claim charts 
update/preparation 

SEP holder form filling 
EPO and NPO change in patent 
revenue 

total i) 

ii) PO2 (50-100+sample) 

SEP holder (registration fee) 

SEP holder (essentiality checks) 
SEP holder, cost of patents registration 
and maintenance  
SEP holder claim charts 
update/preparation 

SEP holder form filling 
EPO and NPO change in patent 
revenue 

no. licensing 
negotiations 
72 000 patent families 
registered and checked 
initially (+27 500 
rechecked), 10% of 
that in subsequent 
years 

Initial year 

Subsequent 
years 

10 years 
average 

-497 500 000 

-49 750 000 

-94 525 000 

11 600 000 

11 600 000 

11 600 000 

50% of patents updated 
72 000 in 1st year, 10% 
thereafter 

-180 000 000 

-18 000 000 

-34 200 000 

-14 400 000 

-1 440 000 

-2 736 000 

patents 
72 000 patent families 
registered initially, 
10% of that in 
subsequent years 
13 550 checked 
initially (+885 
rechecked), 10% in 
subsequent years 

-11 600 000 
-685 255 000 

-11 600 000 
-58 795 000 

-11 600 000 
-121 441 000 

-3 681 000 

-1 091 000 

-1 350 000 

-72 175 000 

-7 217 500 

-13 713 250 

-29 000 000 

-29 000 000 

-29 000 000 

50% of patents updated 
72 000 in 1st year, 10% 
thereafter 

-33 875 000 

-3 387 500 

-6 436 250 

-14 400 000 

-1 440 000 

-2 736 000 

29 000 000 
-112 242 000 

29 000 000 
-1 247 000 

29 000 000 
-12 346 500 

Source: Own assessment based on studies and assumptions 

Total ii) 

Table 16: Ten-year-average incremental annual costs and benefits of PO2 (PO1 not included) 

PO2 (common) 
Implementers large EU 
Implementers SME EU 
Non EU implementers with EU 
subsidiaries 
SEP owners 

no. licensing 
negotiations 

  230 
  55 

  290 
  575 

benefit 
 10 800 
 5 400 
 10 800 

 10 800 

cost 

Total  
(+ saving, - cost) 
2 484 000 
 297 000 
3 132 000 

6 210 000 

  No. of entities 

Access fee large implementers (EU and 
non-EU with subsidiaries in the EU) 
Access fee SME implementers 
judges 

  340 
  40 
  35 

 1 700 
 1 500 
  0 

10 800 

- 578 000 
- 60 000 
378 000 

i) PO2 (all checked) 
SEP holder (registration fee) 

SEP holder (essentiality checks) 

patents 
72 000 patent families registered and checked 
initially (+27 500 rechecked), 10% of that in 
subsequent years 

-1 869 000 

-94 525 000 

104 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
no. licensing 
negotiations 

benefit 

cost 

Total  
(+ saving, - cost) 

PO2 (common) 
SEP holder, savings on patents 
maintenance cost 
SEP holder claim charts 
update/preparation 
SEP holder form filling 
EPO and NPO change in patent 
revenue 

total i) 

ii) PO2 (50-100+sample) 

SEP holder (registration fee) 

SEP holder (essentiality checks) 
SEP holder, cost of patents registration 
and maintenance  
SEP holder claim charts 
update/preparation 
SEP holder form filling 
EPO and NPO change in patent 
revenue 

Source: Own assessment based on studies and assumptions 

Total ii) 

50% of patents updated 
72 000 in 1st year, 10% thereafter 

5 000 

patents 
72 000 patent families registered initially, 10% of 
that in subsequent years 
13 550 checked initially (+885 rechecked), 10% in 
subsequent years 

50% of patents updated 
72 000 in 1st year, 10% thereafter 

5 000 
200 

11 600 000 

-34 200 000 
-2 736 000 

-11 600 000 
-121 441 000 

-1 350 000 

-13 713 250 

-29 000 000 

-6 436 250 
-2 736 000 

29 000 000 
-12 346 500 

Table  17:  Summary  of  ten-year-average  incremental  annual  costs  and  benefits  of  PO2  (PO1  not 
included): A – sub-option i); B – sub-option ii) 

A – sub-option i) 

SEP implementers 

Costs 
Benefits 
Net 
Costs 
Benefits 
Net 
Subtotal (net effect for implementers and owners) 
EPO/NPO benefit 

SEP owners 

EU 

- 306 000 
2 875 500 

2 569 500 

-19 999 500 
2 699 850 

-17 299 650 
-14 730 150 

-11 600 000 

non-EU 

- 306 000 
3 226 500 

2 920 500 
-113 330 500 
15 299 150 

-98 031 350 
-95 110 850 

Total 

- 612 000 
6 102 000 

5 490 000 
-133 330 000 
17 999 000 

-115 331 000 
-109 841 000 

-11 600 000 

Total net benefit 

-26 330 150 

-95 110 850 

-121 441 000 

B – sub-option ii) 

SEP implementers 

Costs 
Benefits 
Net 
Costs 
Benefits 
Net 
Subtotal (net effect for implementers and owners) 
EPO/NPO benefit 

SEP owners 

EU 

- 306 000 
2 875 500 

non-EU 

- 306 000 
3 226 500 

Total 

- 612 000 
6 102 000 

2 569 500 

2 920 500 

5 490 000 

-7 985 325 
 959 850 

-45 250 175 
5 439 150 

-7 025 475 
-4 455 975 

29 000 000 

-39 811 025 
-36 890 525 

-53 235 500 
6 399 000 

-46 836 500 
-41 346 500 

29 000 000 

* concerns non-EU implementers with subsidiaries in the EU 
Source: Own assessment based on studies and assumptions 

Total net benefit 

24 544 025 

-36 890 525 

-12 346 500 

105 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 18: Ten-year-average total annual costs and benefits of option PO2 (sub-option ii) by main 
categories of affected parties and their origin (including PO1) 

SEP implementers 

Costs 
Benefits 
Net 
Costs 
Benefits 
Net 
Subtotal (net effect for implementers and owners) 
EPO/NPO benefit 

SEP owners 

EU 

- 306 000 
4 745 500 

non-EU 

- 306 000 
4 776 500 

Total 

- 612 000 
9 522 000 

4 439 500 

4 470 500 

8 910 000 

-7 985 325 
1 335 600 

-45 250 175 
7 568 400 

-6 649 725 
-2 210 225 

29 000 000 

-37 681 775 
-33 211 275 

-53 235 500 
8 904 000 

-44 331 500 
-35 421 500 

29 000 000 

* concerns non-EU implementers with subsidiaries in the EU 
Source: Own assessment based on studies and assumptions 

Total net benefit 

26 789 775 

-33 211 275 

-6 421 500 

PO3: SEP register with essentiality checks and conciliations 

Costs: 

Competence Centre’s initial cost would include creation of a “roster” of conciliators. IT cost would 
include creating a secured channel for communication/exchange of documents between conciliators 
and parties, creation of an internal secured register of conciliation reports, as well as payment system. 
These costs are expected at around EUR 130 000 and EUR 40 000 respectively. 

Recurring costs would include management of the choice of conciliators, payment processing and 
providing other back-office support to conciliators. Additionally, there would be IT maintenance and 
depreciation of one-off costs. These costs are estimated at EUR 30 000 (for around 70 conciliations 
per year), EUR 8 000 and EUR 17 000 respectively, bringing the total of EUR 55 000 per year.  

On average a conciliation is expected to take 40 hours of conciliator’s time, at hourly wage of EUR 
500. The average cost of engaging a conciliator is estimated at EUR 20 000.  

We expect around 35 conciliation per  year (based on court litigation information) and another 35 
conciliations to help in FRAND determination. At such demand, the average cost of conciliation to 
cover all cost of the Centre and conciliator is estimated at EUR 20 800. 

Benefits: 

Based  on  WIPO  experience  alternative  dispute  resolution  mechanism  can  reduce  need  for  court 
proceeding by up to 70%. This would mean that around 24 conciliations would result in agreement, 
and court  costs (first  instance,  estimated  average  at  around EUR 170 000 in  the EU)301 would be 
avoided. While for 30% or 11 cases the matter would still end in court, albeit with additional evidence 
from  the  conciliator’s  report.  In  case  of  the  remaining  35  conciliations  the  value  of  assistance  in 
reaching  FRAND  terms  and  conditions  is  estimated  at  around  EUR  97 000  (accounting  for 
approximately 90% of an average negotiation cost of EUR 108 000).302 Taking also costs into account 
the benefits delivered by this option are estimated at EUR 6 million per year. See table below for a 
summary.  

Table 19: Average incremental annual costs and benefits of PO3 (PO1 and PO2 not included) 

301 There are strong variations around this average, court costs could be much higher. 
302 Average negotiation cost for all SEP licenses granted per year (including both bilateral negotiations where costs can 
reach millions of EUR and licensing through patent pools where it is close to zero). Own calculations based on Baron, J., 
Arque-Castells,  P.,  Leonard,  A.,  et  al.,  Empirical  Assessment  of  Potential  Challenges  in  SEP  Licensing,  European 
Commission, DG GROW, pp. 138-139, Table 16. 

106 

 
 
 
 
                                                 
PO3 
Cases (that will not go to court) 

Help in FRAND determination 

total 

Source: Own assessment based on studies and assumptions 

Fees 

no. affected 

benefit 

cost 

Total  
(+ saving, - cost) 

  24 

  35 
  70 

 170 000 

 97 200 

 20 800 

4 080 000 
3 402 000 

-1 456 000 

6 026 000 

Table 20: Summary of average incremental annual costs and  benefits of PO3 (PO1 and PO2 not 
included) 

SEP implementers 

SEP owners 

Costs 
Benefits 
Net 
Costs 
Benefits 
Net 

Total net benefit 
* concerns non-EU implementers with subsidiaries in the EU 
Source: Own assessment based on studies and assumptions 

EU 

- 364 000 
1 870 500 

non-EU 

- 364 000 
1 870 500 

Total 

- 728 000 
3 741 000 

1 506 500 

1 506 500 

3 013 000 

- 109 200 
 561 150 

- 618 800 
3 179 850 

- 728 000 
3 741 000 

 451 950 
1 958 450 

2 561 050 
4 067 550 

3 013 000 
6 026 000 

Table  21:  Average  total  annual  costs  and  benefits  of  option  PO3  by  main  categories  of  affected 
parties and their origin (including PO1 and PO2 sub-option ii) 

SEP implementers 

Costs 
Benefits 
Net 
Costs 
Benefits 
Net 
Subtotal (net effect for implementers and owners) 
EPO/NPO benefit 

SEP owners 

EU 

- 670 000 
6 616 000 

non-EU 

- 670 000 
6 647 000 

Total 
-1 340 000 
13 263 000 

5 946 000 

5 977 000 

11 923 000 

-8 094 525 
1 896 750 

-45 868 975 
10 748 250 

-6 197 775 
- 251 775 

29 000 000 

-35 120 725 
-29 143 725 

-53 963 500 
12 645 000 

-41 318 500 
-29 395 500 

29 000 000 

* concerns non-EU implementers with subsidiaries in the EU 
Source: Own assessment based on studies and assumptions 

Total net benefit 

28 748 225 

-29 143 725 

- 395 500 

PO4: Aggregate royalty for SEP 

Costs: 

Competence Centre’s initial costs would be entirely covered by PO3 as conciliators for the aggregate 
royalty expert assessment panel would come from the roster created in PO3. IT cost would include 
changes to the register web interface to publish aggregate royalties and are estimated at EUR 25 000. 

Recurring costs would include back-office support for expert assessment, including publication of 
call for interest, reception of position papers, preparation of meetings and management of payments, 
all  estimated  at  around  EUR  40 000  for  three  expert  determinations  per  year.  Additionally,  there 
would  be  IT  maintenance  and  depreciation  of  one-off  costs  of  EUR  5 000  and  EUR  2 500 
respectively. Together the average costs are estimated at EUR 47 500 per year.  

107 

 
 
  
 
 
 
 
 
 
 
 
 
 
With expected up to 3 expert assessments per year,303 the cost per assessment is estimated at EUR 
135 800. It consists primarily of remuneration for an estimated  240 hours  of work of conciliators 
(hourly wage EUR 500) on each case, as well as a proportion of cost of the Competence Centre.  

Benefits: 

Publication of an aggregate royalty is expected to facilitate negotiations  for all implementers who 
currently  take  license  in  the  EU  and  pay  license  fee.  As  estimated  in  Annex  A5.1  these  concern 
around 575 new SEP licenses involving EU stakeholders signed per year. The value of information 
on aggregate royalty is estimated to save around EUR 22 000 in negotiation costs (accounting for 
approximately 20% of an average negotiation cost of EUR 108 000).304 

Taking  also  costs  into  account  the  net  benefits  delivered  by  this  option  are  estimated  at  EUR  25 
million per year. See table below for a summary. 

Table 22: Average incremental annual costs and benefits of PO4 (PO1, PO2 and PO3 not included) 

PO4 
Negotiation savings implementer EU 
Negotiation savings implementer 
non-EU with subsidiaries in the EU 
SEP holders 
Imp and SEP hold - Expert panel 

total 

no. affected 

benefit 

cost 

Total  
(+ saving, - cost) 

  285 

 22 000 

 22 000 
 22 000 

  290 
  575 
  3 

 135 800 

6 270 000 

6 380 000 
12 650 000 
- 407 400 

24 892 600 

Source: Own assessment based on studies and assumptions 

Table 23: Summary of average incremental annual costs and benefits of PO4 (PO1, PO2 and PO3 
not included) 

SEP implementers 

SEP owners 

Costs 
Benefits 
Net 
Costs 
Benefits 
Net 

Total net benefit 
* concerns non-EU implementers with subsidiaries in the EU 
Source: Own assessment based on studies and assumptions 

EU 

- 101 850 
6 270 000 

non-EU 

- 101 850 
6 380 000 

Total 

- 203 700 
12 650 000 

6 168 150 

6 278 150 

12 446 300 

- 30 555 
1 897 500 

- 173 145 
10 752 500 

- 203 700 
12 650 000 

1 866 945 
8 035 095 

10 579 355 
16 857 505 

12 446 300 
24 892 600 

Table  24:  Average  total  annual  costs  and  benefits  of  option  PO4  by  main  categories  of  affected 
parties and their origin (including PO1, PO2 sub-option ii) and PO3) 

SEP implementers 

Costs 
Benefits 
Net 

EU 

- 771 850 
12 886 000 

non-EU 

- 771 850 
13 027 000 

Total 
-1 543 700 
25 913 000 

12 114 150 

12 255 150 

24 369 300 

303 It should be noted that it is expected that SEP holders will provide ex-ante aggregate royalty themselves in most cases, 
and expert panel will be used only in case they did not or when there is a major disagreement on the level announced. 
304 Cost savings may result from the fact that the Competence Centre’s guidance on an aggregate royalty reduces the need 
for  parties  to  carry  out  their  own  assessments  of  such  an  aggregate  royalty,  or  from  the  fact  that  the  availability  of 
objective benchmarks for a FRAND rate reduces the need for other expenses related to the  conduct of SEP licensing 
negotiations. 

108 

 
 
 
 
 
 
 
 
 
 
 
 
                                                 
SEP owners 

Costs 
Benefits 
Net 
Subtotal (net effect for implementers and owners) 
EPO/NPO benefit 

EU 

-8 125 080 
3 794 250 

-4 330 830 
7 783 320 

29 000 000 

non-EU 

-46 042 120 
21 500 750 

-24 541 370 
-12 286 220 

Total 
-54 167 200 
25 295 000 

-28 872 200 
-4 502 900 

29 000 000 

Total net benefit 

36 783 320 

-12 286 220 

24 497 100 

* concerns non-EU implementers with subsidiaries in the EU 
Source: Own assessment based on studies and assumptions 

PO5: SEP clearing house 

Costs: 

Competence Centre’s initial costs would include set up of clearing house’s process, criteria, accounts, 
payments  system  and  verification  system.  IT  cost  would  be  also  connected  to  the  payment  and 
royalties’ distribution system. These are estimated at EUR 260 000 and EUR 40 000 respectively. 

Running costs of the clearing house would include managing all the payments and license agreements 
including  handling  incoming  payments  from  implementers,  transferring  proportionate  amounts  to 
SEP holders, handling updates to  information  (e.g. on expected sales), control and verification of 
payments. They are estimated at EUR 220 000 per year. Additionally, there would be IT maintenance 
and depreciation of one-off costs of EUR 8 000 and EUR 30 000 respectively. Together the average 
costs are estimated at EUR 258 000 per year.  

In case SEP holders cannot reach an agreement over allocation of aggregate royalty among them, 
they can request assistance of the Centre’s facilitator. Such request is expected to occur on average 
1.5 times per year over a decade. Cost of conciliation is borne by SEP holders and amounts to EUR 
120 000 (one conciliation, equivalent to remuneration for an average 240 hours of conciliator’s work 
at EUR 500 per hour). 
With  expected  average  annual  number  of    payments  at  around  3 000  during  a  decade,305  the 
transaction processing cost to be borne by the implementer per payment is estimated at around EUR 
95.  

Benefits: 

Clearing  house  can  strongly  reduce  the  need  for  SEP  license  negotiations.  On  top  of  negotiation 
savings/benefits delivered by PO2 and PO4 it is expected to help to reduce the remaining 70% of an 
average negotiation cost of 108 000 EUR. While the demand for use of clearing house services will 
depend on the implementer’s assessment of its ability to get a better deal in bilateral negotiations, we 
estimate that the majority of implementers will want to use the clearing house for at least some of the 
standards they have. The reduction in number of licensing negotiations is thus estimated at 250 for 
EU based firms and 250 for non-EU based firms with subsidiaries in the EU.  

Taking also costs into account the net benefits/savings delivered by this option are estimated at EUR 
76 million per year. See table below for a summary. 

305 Assuming one payment per year, and that nearly all implementers that is around 300 EU-based and around 250 non-
EU based (with EU subsidiaries) will use this facility for at least some of their license agreements. Note that the number 
of payments cumulate as in subsequent years not only new licenses are added but also payments for the existing ones 
have to be made. 

109 

 
 
 
 
                                                 
Table  25:  Average  incremental  annual  costs  and  benefits  of  PO5  (PO1,  PO2,  PO3  and  PO4  not 
included) 

PO5 
Negotiation savings for EU 
implementers 
Negotiation savings for non-EU 
implementers with subsidiaries in the 
EU 
SEP holders savings 
Conciliators assistance in SEP 
holders’ negotiations on division of 
aggregate royalty (not obligatory, on 
demand only) 
Payment fees per year 

total 

no. licensing 
negotiations 

benefit 

cost 

Total  
(+ saving, - cost) 

250 

 75 600 

18 900 000 

250 
  500 

 75 600 
 75 600 

  1.5 
 2 750 

120 000 
94 

18 900 000 
37 800 000 

- 180 000 
- 258 000 

75 162 000 

Source: Own assessment based on studies and assumptions 

Table 26: Summary of average incremental annual costs and benefits of PO5 (PO1, PO2, PO3 and 
PO4 not included) 

SEP implementers 

SEP owners 

Costs 
Benefits 
Net 
Costs 
Benefits 
Net 

Total net benefit 
* concerns non-EU implementers with subsidiaries in the EU 
Source: Own assessment based on studies and assumptions 

EU 

- 129 000 
18 900 000 

non-EU 

- 129 000 
18 900 000 

Total 

- 258 000 
37 800 000 

18 771 000 

18 771 000 

37 542 000 

- 27 000 
5 670 000 

- 153 000 
32 130 000 

- 180 000 
37 800 000 

5 643 000 
24 414 000 

31 977 000 
50 748 000 

37 620 000 
75 162 000 

Table  27:  Average  total  annual  costs  and  benefits  of  option  PO5  by  main  categories  of  affected 
parties and their origin (including PO1, PO2 sub-option ii), PO3 and PO4) 

SEP implementers 

Costs 
Benefits 
Net 
Costs 
Benefits 
Net 
Subtotal (net effect for implementers and owners) 
EPO/NPO benefit 

SEP owners 

EU 

- 900 850 
31 786 000 

non-EU 

- 900 850 
31 927 000 

Total 
-1 801 700 
63 713 000 

30 885 150 

31 026 150 

61 911 300 

-8 152 080 
9 464 250 

-46 195 120 
53 630 750 

1 312 170 
32 197 320 

29 000 000 

7 435 630 
38 461 780 

-54 347 200 
63 095 000 

8 747 800 
70 659 100 

29 000 000 

* concerns non-EU implementers with subsidiaries in the EU 
Source: Own assessment based on studies and assumptions 

Total net benefit 

61 197 320 

38 461 780 

99 659 100 

Competence Centre – summary of costs and fees 

Anticipated costs of the  Competence Centre were enumerated  above  for  each option, this section 
summarises these costs. It also summaries fees that are expected to cover the Centre’s costs. 

110 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 28: One-off and recurrent costs of the Competence Centre per option and approximation of 
fees to break even.  

PO1 

PO2 (sub-option ii) 

PO3 

PO4 

PO5 

Preferred 
option  
PO1 to PO4 

One-off costs (EUR thousands) 

One off 

One off IT 

Total One off 

760 

50 

810 

710 

700 

1 410 

130 

40 

170 

0 

25 

25 

260 

40 

300 

1 600 

815 

2 415 

PO1 

PO2 (sub-option ii) 

PO3 

PO4 

PO5 

Year 1 

Year 2 
to 10 

10-year-
avg. 

Preferred 
option  
PO1 to 
PO4** 

Recurrent costs (EUR thousands) 

running costs 

IT maintenance 

depreciation of One-off* 

430 

3 400 

10 

81 

140 

141 

810 

140 

141 

1 069 

140 

141 

total 

521 

3 681 

1 091 

1 350 

30 

8 

17 

55 

40 

5 

  2.5 

220 

8 

30 

 1 569 

  163 

  241.5 

  47.5 

258 

 1 973.5 

Fee calculations (EUR) -  to cover Centre’s costs (without external experts costs) 

Action 

Patent registrations: 

Concili
ations 

Expert 
opinion 

Payme
nts 

Quantity per year 

72 000 

7 200 

13 680 

70 

3 

2 750 

Fee  per  case***  (EUR,  
rounded) 

Free 
**** 

50 

150 

100 

800 

15 800 

95 

* One-off cost depreciated over 10 years; ** PO2 using 10-year-average; *** total recurrent cost divided by quantity per year**** 
cost of PO1 (including additional external cost of EUR 90 000 for studies) will be covered by fees to access the PO2 register: 
estimated at EUR 1 700 for large and EUR 850 for SMEs. 
Source: Own assessment based on EUIPO input 

Summary of estimated average remunerations of external experts: 

  PO1: studies: avg. EUR 30 000 per study 
  PO2: essentiality checks: EUR 5 000 per check 
  PO3: conciliation: EUR 20 000 per average conciliation 
  PO4: expert opinion: EUR 120 000 per average opinion 
  PO5:  conciliator  to  recommend  aggregate  royalty  allocation  method:  EUR  120  000  per 

average recommendation 

Impacts difficult to assess – impact on royalties income of SEP holders and on price of SEP 
embedding products for EU customers 

There are impacts which are difficult to assess, such as whether or not this initiative will have impact 
on  the  average  royalties  firms  will  have  to  pay  for  implementing  standards,  the  number  of  SEP 
holders actively licensing their SEPs, or the number of implementers paying royalties. Furthermore, 
other market developments not related to this initiative (e.g. rise of IoT, new patent pools/patent pools 
policies)  may  influence  both  royalties  and  number  of  implementers.  These  impacts  may  further 
determine  indirect  effects,  such  as  effects  on  firms’  incentives  to  contribute  their  innovative 

111 

 
 
 
 
 
 
 
 
 
 
technologies  to  standards  development,  or  implement  standards  potentially  subject  to  SEPs  and 
innovate at the product level. 
Worldwide royalty income on cellular standards is estimated at USD 18 billion in 2015306 and if the 
share  of  EU  licensees  in  that  royalty  burden  is  proportional  to  the  EU  GDP  in  the  world 
(approximately 1/6) then EU firms pay approximately USD 3 billion (around EUR 3 billion assuming 
currency parity) on SEP royalties each year.  

In case global royalty levels (income) would go down by just 1% (or number of paying implementers 
globally  would  go  down  by  1%),  the  savings  for  the  EU  implementers  are  estimated  at  EUR  30 
million and almost equivalent or slightly lower figure represents losses of the EU SEP holders.307 In 
case royalty levels increase, the impacts will be reversed. Thus, the impacts of changes to global SEP 
royalty rates (or change in number of implementers paying current levels of royalties) on EU based 
SEP holders and implementers largely cancel each other out. A different redistribution of economic 
surplus may, however, affect  innovation  and standard implementation  incentives in  ways that are 
difficult to predict. 

In case change of royalty levels (or change in number of implementers) is limited only to the EU 
based firms, the difference between impacts on the EU based implementers and SEP holder may be 
more pronounced. For instance, if the share of SEPs held by EU based SEP holders continues to go 
down and/or share of EU licensed implementers will increase, a cumulative negative impact on all 
EU implementers will be more significant than the cumulative positive impact on the EU based SEP 
holders  (especially  if  the  changes  are  significant,  e.g.  resulting  in  double  digit  change  of  royalty 
income). 

Impact on customers 

Many implementers currently use standards without having a license. Thus, effect on availability of 
SEP embedding products is unknow. We expect that lower transaction costs will promote license-
based applications and more implementers will take a license. It may be just a shift from unlicensed 
products  to  licensed  products,  or  real  increase  in  technology  take-up  resulting  in  more  SEP 
embedding products on the market. Independently of the effects of this proposal, rise of the Internet 
of Things (IoT) applications is expected to increase the number of SEP embedding products on the 
market. 

Impact on SEP price (royalties paid by implementers) is unknow as described above. Announcements 
of  aggregate  royalties  and  FRAND  determination  process  may  (but  do  not  have  to)  contribute  to 
lowering the royalties paid by implementers.  

Consequently, we have two effects working in different directions: i) potentially more firms taking a 
license  (increasing  implementers  costs)  and  ii)  potentially  lower  royalties  paid  (decreasing 
implementers cost). Finally, the impact on prices for final customers will depend on the competition 
on a given product market: any change in royalties paid by producers may be internalised by a firm 
or passed on to final customers. 

Impacts of the preferred option 

The  below  table  presents  a  summary  of  quantifiable  costs  and  benefits  brought  by  the  preferred 
option. The option is expected to produce annual savings of around EUR 24.5 million per year during 
a decade. 

and 

SEP  Licensing:  A  Report 

306  CRA,  Régibeau,  P.,  De  Coninck,  R.  and  Zenger,  H.,  Transparency,  Predictability,  and  Efficiency  of  SSO-based 
57, 
Standardization 
https://ec.europa.eu/docsroom/documents/48794?locale=en.  
307 Since we estimate revenue of the EU based SEP holder using an approximate share of their SEPs in the total number 
of declared SEPs (15%) which is similar to the EU GDP share in global economy used to calculate implementers’ savings. 
112 

the  European  Commission, 

2016, 

for 

p. 

 
                                                 
Table 29:  Ten-year-average annual  costs and benefits  of  the preferred option PO4 (consisting of 
incremental costs and savings of each option it consists of) 

no. affected 

benefit 

cost 

Total  
(+ saving, - 
cost) 

PO1 (guidelines and Centre) 
SME trainings 
Implementers EU 

Non EU implementers with EU 
subsidiaries 
SEP owners 

judges/legal counsels/other 

subtotal PO1 

no. licensing 
negotiations 

  No. of entities 

PO2 (register, 50-100+sample) 
Implementers large EU 
Implementers SME EU 
Non EU implementers with EU 
subsidiaries 
SEP owners 

Access fee large implementers (EU and 
non-EU with subsidiaries in the EU) 
Access fee SME implementers 
judges 

  80 
  230 

  190 

  261 

  480 

  230 
  55 

  290 
  575 

  340 
  40 
  35 

 1 500 
 5 000 

 5 000 

 5 000 

 5 000 

 10 800 
 5 400 
 10 800 

 10 800 

10 800 

0 
0 

0 

0 

0 

 1 700 
 1 500 
  0 

  patents 

72 000 patent families registered initially, 10% of that 
in subsequent years 
13 550 checked initially (+885 rechecked), 10% in 
subsequent years 

SEP holder (registration fee) 

SEP holder (essentiality checks) 
SEP holder, cost of patents registration 
and maintenance  
SEP holder claim charts 
update/preparation 
SEP holder form filling 
EPO and NPO change in patent revenue 
subtotal: additions of PO2 

PO3 (conciliation) 
Cases (that will not go to court) 
Help in FRAND determination 
Fees 

subtotal: additions of PO3 

PO4 (aggregate royalty) 
Negotiation savings implementer EU 
Negotiation savings implementer non-
EU with subsidiaries in the EU 

SEP holders 
Imp and SEP hold - Expert panel 

50% of patents updated 
72 000 in 1st year, 10% thereafter 

5 000 
200 

no. affected 

no. licensing 
negotiations 

  24 
  35 
  70 

  285 

  290 

  575 
  3 

113 

 170 000 
 97 200 

 20 800 

 22 000 

 22 000 

 22 000 

 135 800 

 120 000 
1 150 000 

 950 000 

1 305 000 

2 400 000 

5 925 000 

2 484 000 
 297 000 
3 132 000 

6 210 000 

- 578 000 
- 60 000 
378 000 

-1 350 000 

-13 713 250 

-29 000 000 

-6 436 250 
-2 736 000 
29 000 000 
-12 346 500 

4 080 000 
3 402 000 
-1 456 000 

6 026 000 

6 270 000 

6 380 000 

12 650 000 
- 407 400 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
subtotal: additions of PO4 

no. affected 

benefit 

cost 

Benefits/Savings of the preferred option PO4  
Source: Own assessment based on studies and assumptions 

Total  
(+ saving, - 
cost) 

24 892 600 

24 497 100 

The majority of quantifiable benefits will accrue to standards implementers, while SEP holders are 
expected to face additional costs (mainly due to PO2). The European patent office/national patent 
offices are also expected to benefit from new patent revenue. The tables below summarise the effects 
of the preferred option i) in the initial year (when there will be significantly more patents registrations 
and essentiality checks); ii) in  the subsequent  years (when  the  number of patent registrations and 
essentiality checks will account for approximately 10% of the initial numbers) and iii) as a ten-year-
average annual costs and benefits – which is used throughout the document. 

Table 30: Average annual costs and benefits of the preferred option PO4 in the initial year by main 
categories of affected parties and their origin 

SEP implementers 

Costs 
Benefits 
Net 
Costs 
Benefits 
Net 
Subtotal (net effect for implementers and owners) 
EPO/NPO benefit 

SEP owners 

EU 

- 771 850 
12 886 000 

non-EU 

- 771 850 
13 027 000 

Total 
-1 543 700 
25 913 000 

12 114 150 

12 255 150* 

24 369 300 

-23 109 405 
3 794 250 

-130 953 295 
21 500 750 

-19 315 155 
-7 201 005 

29 000 000 

-109 452 545 
-97 197 395 

-154 062 700 
25 295 000 

-128 767 700 
-104 398 400 

29 000 000 

* concerns non-EU implementers with subsidiaries in the EU 
Source: Own assessment based on studies and assumptions 

Total net benefit 

21 798 995 

-97 197 395 

-75 398 400 

Table 31: Average  annual  costs and benefits  of the preferred option PO4 in  subsequent  years  by 
main categories of affected parties and their origin 

SEP implementers 

Costs 
Benefits 
Net 
Costs 
Benefits 
Net 
Subtotal (net effect for implementers and owners) 
EPO/NPO benefit 

SEP owners 

EU 

- 771 850 
12 886 000 

non-EU 

- 771 850 
13 027 000 

Total 
-1 543 700 
25 913 000 

12 114 150 

12 255 150* 

24 369 300 

-6 460 155 
3 794 250 

-36 607 545 
21 500 750 

-2 665 905 
9 448 245 

29 000 000 

-15 106 795 
-2 851 645 

-43 067 700 
25 295 000 

-17 772 700 
6 596 600 

29 000 000 

* concerns non-EU implementers with subsidiaries in the EU 
Source: Own assessment based on studies and assumptions 

Total net benefit 

38 448 245 

-2 851 645 

35 596 600 

Table  32:  Ten-year-average  annual  costs  and  benefits  of  the  preferred  option  PO4  by  main 
categories of affected parties and their origin 

SEP implementers 

Costs 
Benefits 
Net 

EU 

- 771 850 
12 886 000 

non-EU 

- 771 850 
13 027 000 

Total 
-1 543 700 
25 913 000 

12 114 150 

12 255 150* 

24 369 300 

114 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SEP owners 

Costs 
Benefits 
Net 
Subtotal (net effect for implementers and owners) 
EPO/NPO benefit 

EU 

-8 125 080 
3 794 250 

-4 330 830 
7 783 320 

29 000 000 

non-EU 

-46 042 120 
21 500 750 

-24 541 370 
-12 286 220 

Total 
-54 167 200 
25 295 000 

-28 872 200 
-4 502 900 

29 000 000 

Total net benefit 

36 783 320 

-12 286 220 

24 497 100 

* concerns non-EU implementers with subsidiaries in the EU 
Source: Own assessment based on studies and assumptions 

Analysing geographical distribution of quantifiable impacts of the  preferred option in the EU, the 
benefits  should  outweigh  the  cost  in  case  of  companies  from  all  but  three  (FI,  SE  and  LU)  EU 
Member States.  

Table 33: Ten-year-average annual impact on costs and benefits of the preferred option PO4 by main 
categories of affected parties and per EU Member States. 

Member State 
DE 
IT 
FR 
ES 
NL 
PL 
CZ 
BE 
HU 
AT 
IE 
EL 
RO 
SK 
PT 
BG 
HR 
DK 
SI 
LT 
MT 
EE 
LV 
CY 
LU 
SE 
FI 

SEP Owners 
- 363 162 
- 6 682 
- 73 497 

- 259 402 

- 7 075 

- 53 846 
-1 413 739 
-2 153 427 
-4 330 830 

Total 

SEP Implementers 
3 274 007 
1 625 624 
1 316 755 
 933 108 
 916 852 
 562 466 
 399 904 
 256 849 
 253 597 
 211 331 
 201 577 
 188 572 
 182 070 
 169 065 
 165 814 
 133 301 
 94 286 
 61 774 
 58 522 
 52 020 
 42 266 
 26 010 
 13 005 
 6 502 
 16 256 
 487 687 
 464 928 
12 114 150 

Net impacts 
2 910 844 
1 618 942 
1 243 258 
 933 108 
 657 450 
 562 466 
 399 904 
 256 849 
 253 597 
 211 331 
 194 503 
 188 572 
 182 070 
 169 065 
 165 814 
 133 301 
 94 286 
 61 774 
 58 522 
 52 020 
 42 266 
 26 010 
 13 005 
 6 502 
- 37 589 
- 926 052 
-1 688 499 
7 783 320 

Assumptions: Distribution of cost per SEP holder according to estimated share of declared SEPs, distribution of benefits among 
implementers according to estimated number of companies affected per country (see Annex A5.1) 
Source: Own assessment based on studies and assumptions 

The following table summarises the fees and other costs of the preferred option on market 
participants. 

Table 34: Summary of fees and other cost of the preferred option 

Action: 
Costs introduced by regulation 
Patent registration 
Essentiality checks 

Approx. cost 

Total avg. annual cost (€ million) 

€100 per patent 
€ 5 000 per check 

115 

1.4 
13.7 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Action: 
Conciliation fees and conciliator 
remuneration 
Aggregate royalty determination process 

Register access fee (basic access for free) 
Total fees and expert remuneration: 

Firms’ internal costs to comply 
Filling forms (OIOO eligible cost) 
Update claim charts 

Total internal costs: 

Approx. cost 
€800 fee of EUIPO, avg. €20 000 
fee of conciliator 
€15 800 fee of EUIPO, avg. 
€120 000 fee of conciliators panel 
€1700 large firms, €850 SMEs 

€200 per patent 
€2 500 per patent 

Source: Own assessment based on studies and assumptions 

Total avg. annual cost (€ million) 
1.5 

0.4 

0.6 

2.7 
6.4 

17.6 

9.1 

Are these costs significant for SEP holders? 

Looking at the cost of the preferred option especially on SEP owners, one should put these numbers 
into perspective. For instance, analysing just the cost applicable to the EU based SEP owners, which 
amounts to around EUR 8.1 million per year (see Table 32), the share applicable to the SE and FI 
SEP holders amounts to around EUR 6.7 million (as they own approximately 80% of EU SEPs). This 
cost will fall on two EU firms, Nokia and Ericsson. As discussed in Annex A5.1 the combined annual 
revenue of these firms amounts to EUR 45 billion, and R&D expenditures to EUR 8 billion. The 
additional costs due to the preferred option will constitute respectively around 0.015% of the revenue 
and 0.084% of R&D budget. Thus, it seems affordable to these firms.308  

As regards other SEP holders also from outside of the EU, the cost of essentiality check amounts to 
approximately 11% of the fees that should be paid for maintaining a European Patent for 20 years in 
four Member States; 0.4% of the value of an essential patent if its use is limited only to the territory 
of the EU and 0.06% when it is used globally. 

Table 35: Cost of essentiality check in perspective of other costs or incomes on SEP 

Essentiality check per patent 
Cost of maintaining a European Patent for 20 years in four 
Member States 
Value of an essential patent to SEP holder 
(net present value for 10 years of collecting royalties)  
Value of an essential patent to SEP holder (limited to EU only) 
(net present value for 10 years of collecting royalties) 

EUR 

% of cost of an 
essentiality check 

 5 000 

100.0% 

 44 420 
Avg. 8 000 000 
(EUR 6 to 10 million)  
Avg. 1 350 000 
(EUR 1 to 1.7 million) 

11.3% 

0.06% 

0.4% 

Source: EPO for European patent: https://www.epo.org/applying/european/unitary/unitary-patent/cost.html; Baron, J., Essentiality 
Checks for Potential SEPs – Framework for Assessing the Impact of Different Policy Options, European Commission, DG GROW, 
2023, p.45 on the value of an essential patent 

The next figure compares the total average annual cost of the new SEP system (excluding benefits) 
for SEP holders to the total annual estimated revenues on cellular standards. 

308 Additionally, these two firms incur large expenditures on SEP related litigations. Thus, they could benefit more than 
average firm from lowering of litigation costs brought by the preferred option. 

116 

 
 
 
                                                 
Figure 17: Total average annual costs (for SEP owners) of the new system in comparison to estimated 
annual revenues from cellular standards (EUR million + in brackets: cost of SEP initiative as % of 
a value of a given line) 

* CRA(2016), ** Sidak (2016), *** using EU GDP as a proxy (approx. 1/6 of 18 billion) 
Note: USD values converted to EUR at 1:1. 
Source: Own calculation based on studies 

117 

54 (100%)3 000 (2%)18 000 (0.3%)22 000 (0.2%)SEP initiative approximate annual costs for SEP ownersApproximate royalties from cellular standards in the EU***Approximate royalties from cellular standards in the world*Approximate royalties from cellular standards in the world* +approximate non-cash value of cross licenses** 
 
 
 
A7.2 Aggregate royalty 

Results of Literature Analysis  

An aggregate royalty for a standard is the royalty due for all SEPs on the standard. It is the starting 
point in a top-down determination of the royalty to be paid for a given portfolio. Such an approach 
was taken in the landmark decision by the U.S. District Court for the Central District of California in 
the litigation between TCL Communications and Ericsson, which “offers a strong endorsement of 
‘top down’ methodologies for the calculation of SEP royalties” (Contreras, 2017a).309 As Contreras 
(2017b, p. 690)310 notes, “[t]op-down approaches avoid many drawbacks associated with bottom-up 
approaches in which royalties for individual SEPs are assessed, often in an inconsistent and piecemeal 
manner, without regard for the other SEPs that cover the standard.”  

Economically, an aggregate royalty makes sense because implementers value the standard as a whole, 
not a collection of inventions represented by some incomplete portfolio of SEPs. It may also help to 
overcome  problems  of  royalty  stacking,  a  modern  version  of  Cournot’s  (1838)311  well-known 
problem  that  the  independent  pricing  of  complementary  goods  –  here:  licenses  to  different  SEP 
portfolios on the same standard – leads to excessive prices, above those that a single party offering 
all those goods jointly would charge. Geradin et  al. (2008)312, in “assess[ing] the case for royalty 
stacking within standards […] find the evidentiary support weak at best.” In contrast, Lemley and 
Shapiro (2007)313 “using third-generation cellular telephones and Wi-Fi as leading examples, […] 
illustrate that royalty stacking can become a very serious problem, especially in the standard-setting 
context where hundreds or even thousands of patents can read on a single product standard.” A clear 
illustration of the problem of royalty stacking is provided by the decision of the U.S. District Court 
of  the  Western  District  of  Washington  at  Seattle  in  Microsoft  Corp.  v.  Motorola,  Inc.  in  2013. 
Commenting on Motorola’s royalty demands for its SEPs on the Wi-Fi (802.11) standard, the court 
noted: “If each of these 92 entities [owners of Wi-Fi SEPs] sought royalties similar to Motorola's 
request of 1.15 % to 1.73% of the end-product price, the aggregate royalty to implement the 802.11 
Standard, which is only one feature of the Xbox product, would exceed the total product price. The 
court concludes that a royalty rate that implicates such clear stacking concerns cannot be a RAND 
royalty  rate.”314  Contreras  (2015)315  makes  an  observation  that  might  reconcile  the  contradictory 
pieces  of evidence  above:  “A  relevant  factor in  determining  the incremental value of a particular 
patented technology must be the number of additional patented technologies included in the same 
product. […] What is less relevant is whether the accused infringer is then paying royalties to other 
patent  holders,  and  in  what  amounts.”  This  logic  is  plausible  since,  if  some  SEP  holders  do  not 

US 

Royalty 

FRAND 

Decision. 

December 

Top-Down 

Patently-O, 

309 Contreras, J. L., ‘TCL v. Ericsson: The First Major US Top-Down FRAND Royalty Decision. Ericsson: The First 
Major 
2017, 
https://dc.law.utah.edu/cgi/viewcontent.cgi?article=1083&context= 
scholarship.  
310  Contreras,  J.  L.,  ‘Aggregated  royalties  for  top-down  FRAND  determinations:  revisiting  “joint  negotiation”’,  The 
Antitrust Bulletin, 2017, Vol. 62, Issue 4, pp. 690-709, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3051502. 
311  Cournot,  A.  A.,  Recherches  sur  les  principes  mathématiques  de  la  théorie  des  richesses,  L.  Hachette,  1838, 
https://gallica.bnf.fr/ark:/12148/bpt6k6117257c.texteImage. 
312 Geradin, D., Layne-Farrar, A., and Padilla, A. J., ‘The complements problem within standard setting: Assessing the 
evidence on royalty stacking’, Boston University Journal of Science & Technology Law, January 2008, Vol. 14, Issue 2, 
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=949599.  The  authors  acknowledge  financial  support  from 
Qualcomm. 
313 Lemley, M. A., and Shapiro, C., ‘Patent holdup and royalty stacking’, Texas Law Review, 2007, Vol. 85, pp. 1991-
2049, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=923468. 
314 Microsoft Corp. v. Motorola, Inc., Findings of Fact and Conclusions of Law, 2013 U.S. Dist. W.D. Wash., Apr. 25, 
2013, at 456. 
315  Contreras,  J.  L.,  ‘Standards,  royalty  stacking  and  collective  action’,  CPI  Antitrust  Chronicle,  March  2015, 
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2587954. 

118 

 
                                                 
demand royalties, there is no reason  why those should  be collected by other SEP holders that do 
enforce their patents; rather, consumers should benefit through lower prices that will likely result 
from a reduced SEP royalty burden. In any case, no matter if the problem of royalty stacking is weak 
or serious, an explicit aggregate royalty should help to mitigate it.  

Ex-ante aggregate royalty 

As aggregate royalty would be determined before the development of the standard starts potential 
contributors  could  decide  whether  they  would  like  to  contribute  their  technologies  to  the 
standardisation process knowing the extent to which they may be rewarded if their contribution is 
accepted into the standard. Further, having more certainty with such ex-ante aggregate royalty can 
help address the issue of royalty stacking316 and possibly resolve any risks of hold-up, to some extent.  

The ex-ante aggregate royalty does not create price competition between technologies competing for 
inclusion into the standard (this  is  an aggregate royalty).  Technical  contributions will be selected 
based  on  technical  merit.  There  is,  thus,  less  pressure  on  the  individual  potential  royalties.  The 
likelihood that individual contributors will be dissuaded from contributing is lower.  

“…  coordinated  pricing  of  strict  complements  may  allow  limiting  potentially  excessive  royalty 
requests on the part of individual licensors, thereby leading to lower final consumer prices and hence 
more successful commercialization of end products. This mutual benefit is broadly recognised by all 
parties.”317 

Defining  an  aggregate  royalty  before  a  standard  comes  to  the  market  benefits  both  standard 
contributors and standard implementers as it increases business certainty in terms of cost planning 
and potential benefits. It is, however, very difficult to establish a fair value for a standard before it is 
even developed, and to predict the success, nature and scope of implementations. There may also be 
a lack of visibility to future products that may use the standard, as is the case with emerging IoT 
segments  and  their  use  of  connectivity  standards,  for  example.  As  a  result,  the  ex-ante  aggregate 
royalty may either overestimate the significance of the technology (in which case the standard will 
not be used, unless the aggregate royalty is reviewed and adapted) or underestimate (in which case, 
the standards will lose potentially superior technologies which were not contributed because of the 
low incentives to do so). A mechanism should therefore exist to adjust such ex-ante aggregate royalty 
once the standard is actually being implemented. 

316 In the literature on vertically related markets the royalty stacking problem is known as the double marginalization 
problem: the pub would mark up on the price at which it buys the beer from brewer without taking into consideration that 
this reduces the sales for the brewers. Consequently, beer prices to pub customers should go up when brewers are forced 
to divest pubs. 
317 For detailed explanation please see CRA, Régibeau, P., De Coninck, R. and Zenger, H., Transparency, Predictability, 
and  Efficiency  of  SSO-based  Standardization  and  SEP  Licensing:  A  Report  for  the  European  Commission,  2016, 
Section 5.1.2, pp. 43-45, https://ec.europa.eu/docsroom/documents/48794?locale=en. 

119 

 
 
 
                                                 
A7.3 WTO/TRIPS compatibility 

To ensure effective IPR protection on an international level, the Agreement on trade related aspects 
of intellectual property (TRIPS) is an essential part of the WTO agreement. The specifics of the rights 
of the patent holder are outlined in Articles 27, 28, 41 and 44 of the TRIPS agreement. Article 28(1) 
TRIPS establishes the basic rights of the patent holder, which is to preclude others without consent 
from the acts of making, using, selling, offering for sale or importing the patented product, or using 
the patented process (including importing products made with the process).  

The imposition of an obligation to condition SEP enforcement upon registration in the SEP register 
and  to  participate  in  a  FRAND  determination  procedure  before  court  litigation  commences 
(conciliation) could be seen as limiting the right of SEP holders to prevent the use of the SEP owner’s 
patents without their consent.  

However, the exclusive rights of the patent owner are not absolute rights, just like other property 
rights. According to Article 30 TRIPS, limited exceptions to the exclusive rights conferred by a patent 
in Article 28(1) TRIPS may be instituted by WTO Members. An exception to the exclusive rights 
conferred by a patent is provided for in Article 30 TRIPS and should comply with three conditions: 
(a) it has to be “limited”, (2) it should not “unreasonably conflict with a normal exploitation of the 
patent”, and (3) it should not “unreasonably prejudice the legitimate interests of the patent owner, 
taking account of the legitimate interests of third parties”. Additionally, TRIPS includes objectives 
to promote technological innovation and the dissemination of technology to the mutual advantage of 
the patent (SEP) holder and the user of the technology (Article 7) and principles of preventing the 
abuse of intellectual property rights and adopting measures for public interest reasons (Article 8). 

Interpretations of Article 30 TRIPS exceptions 

The scope of permitted exceptions under Article 30 is the subject of some controversy and has been 
interpreted only in one WTO dispute. The Panel in Canada - Patents318 acknowledged the object and 
purpose of the TRIPS in Articles 7 and 8, but it did not apply them to interpret Article 30. The Panel's 
assessment  focused  on  whether  the  exceptions  were  ‘limited’. The  Panel  concluded  that  the  term 
‘limited exception’ enabled only a ‘narrow curtailment of the legal rights’ of a patent holder. It is 
argued  that  the  Panel's  interpretation  of  the  term  ‘limited’  of  Article  30  being  a  quantitative 
assessment,  devoid  of  normative  considerations  (including  reasons  justifying  the  exception) 
artificially constrained the scope of Article 30319. But, the Panel noted also that "the exact scope of 
Article 30's authority will depend on the specific meaning given to its limiting conditions." To this 
end, the goals enumerated in Articles 7 and 8.1 are relevant when doing so.  

It should be noted that the Australia - Tobacco Plain Packaging decisions (Australia-TPP)320, where 
Articles 7 and 8 TRIPS were relied upon to interpret the term ‘unjustifiably’ in the special measures 
provisions on trademarks under Article 20 TRIPS. The Panel found that public interest objectives 
stated in Article 8(1), including public health, are legitimate objectives permitting encumbrance on 
trade mark use.321 Since the Australia-TPP Panel referred to the report in Canada - Patents regarding 

2020, 

Studies, 

318 Panel Report, Canada-Patent Protection of Pharmaceutical Products, WTO WT/DS114/R of 17 March 2000. 
319 Geiger, C., and Desaunettes-Barbero, L., ‘The Revitalisation of the Object and Purpose of the TRIPS Agreement: The 
Plain  Packaging  Reports  and  the  Awakening  of  the  TRIPS  Flexibility  Clauses’,  Centre  for  International  Intellectual 
36, 
Property 
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3556585. 
320  Panel  Report  in  Australia–Certain  Measures  Concerning  Trademarks,  Geographical  Indications  and  other  Plain 
Packaging  Requirements  Applicable  to  Tobacco  Products  and  Packaging,  cases  WT/DS435/R,  WT/DS441/R, 
WT/DS458/R, WT/DS467/R of 28 June 2018; Appellate Body Report, case WT/DS435/R, WT/DS441/R of 9 June 2020. 
321 Tesoriero, A.,‘Using the flexibilities of Article  30 TRIPS to implement patent exceptions in pursuit of Sustainable 
Development  Goal  3’,  The  Journal  of  World  Intellectual  Property,  2022,  Vol.  25,  Issue  2,  pp.  516-535, 
https://onlinelibrary.wiley.com/doi/full/10.1111/jwip.12239#jwip12239-note-0018. 

Research 

2020-01, 

Paper 

No. 

p. 

120 

 
                                                 
the interpretation of the terms of Article 30 of the TRIPS Agreement in light of its object and purposes 
of Articles 7 and 8, its findings may provide useful context regarding the interpretation of Article 30 
TRIPS. The plain packaging measure restricted the use of the trademark, the TRIPS Agreement does 
not grant a right to use the trademark. The Panel concluded that the right of the trademark owner to 
prevent third parties not having its consent from using the trade mark, which is the right granted by 
Article  16  of  the  TRIPS  Agreement,  was  not  limited.  This  was  an  important  element  to  consider 
whether the measure was TRIPS compliant. 

The current initiative restricts the right of the patent owner to prevent use without consent but does 
so only for a limited period of time. 

In the SEP context 

Certain proposed limitations on the rights of a SEP owner, including requirements to (i) register its 
patents  in  a  designated  register  prior  to  enforcement,  and  (ii)  engage  in  a  specified  FRAND 
determination  process  before  enforcing  its  rights,  would  be  consistent  with  the  objectives  of  the 
TRIPs agreement to promote technological innovation and the dissemination of technology to the 
mutual  advantage  of  the  SEP  holder  and  the  user  of  the  technology  (Article  7).  It  would  also  be 
consistent  with  its  principles  of  preventing  the  abuse  of  intellectual  property  rights  and  adopting 
measures for public interest reasons (Article 8):  

-  Standardisation  is  necessary  to  ensure  interoperability  and  to  promote  the  uptake  of  modern 
technologies. Standards promote technological development which is in the public interest (as 
acknowledged by Article 8 TRIPs). 

-  Standards, including those that include patented technology, promote the dissemination of that 

technology (as formulated in Article 7 TRIPS). 

Therefore, it seems to be justified to interpret the findings of the Panel in Canada - Patents bearing 
in mind the goals and limitations of Articles 7 and 8 and in light of the specific context of SEPs. 

An interpretation of Article 30 informed by Articles 7 and 8 would make strike an appropriate balance 
between the legitimate interests of patent owners and the right of WTO Members to adopt measures 
to  promote  their  public  interests  in  sectors  of  vital  importance  to  their  socioeconomic  and 
technological development. 

The  introduction  of  an  enhanced  legal  approach  for  assessing  FRAND  terms  and  conditions  in  a 
particular context – one which results in more certainty and predictability for the SEP holder and the 
user of the standard – is a reasonable element in the effective exploitation of the patent rights of the 
SEP owner. Such an exception arguably would not unreasonably conflict with the traditional means 
of exploitation of the patent and does not unreasonably prejudice the legitimate interests of the patent 
owner. On the other hand, the exception reduces the possibility of a SEP holder abusing its IP rights 
in  an  anti-competitive  fashion  and  results  in  a  more  balanced  outcome  by  taking  account  of  the 
legitimate interests of the users of the technology and consumers as a whole.   

The following factors are relevant to this analysis: 

-  Patent  owners  benefit  from  the  adoption  of  the  standard  and  therefore  tolerate  the 
infringement of their patents to ensure the standard is widely used in products (especially if 
they also contributed technology to the standard during development); 

-  When the SEP holder commits to license its patents under FRAND terms and conditions in 
order to promote adoption of the standard, its objective is not to stop the sale of infringing 
products but to collect royalties from such sales (although some SEP holders may choose not 
to actively monetize or assert their SEPs); 

121 

 
 
 
-  The normal exploitation of the patent in the context of standard-compliant products is to be 
able to collect FRAND royalties; due to the unique nature of SEPs (i.e., patents cannot be 
designed  around  because  the  technology  is  essential  for  implementing  the  standard  in 
products),  exploitation  rights  are  more  strictly  defined  or  limited  because  of  concerns 
regarding potential restrictions to fair competition and discrimination – i.e. behaviour that is 
harmful to competition; 

-  Demands for royalties that are unreasonable undermine the objectives of standardisation, lead 
to  unnecessary  litigation  and  slow  down  the  process  whereby  patent  owners  can  receive 
adequate remuneration for the use of their patents. 

Furthermore,  pursuant  to  Article  40  TRIPs,  Members  may  adopt,  consistently  with  the  other 
provisions  of  TRIPS,  appropriate  measures  to  prevent  some  licensing  practices  or  conditions 
pertaining to intellectual property rights which restrain competition that may impede the transfer and 
dissemination  of  technology.  In  this  instance,  the  proposed  FRAND  determination  process  is 
intended  to  address,  among  other  issues,  concerns  about  whether  the  demanded  royalty  is  truly 
FRAND,  which  may  have  potential  anti-competitive  effects.  Such  anti-competitive  effects  may 
impede the adoption of the standardized technology mainly by new entrants and SMEs that lack the 
resources  to  deal  with  such  demands  or  pay  potentially  non-FRAND  royalties.  Any  potentially 
abusive practices in the licensing of IP rights may result in harm to the consumer and public interest. 

Taking  the  above  factors  into  account,  it  is  important  that  processes  be  implemented  that  allow 
stakeholders (SEP holders and implementers alike) to establish FRAND terms and conditions in a 
reasonable and efficient manner, and to ensure that SEP holders are not abusing their IP rights by 
demanding higher-than-FRAND royalties. Further clarity on FRAND also allows assessment of the 
multiple  demands  and  offers  that  may  be  made  during  a  SEP  licensing  negotiation  by  all  parties 
involved,  and  to  reach  a  balanced  result  that  promotes  continued  contribution  to  and  use  of  the 
standard for the benefit of the consumer and in the public interest. 

122 

 
 
 
ANNEX 8: SMES AND SEPS 

A8.1 Results of Literature Analysis  

Regarding potential problems for SMEs in the licensing of SEPs, a distinction is in place between 
SMEs as licensors and as licensees. Their role as licensors is less complex and will be addressed first.   
Out-licensing patents  is  not  uncommon for SMEs.  In  fact,  de Rassenfosse (2012, p. 437)322 finds 
based on a survey of SMEs conducted by the European Patent Office that SMEs “exhibit a much 
stronger  reliance  on  ‘monetary  patents’  than  large  companies  and  nearly  half  of  the  SMEs in  the 
sample patent for monetary reasons.” Yet, in the context of SEP licensing a number of challenges 
arise from SMEs’ resource constraints. Their managerial capacity may be too limited to engage in 
licensing  negotiations  with  several  implementers,  in  particular  if  those  negotiations  are  lengthy. 
Taking legal action may furthermore be difficult or even impossible due to the potentially high cost 
this entails. If, as is likely, an SME licensor’s SEP portfolio is small, then potential licensees might 
– with some justification – doubt if the portfolio contains even a single patent that is actually essential, 
infringed by the respective party (which does not necessarily follow from essentiality), and valid (i.e., 
legally robust). Demonstrating that this is indeed the case may require recourse to the courts, which 
– as said above – may not be an option for the SME. As to the technical and patent-related competence 
required to out-license SEPs, one may assume that an SME capable of developing SEPs and having 
the patented inventions accepted into a standard should have a reasonable good understanding of the 
essentiality of its patents. It may lack, however, an overview of the entire standard, and also of the 
number of actual SEPs on the standard and of the level of the aggregate FRAND royalty. This might 
make it hard for the SME to come up with an appropriate royalty demand for its portfolio (similar to 
the problems that SMEs as SEP licensees face in this regard, see below). An option for an SME SEP 
licensor to address these issues might be to join a patent pool, provided a suitable pool for the standard 
at hand exists.   

The  role  of  SMEs  as  licensees  is  more  complex.  The  challenges  of  in-licensing  SEPs  have  been 
addressed by various authors (Geradin, 2020, p. 17; Schneider, 2020; Borghetti et al., 2021, p. 4; 
SEPs  Expert  Group,  2021,  pp.  42,  158;  Henkel,  2022).323  For  SMEs,  the  in-licensing  of  SEPs  is 
particularly  problematic,  for  several  reasons.  Consider  the  situation  that  an  SME  uses  a  certain 
standard in  its product, and that a patent owner offers the SME a portfolio of allegedly standard-
essential patents for licensing – or that, in turn, the SME seeks a license from a firm that claims to 
have SEPs on a standard of interest to the SME. In order to negotiate on eye level with the patent 
holder, the SME would need to evaluate the licensing offer. It would have to: (a) understand what 
share of the portfolio patents are actually essential for the standard; (b) what share of all actual SEPs 
on the standard the portfolio covers; (c) what a FRAND aggregate royalty for the standard is; and (d) 

2, 

39, 

Vol. 

Issue 

2012, 

September 

322 De Rassenfosse, G., ‘How SMEs exploit their intellectual property assets: evidence from survey data’, Small Business 
Economics, 
437-452, 
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1726208. 
323 Borghetti, J.-S., Nikolic, I., and Petit, N., ‘FRAND licensing levels under EU law’, European Competition Journal, 
2021,  pp.  205-268,  https://www.tandfonline.com/doi/full/10.1080/17441056.2020.1862542.  The  authors  acknowledge 
financial support from 4iP Council. Geradin, D., ‘SEP licensing after two decades of legal wrangling: Some issues solved, 
many still to address’, TILEC Discussion Paper No. DP2020-040, 2020, https://ssrn.com/abstract=3547891. Henkel, J., 
‘Licensing standard-essential patents in the IoT – A value chain perspective on the markets for technology’, Research 
Policy,  December  2022,  Vol.  51,  Issue  10,  104600,  https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4050472. 
Schneider, M., ‘SEP licensing for the Internet of Things – Challenges for patent owners and implementers’, CPI Antitrust 
Chronicle,  March  2020,  https://www.competitionpolicyinternational.com/sep-licensing-for-the-internet-of-things-
challenges-for-patent-owners-and-implementers/.  Baron,  J.,  Geradin,  D.,  Granata,  S.,  et.  al.,  Group  of  Experts  on 
Licensing and Valuation of Standard Essential Patents ‘SEPs Expert Group’ (E03600): Contribution to the Debate on 
SEPs, 2021, https://ec.europa.eu/docsroom/documents/45217. 

pp. 

123 

 
                                                 
what the process and rules of FRAND-licensing are. Furthermore, (e) the ownership of SEPs is for 
many standards fragmented, and so the SME would potentially have to deal with a large and unknown 
number  of  licensors.  Fragmentation  of  the  licensee  industry  –  which  is  likely  high  if  SMEs  are 
important – means that, on the level of the economy under consideration (here, the EU), the dyad-
level transaction costs of licensing need to be multiplied not only by the number of licensors, but also 
by a large number of licensees. These points are problematic for SMEs for reasons that partly related 
to  characteristics  of  SMEs,  partly  to  those  of  standards  and  SEPs,  as  will  be  explained  in  the 
following.  
Regarding  (a),  Geradin  (2020,  p.  17)324  notes  in  referring  to  implementers  in  general  that  “while 
manufacturers  of  mobile  communication  devices  have  significant  knowledge  of  mobile 
communication  technologies,  it  is  not  the  case  with  respect  to  manufacturers  of  other  connected 
products  […]”.  This  is  problematic  due  to  the  ever  increasing  use  of  ITC  standards,  and  mobile 
communication specifically, in such “other connected products”, e.g. in the IoT context. Specific to 
SMEs, the SEPs Expert Group (2021, p. 42) 325 notes regarding the use of ICT standards in the IoT 
context  that  “[t]he  population  of  licensees  may  thus  not  only  be  larger  and  more  diverse,  but  the 
number of small and medium-sized enterprises (‘SMEs’) requiring SEP licenses will likely be much 
larger than in the industries where SEP licensing has taken place thus far. This is especially important 
since  SMEs  may  be  less  experienced  with  the  complexities  of  FRAND  licensing,  and  have  very 
limited resources to deal with such complexities.” In general, SMEs are characterized by a limited 
diversity of competences, and it is highly likely that a given SME lacks the technical as well as the 
patent-related competence needed to evaluate, even cursory, standard essentiality of a given portfolio. 
As Schneider (2020) 326 notes, “many of these SMEs will not have the technical expertise required to 
evaluate the viability of a technology owner’s license offer or the quality of value of the IP offered 
in the license.” Similarly Bekkers et al. (2022)327: “Implementers […] are confronted with dozens of 
SEP holders with thousands of patents, and typically have limited or no knowledge about the details 
of individual patents claiming to be SEPs.” SMEs as potential SEP licensees will in general also be 
ignorant regarding the fact that, for cellular standards (and most likely for other standards as well), 
the share of declared SEPs that are actually essential is on average considerably below 50 percent, 
and that this share varies strongly between SEP holders (e.g., Bekkers et al., 2022, Section 3.1328). 
While  large  potential  licensees  that  are  not  active  in  the  standard’s  technology  field  (e.g.,  device 
makers in the IoT space) face the same problems, they can more easily afford to procure the required 
expertise externally and can usually find at least some of the needed resources in-house (e.g., legal 
expertise); SMEs cannot.   

As to (b), also the understanding of what share of all SEPs on the standard the focal portfolio covers, 
and how many other licensors there might be, requires competences that an SME typically lacks – 
and, in fact, any implementer not active in the standard’s technology field. Commercial studies may 
give  indications  as  to  the  share  a  certain  patent  owner  has  in  the  standard’s  overall  SEP  stack. 
However,  these  studies  tend  to  be  highly  priced,  are  not  available  for  all  standards,  and  may  not 
accurately capture the current SEP position of a given licensor. Related, “[m]any of these [non-ICT] 
manufacturers and potential licensees […] may not be aware of the need to take licenses to specific 
SEP portfolios” (Schneider, 2020)329 since they do not know the full list of SEP holders – a specific 

324 See footnote 323. 
325 See footnote 323. 
326 See footnote 323. 
327 Bekkers, R., Tur, E. M., Henkel, J., et. al., ‘Overcoming inefficiencies in patent licensing: A method to assess patent 
essentiality 
104590, 
Research  Policy, 
https://research.tue.nl/en/publications/overcoming-inefficiencies-in-patent-licensing-a-method-to-assess-. 
328 See footnote 327. 
329 See footnote 323. 

2022,  Vol. 

standards’, 

technical 

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51, 

10, 

for 

124 

 
                                                 
instance  of  the  more  general  problem  of  finding  transaction  partners  for  IP  licensing  (Arora  and 
Gambardella, 2010).330 Again, this will particularly be relevant for SMEs. 

Regarding  (c),  even  industry  insiders  and  specialized  courts  find  it  typically  hard  to  pin  down  a 
standard’s aggregate FRAND royalty. It is harder still for SMEs that are implementers of a standard 
–  again  for  the  reasons  listed  under  the  preceding  points,  i.e.,  limited  competences  and  resource 
constraints.  

Point  (d)  is  about  the  competence  regarding  patent  licensing  and  the  dos  and  don’ts  of  license 
contracts, a subject that most SMEs will have little or no experience with. They will know even less 
about  the  specificities  of  SEP  licensing,  which  is  governed  among  other  things  by  the  FRAND 
requirement and, in the EU, the Huawei-ZTE rules. As Schneider (2020)331 puts it, “[m]any of these 
manufacturers  and  potential  licensees  […]  will  be  small  and  medium-sized  enterprises  (‘SMEs’) 
without any licensing experience and perhaps no in-house legal expertise at all […]”. Henkel (2022, 
Section  4.1.2)332  cites  an  interviewee  from  an  IoT  start  up,  stating  “[…]  how  do  you  work  with 
licensing stuff, I don’t even know. We have never done that, we just buy [a module] and create a 
system […].” 

The final point (e) implies that the problems listed above may recur repeatedly for each SME licensee, 
for an unknown and potentially large number of SEP owners. This creates not only cost and time 
demands for an SME, but also uncertainty regarding cost and legal aspects. For instance, the SME’s 
profit margin may be jeopardized by unexpected license demands (Henkel, 2022, Section 4.1.2).333 
Also, customers may demand product delivery free of third-party rights and then turn to the SME in 
case a SEP holder accuses them of infringement (Henkel, 2022, Section 4.4).334 Large implementers 
will face similar issues but are better positioned to deal with them. SMEs lack the required financial 
buffers and in-house legal competence.  

The above implies that the playing field between a prospective licensor and an SME as licensee is 
rather unbalanced. While information asymmetry in favour of the technology seller is a general issue 
(Akerlof, 1970;  Zeckhauser, 1996)335, in the context of SEP licensing to SMEs those information 
asymmetries  are  particularly  strong  and  compounded  by  resource  constraints.  In  turn,  a  potential 
problem  for  a  licensor  is  that  an  SME  may  simply  refuse  to  take  a  license,  and  that  –  given  the 
relatively small licensing income that can be expected from an SME – it is not worthwhile to take 
legal action. One should note, though, that aggressive licensors may  well sue a certain number of 
SMEs to create a precedent and build a reputation for “toughness” (e.g., Agarwal et al., 2009)336 that 
subsequently makes other SMEs willing to take a license.  

330 Arora, A., and Gambardella, A., ‘The market for technology’, Handbook of the Economics of Innovation, 2010, Vol. 
1, pp. 641-678, https://www.sciencedirect.com/science/article/pii/S0169721810010154. 
331 See footnote 323. 
332 See footnote 323. 
333 See footnote 323. 
334 See footnote 323. 
335 Akerlof,  G.  A.,  ‘The  market  for  ‘Lemons’:  Quality  uncertainty  and  the  market  mechanism’,  Quarterly  Journal  of 
3, 
Economics, 
488-500, 
https://www.sciencedirect.com/science/article/pii/B978012214850750022X;  Zeckhauser,  R., 
‘The  challenge  of 
contracting  for  technological  information’,  Proceedings  of  the  National  Academy  of  Sciences  of  the  United  States  of 
America, 
12743-12748, 
Vol. 
https://scholar.harvard.edu/rzeckhauser/publications/challenge-contracting-technological-information. 
336 Agarwal,  R.,  Ganco,  M.,  and  Ziedonis,  R.  H.,  ‘Reputations  for  toughness  in  patent  enforcement:  Implications  for 
knowledge spillovers via inventor mobility’,  Strategic Management Journal, 2009, Vol. 30, Issue 13, pp. 1349-1374, 
https://deepblue.lib.umich.edu/bitstream/handle/2027.42/64300/792_ftp.pdf;sequence=1. 

November 

August 

1970, 

1996, 

Issue 

Issue 

Vol. 

84, 

23, 

93, 

pp. 

125 

 
                                                 
The  above  problems  are  not  just  a  theoretical  possibility,  but  they  matter  in  practice.  In  a  study 
involving 12 European IoT SMEs, mostly start-ups, Henkel (2022)337 found that four of them had 
been approached by one or more SEP holders to take a license. Among the prospective licensors were 
patent assertion entities and patent pools, but also a large, producing SEP holder. Thus, some SEP 
holders do – or at least did in the recent past – approach IoT SMEs for SEP royalties. Some SEP 
holders state that they would not seek to license SMEs – possibly, they realized that this approach is 
not workable after failed attempts to license IoT SMEs (only one of the four SMEs mentioned above 
took  a  license  in  the  end,  see  Henkel  2022338).  However,  in  order  to  be  helpful  for  SMEs  a 
commitment not to demand royalties from them would have to be public, legally binding, clearly 
defined, and given by all SEP holders. None of these requirements is currently fulfilled. SME would 
need legal certainty that they will not be approached by any SME holder up to, e.g., a certain threshold 
of revenues or units sold per year. An alternative – in fact preferred by the participants in the SME 
survey and also by those studied by Henkel (2022) – would be upstream licensing, which would give 
SMEs (which most likely will be on the device, hence downstream level) the option to procure fully 
licensed modules incorporating the respective standard. As Kühnen (2019, Section II)339 explains, 
such upstream licensing would create legal certainty not only for the SME implementers on the device 
level, but also for the upstream firms that supply the standard-practicing modules.  

337 See footnote 323. 
338 See footnote 323. 
339  Kühnen,  T.,  ‘FRAND  licensing  and  implementation  chains’,  Journal  of  Intellectual  Property  Law  &  Practice, 
December 2019, Vol. 14, Issue 12, pp. 964-975, https://academic.oup.com/jiplp/article/14/12/964/5625119. 

126 

 
 
 
                                                 
A8.2 SME Test 

Step 1/4: Identification of affected businesses 

The scope of the initiative comprises firms of all sizes, including SMEs. The initiative does not target 
SMEs specifically, but its (positive) impact on SMEs may be more substantial than that on larger 
firms.  The  initiative  affects  both  owners  (hence,  potential  licensors)  and  implementers  (hence, 
potential licensees) of SEPs. 

As  the  initiative  concerns  all  SEPs,  rather  than  a  specific  sector,  only  qualitative  assessment 
supplemented  by  indicative  statistics  about  the  distribution  of  firms  by  size  among  the  affected 
companies (both, for SEP holders and implementers) can be made:  

•  Due  to  the  technical  and  procedural  complexities  of  standard  development,  SMEs  are 
relatively few among the SEP owners/licensors. Out of 31 identified EU based SEP holders 
with 10 or more patents families (so those most likely to license SEP), information on size 
was available for 16 firms, out of which 3 were SMEs.  

•  Depending on the standard under consideration and the level of the value chain, the number 
of SMEs that are implementers of a standard can be very large. This is the case, e.g., for 
cellular  standards  on  the  device  level  of  the  value  chain,  where  in  the  IoT  context  large 
numbers of SMEs create a multitude of different applications. Among 3 800 potential SEP 
implementers in the EU, 84% were SMEs.340 

The impacts on both categories will be described below (under step 3). 

Key question: To what extent is the initiative relevant for SMEs?  

This initiative is considered relevant for SMEs and has been included by the SME envoys in the SME 
filter. 341 

While not being targeted at SMEs specifically, it solves several of the problems that the licensing of 
standardized technologies (essentially, their SEPs) creates in particular for SMEs.  

SME SEP holders do not currently have the resources to license their SEPs efficiently. The register 
will give visibility of and a positive “stamp” on their SEP portfolio, the aggregate royalty would help 
justify their royalty demands and the FRAND determination (conciliation) procedure will offer them 
an opportunity to  seek  licensing without entering into expensive litigation (see  explanation under 
step 3). SME SEP holders will also benefit from reduced fees. 

Innovative SMEs have already been creating multiple applications using standards such as cellular, 
Wi-Fi, and NFC. Therefore, question of how to license those technologies is relevant for such SMEs. 
While the initiative falls short of guaranteeing “one-stop licensing” for downstream implementers 
(be it through a comprehensive patent pool or, even simpler, through upstream licensing342), it does 
address  important  problems,  such  as  size  of  SEP  portfolios,  aggregate  royalty,  and  FRAND 

340 See Annex A5.1 Market description. 
341 The network of SME envoys was set up in 2011 as part of the review of the small business act. Each EU country has 
nominated a national SME envoy to complement the role of the EU SME envoy who chairs the network. The group of 
SME envoys makes up an SME policy advisory group that promotes SME friendly regulation and policymaking in all 
EU countries. The network of SME envoys filters EU initiatives (SME filter) and signals those that merit attention from 
an SME perspective to the Commission. Initiatives that are listed in the SME filter will have to be accompanied by a 
proportionate SME test. 
342 If a licence to all relevant SEPs is taken by an upstream supplier, the SEPs are “exhausted” at that level and the SME 
implementers do not longer need to license SEPs. 

127 

 
                                                 
determination. Additionally, the initiative will offer to SME implementers reduced fees for the use 
of the services of the Competence Centre and free training and advice on SEPs. 

Step 2/4: Consultation of SME Stakeholders 

The public consultation (14 February 2022 and 09 May 2022) identified 26 respondents as SMEs out 
of  72  respondents  who  identified  themselves.  The  26  respondents  include  nine  companies,  seven 
business  associations  and  five  research  institutions.  The  public  consultation  contained  questions 
specifically addressed to SMEs. For instance, on the question about the impact of SEP licensing costs 
on SMEs and start-ups implementers, many answered that they would settle SEP dispute as quickly 
as possible to avoid litigation cost, choose alternative technology, or even go out of business.343 SMEs 
also  stated  they  would  not  use  a  standard,  if  there  was  an  alternative  (cheaper)  technology,  if 
negotiation and litigation were too expensive or if the requested royalty was too high. SMEs valued 
more  transparency  about  the  FRAND  royalties  over  transparency  about  the  SEP  essentiality  and 
ownership.344  Finally,  the  majority  of  SMEs  agreed  that  efficient  SEP  licensing  would  foster 
innovation by implementers.345  

To  gain  further  insight  into  views  of  SMEs  the  Commission  held  interviews  with  several 
implementers  (including  SMEs  and  mid-caps).  Examples  of  their  anonymised  accounts  on  SEP 
licensing experiences are reported in  Annex 2.  In addition, the Commission  conducted a targeted 
SME survey run between October and December 2022. It was broadly distributed, among others by 
the European Commission and EU agencies, the European Digital SME Alliance, various industry 
associations,  SME  associations,  and  associations  of  SEP  implementers.  The  survey  yielded  39 
responses. While it is not representative, it gives an impression of how SMEs perceive their situation 
with respect to SEP licensing. It thus allows to infer how the initiative would affect this perception.  

Fifteen of the respondents reported to have participated in standard setting, though mostly not for 
complex ICT standards. Two reported to own SEPs. Motives to contribute to standard development 
comprise improving the standard, influencing its development, promoting the firm’s own technology, 
learning, and networking. Reasons not to contribute comprise a lack of resources and expertise, and 
the domination of SDOs by large  firms.  The initiative will likely not  affect  this situation, neither 
positively nor negatively.  

Regarding their role as SEP licensees (i.e. implementers), respondents perceive various problems: 
Notably, (a) a lack of knowledge what would be a fair (FRAND) royalty, (b) a lack of resources to 
negotiate  licenses,  (c)  uncertainty  about  infringement,  and  (d)  fragmentation  of  SEP  ownership. 
Respondents considered device-level licensing  acceptable only if it was  (e) efficient  (ideally one-
stop),  at  (f)  publicly  known  royalties,  and  (g)  consistently  done  across  all  implementers.  Most 
respondents  expressed  (h)  a  clear  preference  for  upstream  licensing,  so  that  they  could  procure 
components with all IP rights fully licensed. For details see Annex A8.3 SME survey. 

Of these problems and preferences, the initiative will address (a) and (f) (due to the aggregate royalty 
and possibly information about what share of a standard’s SEP a given portfolio corresponds to); (b) 
indirectly, since license negotiations should become simpler (e.g. due to obligatory pre-trial FRAND 
determination (conciliation) or assistance and training to SMEs provided by the Competence Centre); 
(c), due to the register of checked SEPs. The initiative will not affect the problem of fragmented SEP 
ownership (d).  

343 See Annex 9, Q12. 
344 See Annex 9, Q20. 
345 See Annex 9, Q64. 

128 

 
                                                 
The  initiative  will  not  affect  the  points  (d)  and  (e)  on  licensor  fragmentation.  It  might  gradually 
improve the consistency of licensing (g), due to the fact that it will simplify licensing in general. It 
will not address the preference of most respondents for upstream licensing (h). A guidance will be 
given,  however,  that  traditional  level  of  licensing  should  be  considered  when  deciding  on  SEP 
licensing options. 

Step 3/4: Assessment of the impact on SMEs 

Impact on SMEs as owners of SEPs:  

  Due to the technical and procedural complexities of standard development, SMEs are relatively 
few among the SEP owners/licensors. Hence, considering only the number of firms affected, the 
impact of the initiative on SMEs as owners of SEPs will be limited.  

  Those  SMEs  that  do  own  SEPs  will  typically  have  small  portfolios.  Licensing  out  a  small 
portfolio of presumed SEPs can be challenging because the potential licensee may doubt, with 
some justification, that any of the patents in the portfolio are actually essential, legally robust 
(i.e., would withstand a validity challenge), and indeed infringed by the potential licensee. Also, 
for statistical reasons the share of patents that are actually essential, legally robust, and indeed 
infringed will vary more strongly the smaller a portfolio is. Thus, owners of small portfolios of 
presumed SEPs should be positively affected by the “stamp of approval” that the essentiality 
check provides to patents that are found to be actually essential (PO2). This positive effect should 
be stronger than for owners of large portfolios, since for those there will typically be little doubt 
that they own at least some SEPs on the respective standard, and hence that the potential licensee 
is indeed obliged to take a license.  

  Another positive effect should be that the anchor of the announced aggregate royalty (PO4) 
should make it easier for small licensors to explain the royalty demanded to potential licensees, 
something that without reference to this anchor should be relatively more difficult for small than 
for large licensors.  

  Pre-trial  conciliation  (PO3)  should  help  SME  licensors  in  particular,  since  due  to  budget 

restrictions litigation is often not an option for them.  

  A  negative  effect  for  SMEs  is  that  the  upfront  costs  of  registration  and  essentiality  check 
(PO2)  will  be  relatively  more  important  for  SMEs  than  for  larger  firms,  both  due  to  budget 
constraints and because for small portfolios the share of patents that will be assessed will likely 
be higher than for large portfolios. However, the investment into the essentiality check should 
pay off through the simplification of licensing.  

Impact on SMEs as implementers of SEPs:  

  Considering  the  likely  number  of  firms  affected,  the  impact  of  the  initiative  on  SMEs  as 

implementers of SEPs will be substantial.  

  For all implementer SMEs, irrespective of their position in the value chain, all aspects of the 
preferred option should have a positive impact. The register for SEPs with essentiality checks 
(PO2) helps them to assess if a prospective licensor has legitimate demands for royalties. The 
aggregate  royalty  (PO4)  helps  to  understand  and  take  into  account  early  on  the  total  cost  of 
licensing the SEPs. In case the essentiality checks are done in such a way that they indicate each 
licensor’s share in the overall SEP stack of the standard, then they may also facilitate determining 
the share of the aggregate royalty that a licensor can demand. Mandatory pre-trial conciliation 
(PO3), finally, helps to avoid litigation, which would typically be difficult and costly for SMEs. 

129 

 
 
While most of the benefits accrue also to larger firms, those are usually in a better position to 
solve the respective problems themselves (e.g., by hiring expert lawyers or technicians).  

  A  distinction  applies  regarding  the  SMEs’  position  in  the  value  chain.  Downstream  firms 
(device  makers) will typically  have no  in-depth  knowledge of the internal  functioning of the 
standardized  technology,  nor  of  the  patents  that  might  be  essential  to  the  standard.  Thus, 
information on which patents are actually essential on a standard and transparency with regard to 
FRAND  royalties,  in  particular,  should  be  relevant  for  them  in  their  negotiations.  Upstream 
firms  are  “closer”  to  the  standardized  technology  (the  most  upstream  implementer  turns  the 
standard  specification  into  technology,  e.g.  by  designing  a  5G  baseband  processor),  and  thus 
understand  the  technology  and  its  SEPs  better.  Furthermore,  the  number  of  SMEs  that  are 
downstream implementers will typically be (much) larger than the number of SMEs that 
are upstream implementers. For example, most or all makers of cellular baseband chips are 
large firms (due to the high fixed cost involved in the business). Thus, the biggest impact of the 
initiative on SMEs will be on downstream implementers.  

  A potential negative effect of the initiative is that the simplification of licensing that it entails 
may  encourage  more  SEP  holders  to  approach  downstream  SME  implementers  for 
royalties. For those, dealing with several or even many licensors of a technology that they do not 
understand is difficult, even if the initiative simplifies the process to some extent. However, this 
effect depends on SEP owners’ strategies and its potential magnitude cannot be estimated.  

Step 4/4: Minimising negative impacts on SMEs 

The initiative will have its biggest impact on SMEs on the implementer side, more specifically on 
downstream implementers (device makers). For those firms, the impact should largely be positive. 
The potential negative effect mentioned in Step 3 (i.e., that the simplification of licensing that the 
initiative entails may encourage more SEP holders to approach downstream SME implementers for 
royalties) could be mitigated by encouraging SEP holders to exempt SMEs from paying royalties or 
provide discounts to a certain annual production volume (PO1). Additionally, SMEs will benefit from 
reduced fees for services provided by the Competence Centre and free training and advice from the 
Competence Centre. 

Reduced fees for services provided by the Competence Centre for SME SEP holders should lower 
their burden as regards PO2. 

Detailed overview of measures to help SMEs 

The following measures and support will be available to SMEs: 

General: 

  SMEs  will  receive  discounts  for  all  administrative  fees  related  to  registration,  essentiality 

checks and conciliation. 

  A general recommendation that special discounts for SMEs are considered during essentiality 

evaluations and conciliations on a case by case basis. 

  A  general  recommendation  to  SEP  holders  to  provide  to  SMEs  royalty-free  licences  or 

discounts for small volume production (following existing practices of SEP pools). 

Services offered free of charge by the Competence Centre to all companies: 

130 

 
  Access to basic information from the SEP register (name and contact details of SEP holders, 
number of patents each SEP holder registered and the essentiality rate of all registered SEP 
per standard). 

  Studies concerning SEP-related issues (e.g. best valuation practices or best practices to handle 
indemnification clauses) with which SMEs have most problems (based on information from 
SMEs provided to the Competence Centre).  

  Database with SEP-related policy information from key jurisdictions globally as well as case-
law  summaries  (including  arbitrations)  related  to  FRAND  issues,  also  from  foreign 
jurisdictions. 

Services offered free of charge by the Competence Centre to SMEs only: 

  Advice on SEP licensing, negotiations, and conciliation process (both for SME SEP holders 

and SME implementers). 

  Training on SEP licensing/FRAND negotiations and how an SME can best represent itself 

during negotiations/conciliations. 

Services for a fee: 

NOTE:  the  regulatory  proposal  will  not  set  any  of  the  fees.  Instead,  they  will  be  established 
subsequently by an implementing act which will take into account not only calculations presented in 
this IA but also political considerations. The fees presented in the IA are just an indication of the fees 
that would cover the costs of the Competence Centre (based on initial cost prognosis of the EUIPO). 
SME SEP holders and SEP implementers will both receive a reduction in administrative fees. 

 

Implementers: access to detailed information on essentiality of concrete patents or portfolios 
of concrete SEP holders at a reduced SME fee of EUR 850 (as opposed to EUR 1 700 for 
large firms). 
The  relatively  modest  discount  is  to  avoid  circumvention  of  the  standard  fee  by  larger 
companies through creation of an SME just to access the register.  

  SEP owners: SEP registration costs for SME SEP holders will be also limited by the fact that 

 

SMEs have a lower number of SEP to register.346 
Implementers and SEP owners: SEP conciliation cost will depend on the complexity of a case. 
This impact assessment presents an average cost. It is likely that conciliations for SMEs will 
be less demanding and thus the cost will be lower. In any case the final conciliation cost and 
how it is shared between parties will be decided on a case-by-case basis with the help of the 
conciliator. There will be a recommendation that SMEs receive a discount. 

346 The three SME SEP holders with ten of more SEPs, have respectively 10, 11 and 18 SEPs. The initial registration 
costs (both fees and internal costs) for these three firms will be no more than 1% of their annual turnover (turnover for 
2021 from ORBIS database). Costs in the subsequent years (should they create new SEPs) will be just a fraction of the 
initial figure. 

131 

 
 
 
 
                                                 
A8.3 SME survey347 

About the survey and the analysis 

The survey was distributed by the European Commission, directly and through various other channels 
(number of respondents in brackets): European Digital SME Alliance (8); industry associations (8); 
European  Commission  (6);  SME  associations  (5);  EU  Agencies  (4);  Associations  of  SEP 
implementers (2); other (6).  

The survey was active from 25/10/2022 until 27/12/2022. 

It obtained 39 responses in total. It is not representative but gives an impression of the issues start-
ups and SMEs face in the context of SEP licensing.  

In  the  analysis,  most  responses  are  reported  in  detail.  Questions  with  five  or  fewer  responses  are 
omitted. In two cases, clearly inconsistent responses were corrected. Open comments are reported 
verbatim, except for anonymization of company names and careful editing of obvious typos. Open 
comments unrelated to the question at hand are omitted.   

Demographics of participating firms 

Question on Size 

Micro (1 to 9 employees) 
Small (10 to 49 employees) 
Medium (50 to 249 employees) 
Large (250 or more employees) 

  Country 

Figure 18: Number of responses per country 

Answers 
13 
15 
9 
2 

% 
33% 
38% 
26% 
3% 

Source: Own analysis 

347 Prepared based on contract by Prof. Dr. Joachim Henkel, Technical University of Munich. 

132 

6543222221121221101234567 
 
 
 
 
                                                 
Q. Subsidiary/branch of a larger company? 

Not a subsidiary/branch 
Yes, a subsidiary/branch 

Q. Respondent 

General manager (e.g. CEO) 
Manager dealing with technology/innovation 
Company lawyer 
Other 

Q. Sector of activity: IoT, other  

ICT (Information and communication technologies) 
Connected machines within a factory 
Smart meters 
Fleet management, tracking of containers, etc. 
Banking 
Medical devices 
Smart home 
Automotive 
Other IoT 
Not active in IoT, but in other sector(s) 

Note: Multiple choices possible 

Q. In-house specialists for patents, patent licensing 

Yes 
No, we used external specialist 
No, we do not have in-house, nor use external specialists 

Use of ICT communication standards 

Q1. Standards that the firm develops, uses or innovates on 

2G, 3G, 4G, 5G 
Wi-Fi 
LPWAN networks (LoRaWAN, Sigfox, NB-IoT, LTE-M) 
NFC 
Video and audio codecs 
Wireless charging 
Other 
Not developing, using nor innovating on any standard 

Note: Multiple choices possible 

No. of answers 

Q2. Role of those standards in the firm’s business proposition  

Answers 
35 
4 

Answers 
24 
6 
4 
5 

Answers 
24 
10 
9 
8 
6 
6 
6 
5 
9 
4 

Answers 
8 
26 
5 

Answers 
23 
21 
15 
12 
10 
6 
13 
3 
39 

% 
90% 
10% 

% 
62% 
15% 
10% 
13% 

% 
62% 
26% 
23% 
21% 
15% 
15% 
15% 
13% 
23% 
10% 

% 
21% 
67% 
13% 

% 
59% 
54% 
38% 
31% 
26% 
15% 
33% 
8% 

Answers 

% 

133 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Our firm buys ready-made components to integrate into our products that use those 
standards 
Our firm has own unique innovation (IP) on top of the standard 
Our firm produces components that use those standards 
Our firm implements the standards by itself 
Our firm participates in standard setting 
Our firm buys a ready-made device to use in our product(s) that uses those standards 
Our firm contributes technology (patents) to standards 
Our firm exports components or devices that use those standards 
Our firm imports components or devices that use those standards 
Other (please specify) 
Standards do not play any role in my business 

No. of answers 

Note: Multiple choices possible 

22 

16 
16 
12 
12 
11 
9 
7 
7 
2 
2 
39 

56% 

41% 
41% 
31% 
31% 
28% 
23% 
18% 
18% 
5% 
5% 

Q3. Importance of the standardized technology to the firm’s services / products 

Open question. 30 out of 39 respondents provided an answer.  

Most answers (80%: 24 out of 30) stated the technologies were very important to the firm (e.g., “very 
important”, “critical importance”, “vital”, “key”, “essential”, “indispensable”). 

Some  answers  provided  more  specific  information,  highlighting  the  advantages  of  fully  licensed 
chipsets, SMEs’ lack of power to influence standards embedded on chipsets, a lack of standardisation 
for edge computing, and the threat of an unknown number of SEP holders approaching implementers:  

  “Bluetooth is a preferred option due to its availability fully SEP licensed in chipsets by the 

implementer.” 

  “We use Android as an operating system. We have zero say in what standards, or audio or 
video codecs, are incorporated in the chipsets or the operating system. We do not have the 
power as an SME to change the specifications of off the shelf developed chipset products. 
Our in-house technology is valuable to us as our USP.” 

  “Currently there is no standardisation for edge data centers that support the requirements of 
the edge. Legacy data center technology, OCP is not suited for the edge. Europe can play in 
important  role  for  setting  the  standard  for  edge  datacenters  1)  since  it  can  be  based  on 
embedded  technology  2)  it  can  achieve  much  higher  density  and  energy  efficiencies  than 
current  datacenter  technology,  3)  it  can  drive  the  technology  innovation  for  Europe  much 
faster  than  technology  set  by  USA  and  Chinese  large  companies.  4)  it  allows  for  a  fast 
integration with distributed intelligent infrastructures (electricity grid, water, transport, etc.) 
it allows for a better controlled digital sovereignty and implementing GDPR, explainable AI 
in the tactile internet.” 

  “We need our smart EV chargers to communicate with cars, phones and electricity networks. 
We do not  have to  use  wireless or cellular, but  we think the system  will be better for the 
consumer if we do, and there will be energy savings. Threats from [Name of SEP owner] are 
causing  concern  to  [firm]  that  there  may  be  other  claims  from  the  hundreds  of  other  SEP 
owners, and we are therefore considering whether to even include cellular functionality in 
future  accessories  or  products,  and  what  that  might  mean.  That  is  delaying  adoption  and 
hindering innovation (and costing development resource) in the EV sector – that is the last 
thing that the EU needs as it targets Net Zero.” 

134 

 
 
 
 
The firm’s role as a patent licensee 

Preferences regarding licensing of patents implemented in components 

Q4. When buying components / importing devices incorporating such technologies do you… 

prefer products/tech with all IP rights in the product fully 
licensed? 
prefer to deal myself with clearing IP rights? 
not worry about IP rights? 

25 

5 
4 

8 

6 
5 

0 

16 
14 

1 

3 
6 

5 

9 
10 

in most 
cases 

sometimes 

never 

no  
opinion 

no  
answer 

prefer products/tech with all IP rights in the product fully 
licensed? 
prefer to deal myself with clearing IP rights? 
not worry about IP rights? 

in most 
cases 

76% 

19% 
17% 

sometimes 

never 

24% 

22% 
22% 

0% 

59% 
61% 

No. of 
answers 

33 

27 
23 

Note: “No opinion” and “No answer” not taken into account for calculation of percentages 

Checking the licensing status of purchased components 

Q5. If you prefer products/tech with IP rights licensed how do you check that? 

I assume that since product is put on the market all rights 
are cleared 
Seller gives me a guarantee that all rights are cleared 
Seller offers to give me an IP licence as well 
Seller informs me that (some) rights are not cleared and I 
have to do it myself 
I do my own inquiries 

oftenti
mes 
14 

10 
3 
2 

8 

sometimes  never 

7 

11 
13 
9 

10 

5 

6 
7 
12 

6 

no  
opinion 
1 

no  
answer 
12 

1 
2 
2 

1 

11 
14 
14 

14 

oftentimes 

sometimes 

never 

I assume that since product is put on the market all rights 
are cleared 
Seller gives me a guarantee that all rights are cleared 
Seller offers to give me an IP licence as well 
Seller informs me that (some) rights are not cleared and I 
have to do it myself 
I do my own inquiries 

54% 

37% 
13% 
9% 

33% 

27% 

41% 
57% 
39% 

42% 

19% 

22% 
30% 
52% 

25% 

Note: “No opinion” and “No answer” not taken into account for calculation of percentages 

No. of 
answers 
26 

27 
23 
23 

24 

Awareness of potential need of SEP license 

Q6. Are you aware that you may need a licence for standard essential patents for the use of such 
technologies/standards? 

Yes 
No 

Answers 
28 
7 
4 

No answer 

% 
80% 
20% 

Note: “No answer” not taken into account for calculation of percentages. 

135 

 
 
 
 
 
 
 
 
 
 
 
 
Has firm taken any SEP license 

Q7. Have you obtained any licences for standard essential patents?  

Yes 
No 
Other 

Note: “No answer” not taken into account for calculation of percentages 

No answer 

Answers 
7 
21 
6 
5 

% 
21% 
62% 
18% 

Those seven firms who answered “yes” named the following technologies: 

2G, 3G, 4G, 5G 
Video and audio codecs 
Wi-Fi 
LPWAN networks 
NFC 
Wireless charging 

Note: Multiple choices possible 

Answers 
6 
5 
5 
4 
3 
2 

Reasons not to take a licence for (potential) SEPs 

Q8. In case you have not obtained a licence for any (potential) standard essential patents, what are 
the reasons for this? 

My  firm  assumes  that  it  does  not  need  to  take  a  license  because  we  purchase 
components / device free of any rights of third parties (i.e., seller guaranteed me that 
all rights are cleared) 
Difficulties to find out who owns the technology 
Too much effort to enter license agreements with all SEP owners 
To remain competitive (not increase price) 
A SEP holder approached me for a licence, but we cannot agree on the FRAND terms 
and conditions. 
My firm asked for a licence but cannot afford to pay the requested royalty 
My firm is waiting to be approached by a SEP holder to take a licence 
My firm asked for a licence, but it was refused 
Other 

No. of answers 

Note: Multiple choices possible 

Answers 
15 

10 
9 
7 
3 

2 
2 
1 
5 
26 

% 
58% 

38% 
35% 
27% 
12% 

8% 
8% 
4% 
19% 

Reasons to take a licence for (potential) SEPs 

Q9. In case you have obtained a licence for standard essential patent, what was the reason? 

My firm wants to sell SEP cleared products 
My clients will buy from me if my product is SEP cleared 
My firm was afraid it would be sued for patent infringement later 
My firm was approached by a SEP holder and saw a risk of not being able to sell my 
products 
It will differentiate our products from competitors 
Other 

No. of answers 

Note: Multiple choices possible 

Answers 
4 
3 
3 
2 

1 
1 
6 

% 
67% 
50% 
50% 
33% 

17% 
17% 

One respondent added: “We have had multiple SEP licensing requests. One license was obtained by 
misrepresentation. Some have litigated (one litigation costing tens of thousands of Euros was for a 

136 

 
 
 
 
 
 
 
 
 
 
few thousand Euros of value). We have taken several licenses but we know we have unfairly paid 
much more than others.” 

Licensor – Pool or individual SEP owner 

Q10. In case you have obtained a licence for standard essential patent, did you obtain the license(s) 
through a SEP pool or through bi-lateral licensing negotiation(s) or through a combination of both 
approaches? 

2G, 3G, 4G, 5G 
Wi-Fi 
Video and audio codecs 
Wireless charging 
NFC 
LPWAN networks 

Q11. Experience with SEP licensing negotiations 

Seven firms responded: 

pool 

bilateral 
negotiations 

1 
1 
1 
0 
1 
0 

1 
0 
0 
1 
0 
0 

combination 
of both 
approaches 
2 
2 
3 
0 
0 
1 

  “My firm negotiated what it felt was a fair license with the SEP owner” (3 answers) 

o  One  firm  commented:  “We  did  already  sign  a  number  of  license  agreements. 
Sometimes the license rates were published then we had the feeling the agreement 
fulfils FRAND but often the license rates are not published then it is very difficult to 
judge  whether  the  agreements  fulfil  the  FRAND  requirements.  We  are  not  able  to 
analyse large portfolios which are usually negotiated.” 

  “My firm accepted the price and conditions without negotiations” (2 answers) 

o  One firm commented: “As we are a small company we often do not even have the 

option to negotiate.” 

  Other: “NFC licence is part of the membership to the NFC association in which we contribute 

to share experiences (not to set the standard)” (1 answer) 

  Other:  “We  have  had  multiple  SEP  licensing  requests.  One  license  was  obtained  by 
misrepresentation/fraud.  Some  have  litigated  (one  litigation  costing  tens  of  thousands  of 
Euros was for a few thousand Euros of value). We have taken several SEP licenses but we 
know  we  have  unfairly  paid  much  more  than  others.  We  are  discriminated  against  as  an 
SME.” (1 answer) 

Problems in negotiating with SEP owners 

Q12. Was any of the below problems relevant to you when negotiating with SEP owner? 

I did not know  what  would be a fair price for the 
SEPs (FRAND) 

very  
impor-
tant 

rather  
impor-
tant 

neutral 

rather 
not  
impor-
tant 

not 
impor-
tant at all 

no  
opinion 

no  
an-
swer 

15 

3 

2 

0 

0 

10 

9 

137 

 
 
 
 
 
 
 
 
I  did  not  have  resources  to  negotiate  with  SEP 
holder / engage in court proceedings 
I could not clarify whether my product was actually 
using the invention underlying the patent 
I  am  not  aware  of  any  strategies  how  to  defend 
myself against SEP owners 
I saw a threat to my production and sales 

I  did  not  know  who  owns  SEPs  relevant  to  my 
implementation of the standard 
I  did  not  know  if  all  the  patents  SEP  holder 
presented to me were essential to the standard 
I  did  not  understand  the  technology  (e.g.  of 
component  I  use) 
in  meaningful 
negotiations 
Other 

to  engage 

14 

13 

13 

12 

12 

10 

8 

3 

4 

5 

3 

5 

4 

9 

2 

0 

2 

2 

1 

1 

3 

1 

3 

0 

1 

0 

1 

1 

0 

0 

1 

0 

1 

1 

1 

0 

1 

1 

4 

0 

8 

9 

10 

10 

10 

9 

10 

8 

9 

9 

10 

10 

9 

9 

11 

28 

Important 

Neutral 

Not 
important 

No. of  
answers 

I  did  not  know  what  would  be  a  fair  price  for  the  SEPs 
(FRAND) 
I  did  not  have  resources  to  negotiate  with  SEP  holder  / 
engage in court proceedings 
I could not clarify whether my product was actually using 
the invention underlying the patent 
I  am  not  aware  of  any  strategies  how  to  defend  myself 
against SEP owners 
I saw a threat to my production and sales 

to  my 

I  did  not  know  who  owns  SEPs  relevant 
implementation of the standard 
I did not know if all the patents SEP holder presented to me 
were essential to the standard 
I  did  not  understand  the  technology  (e.g.  of  component  I 
use) to engage in meaningful negotiations 
Other 

90% 

82% 

86% 

84% 

89% 

80% 

90% 

56% 

100% 

10% 

9% 

10% 

5% 

5% 

15% 

5% 

17% 

0% 

0% 

9% 

5% 

11% 

5% 

5% 

5% 

28% 

0% 

20 

22 

21 

19 

19 

20 

21 

18 

3 

Note: “Important” consist of answers: “very important” and “rather important”, “Not important” consist of “rather not important” 
and “Not important at all”; “No opinion” and “No answer” not taken into account for calculation of percentages. 

Cost of negotiating an SEP license 

Q13. In case you have obtained a licence for standard essential patent, how much did you spend on 
negotiating the licence (excluding the royalties), for example spent internal and external resources, 
legal advice, as well as other expenses such as access to third party databases? 

  “full time as legal counsel” 

  “NFC license was part of the membership [firm] entered in anyhow due to the core technology 

of the firm” 

  “The costs vary but perhaps GBP 20 000 to GBP 40 000. Sometimes the work crosses over 
between  portfolios  and  claims  (e.g.  where  the  SEP  has  broken  up  the  portfolio).  Much 
depends on whether there was litigation.” 

  “We  are  permanently  negotiating.  I  assume  the  negotiation  costs  are  about  between  EUR 

20 000 to EUR 40 000 per year. The negotiations are often very different.” 

138 

 
 
 
 
 
 
 
Impact of SEP license 

Q14. In cases you obtained a SEP licence: What was the impact on… 

… profit margin of your products if sold within in the EU? 
… profit margin of your products if sold outside of the 
EU? 
… your innovation? 
… legal certainty (e.g. planning your product pricing 
strategy)? 

… profit margin of your products if sold within in the EU? 
… profit margin of your products if sold outside of the EU? 
… your innovation? 
…  legal  certainty  (e.g.  planning  your  product  pricing 
strategy)? 

negative 

3 
3 

2 
2 

neutral / no 
impact 
2 
2 

4 
1 

positive 

2 
2 

1 
4 

negative 

43% 
43% 
29% 
29% 

neutral / 
no impact 
29% 
29% 
57% 
14% 

positive 

29% 
29% 
14% 
57% 

No. of 
answers 
7 
7 
7 
7 

Impact of not obtaining an SEP license 

Q15. In cases you did not obtain a SEP licence: What was the impact on… 

negative 

… profit margin of your products if sold within in the EU? 
… profit margin of your products if sold outside of the EU? 
… your innovation? 
…  legal  certainty  (e.g.  planning  your  product  pricing 
strategy)? 

5 
4 
7 
7 

neutral / 
no impact 
5 
8 
5 
4 

positive 

no opinion 

4 
2 
5 
4 

6 
5 
5 
5 

… profit margin of your products if sold within in the EU? 
… profit margin of your products if sold outside of the EU? 
… your innovation? 
…  legal  certainty  (e.g.  planning  your  product  pricing 
strategy)? 

negative 

36% 
29% 
41% 
47% 

neutral / 
no impact 
36% 
57% 
29% 
27% 

positive 

29% 
14% 
29% 
27% 

No. of 
answers 
14 
14 
17 
15 

Note: “No opinion” and “No answer” not taken into account for calculation of percentages 

Open comments (answers to “Other, please explain”): 

  Positive effect: “Multisite certification is very necessary for the new production model based 
on  the  collaborative  economy  for  ‘projects  of  general  interest’  that  wish  to  remotely  tele-
manufacture.” 

  Negative  effect:  “It  adds  to  uncertainty  both  for  us  and  for  our  customers.  If  we  make 
provision for estimated royalties and our competitors do not, we are at a disadvantage. Our 
module customers generally do not understand the technology and want a solution with SEP 
indemnification as they feel unable to navigate the licensing process. If we do not offer such 
indemnification and our competitors do, we are at a disadvantage.” 

139 

 
 
 
 
 
 
 
 
 
Impact of uncertainty about SEP licensing 

Q16. How does uncertainty about SEP licensing affect your business? 

Any royalty payments will affect my competitive position on 
the market. 
Potential  future  SEP  payments  may  make  me  unable  to 
compete. 
If my competitors also pay the same royalties,  licensing will 
not affect my business significantly. 
I try to use alternatives available on the market in order not to 
pay for SEP (e.g. older technology, or free technology). 
It is unlikely that SEP holders will be interested to license me. 
My prices include a certain amount of estimated royalties. 
I try to develop in-house  alternatives in order not to pay for 
SEP. 
There is no SEP uncertainty. 

Any royalty payments will affect my competitive position 
on the market. 
Potential  future  SEP  payments  may  make  me  unable  to 
compete. 
If my competitors also pay the same royalties, licensing will 
not affect my business significantly. 
I try to use alternatives available on the market in order not 
to pay for SEP (e.g. older technology, or free technology). 
It is unlikely that SEP holders will be interested to license 
me. 
My prices include a certain amount of estimated royalties. 
I try to develop in-house alternatives in order not to pay for 
SEP. 
There is no SEP uncertainty. 

agree 
18 

13 

13 

12 

8 
7 
5 

5 

agree 

64% 

48% 

48% 

48% 

32% 

28% 
19% 

19% 

neutral  disagree no opinion no answer 

9 

11 

8 

4 

9 
5 
8 

4 

1 

3 

6 

9 

8 
13 
13 

17 

3 

3 

3 

4 

4 
4 
4 

4 

neutral 

disagree 

32% 

41% 

30% 

16% 

36% 

20% 
31% 

15% 

4% 

11% 

22% 

36% 

32% 

52% 
50% 

65% 

8 

9 

9 

10 

10 
10 
9 

9 

No. of 
answers 
28 

27 

27 

25 

25 

25 
26 

26 

Note: “No opinion” and “No answer” not taken into account for calculation of percentages. 

Q17. Experience with SEP licensing – open comments 

Twelve respondents provided open comments about their experiences with SEP licensing.  

  “No experience with direct SEP licensing, only discussions with technology suppliers. These 

have made us aware of the potential issues / licensing threats.  

We  have  followed  recent  court  cases  and  announcements  from  patent  pool  holders  with 
interest (and fear).” 

  “[Firm]  has  no  personal  resources  to  manage  SEP  licensing,  in  particular  to  investigate 
potential  SEPs  and  related  licensors  to  ask  for  a  license  and  to  evaluate  of  the  ready 
implemented communication cores freely sourced in from suppliers make use of SEP. 

[Firm]  has  no  chance  of  handling  SEP  licensing  and  estimating  the  potential  costs  with 
reasonable costs. SEP management would have to be handled by outside attorneys and would 
result in  costs that are expected to  far exceed the royalties to  be paid  in  view of the sales 
numbers.” 

  “[Firm’s] executive and senior management together have decades long experience in SEP 
licensing,  from  all  sides  of  the  SEP  licensing  equation.  This  expertise  combined  with  the 
company’s  independence,  allows  [Firm]  to  be  a  true  intermediary  able  to  find  licensing 

140 

 
 
 
 
 
solutions that can be accepted by the market, SEP holders and implementers alike, no matter 
if it concerns a comprehensive solution such as Avanci or a custom arrangement facilitated 
via Innovius. 

Avanci is an aggregate patent licensing solution that currently licenses the SEP portfolios on 
cellular technology (2G, 3G, 4G, and soon 5G) of 52 patent owners to more than 80 auto 
brands worldwide. Avanci was created as a solution for the IoT industry and as this sector 
continues to develop, Avanci will successively add more licensing programs to its offering as 
the  IoT  industry  continues  to  develop  and  new,  innovative  products  reach  the  market. 
Aggregate patent licensing solutions are particularly attractive to start-ups and SMEs. SMEs 
that  are  SEP  implementers  can  be  assured  that  their  license  contains  the  same  terms  and 
conditions as a license with a much larger company. SMEs that are SEP holders may not have 
the  capacity  to  pursue  licensing  themselves  and  licensing  platforms  offer  a  simple  and 
efficient solution to generate a return on their investments and enable SME SEP holders to 
continue to participate in the standardization process. Avanci thus contributes to creating a 
global level playing field and its license provides predictability and certainty. 
Having efficient licensing solutions available to SEP holders and implementers can be a factor 
in promoting the uptake of standardized technology; vice-versa, inefficient or dysfunctional 
licensing eco-systems can inhibit the uptake of standardized technologies and thus inhibit the 
integration of, for example, faster and more energy efficient technologies.” 

  “For an SME it is difficult to estimate whether the offered terms are FRAND, particularly if 
the terms are not published. We try to urge the licensors by means of German case law to 
provide us some information about already signed agreements. This we could do sometimes 
by a third independent attorney who is bound to confidentially and to whom the information 
was  handed  out  so  that  he/she  was  able  to  judge  whether  the  offer  is  FRAND.  But  this 
procedure is not always accepted by the licensors.” 

  “We have experienced a lot. Examples include but are not limited to: 

o  being lied to by an SEP holder who said ‘everyone paid the same royalties’. This was 

untrue, as we later found out in public court case decisions; 

o  refusals to negotiate licenses; 

o 

o 

lies by SEP holders in negotiations; 

injunction  threats  when  we  pointed  out  we  did  not  even  use  certain  alleged  SEP 
features in a products; 

o  our distributors being refused SEP licenses when requesting them; 

o  unlawful seizure of products sold to our distributors at Customs based on a patent later 
found to be not infringed by a Court, costing millions of Euros in damages and lost 
sales (with criminal proceedings against the General Manager personally); 

o  being  sued  in  America  on  alleged  SEPs  where  the  amounts  claimed  were  a  few 

thousand dollars; 

o  pool administrators telling us that they advise other pools on pricing; 

o  outlandish  claims  being  made  as  part  of  an  SEP  audit  –  even  one  where  we  were 

offered a million dollar reduction if we changed lawyers; 

o  multiple NPE licensing requests arising from portfolio fragmentation (splitting up of 

portfolios);  

o  NPE litigation in America.” 

141 

 
  “The issue is completely out of scope. We have been advised by our legal / IP advisor, that 

this might become an issue, but we do not really know how to deal with it.  

  “Most of the small companies my company helps are leveraging patents so it is at the core of 

their activities. 

The companies  I advise that only implement standards to build on top to  create their own 
services and added value solutions factor in the licensing fees into their pricing.” 

  “[Firm’s]  position  is  simple.  [Name  of  SEP  owner]  (and  other  SEP  holders  in  the  future) 
should not be harassing SME’s or others for this type of issue, which are not matters within 
[Firm’s] expertise. [Firm] believes that [Name of SEP owner] (and other SEP owners) should 
be  required  to  grant  SEP  licenses  to  module  suppliers  that  want  a  license  like  [Name  of 
supplier] (or their suppliers), so that [Name of supplier] and its distributors can give normal 
and standard warranties of non-infringement for their cellular products. [Name of SEP owner] 
has, or had, a practice of licensing modules for 2G and 3G and so there is no reason to change 
that for 4G. [Name of SEP owner] also has, or had, a practice of licensing at chipset level. 
The entire supply chain can be licensed at chipset level, which is where the economic value 
of the patents can be realised, so [Name of SEP owner] should take this up with [Name of 
supplier] and their suppliers. Licensing at the chipset level will also mean that all of [Firm’s] 
competitors (across the globe, not just in the EU) will be paying the same for SEP licenses, 
so that there is a level playing field for [Firm’s] market. If [Firm] took a license to [Name of 
SEP owner] patents, how would it know whether its competitors were licensed and whether 
everyone, including large multinational companies, were paying the same. In Unwired Planet 
vs  Huawei,  Mr Justice Birss made  clear that  there should be no material  difference in  the 
pricing of SEPs. Asian companies should pay the same as everyone, and that can be achieved 
by selling with licenses paid at chipset level. 

I have heard it said by various SEP holders and commentators that large SEP holders ‘do not 
chase SME’s’, and that is clearly inaccurate. [Firm] has no idea how many similar licensing 
requests have been sent out by [Name of SEP owner], and other SEP owners. Even if some 
SEP holders did have a practice of leaving SME’s alone, it is unreasonable and unfair for 
SME’s such as [Firm] to have the fear of waiting for a ‘tap on the shoulder’ by an SEP owner. 
Indeed, if SEP holders did ‘leave SME’s alone’, there would remain a fear that SEP holders 
would appear at a later date (perhaps when the SME was a larger company) and then make a 
claim for past royalties going back 6 years. It is unfair and unreasonable to put that financial 
uncertainty onto SME’s like [Firm]. The UKIPO might consider it appropriate to ask some of 
the assertive SEP holders for details of the type of companies they have sent licensing requests 
to, and how many have been sent out. 
[Firm] takes the view that the solution is for the Commission to take active steps to ensure 
that chipset and module suppliers can get SEP licenses, so they can pass the IP rights along 
the supply chain to the SME customers.” 

  “For a small company this type of extras, where patent holders are tying avoid terms with 
module  manufacturer  and  come  after  the  end  product  companies  are  very  bad  for  small 
business:  

o  The amount of productive efforts in negotiations where the patent holder try to get as 
much as possible of value, creates a very unpleasant environment, as you don’t have 
a choice.  

o  Big companies will gain as they have legal departments that can help out. 

142 

 
o  European companies are at a disadvantage compared to foreign producers that might 

fly under the radar. 

o  It is ridiculous that patent pools should come after each company doing some modern 

radio technology, rather than settle cost per module with manufacturer.” 

  “Standards should not be a shop-front for royalty payments to others. SEP are a huge break 

on innovation and deployment of genuine standards in given areas.” 

  “The IoT market is very fragmented. By 2025, the market is expected to represent 100s of 
millions of units, but in our experience, a very large project is only a million units a year and 
most projects we see directly are 100-200k units per year. So you can imagine that there are 
thousands of projects and IoT companies with end solutions in this eco system.   

i.  Even large cellular technology vendors cannot  address  this number of customers 
directly, and we are a small company with a small sales force, so we are partnering 
with  module  vendors,  technology  partners  and  distributors  to  increase  our  market 
reach.   
ii. Increasingly we expect sales to go through partner channels, many of which also 
sell  primarily  through  distributors,  meaning  that  we  will  not  know  who  the  end 
customer is nor what their application is. Even today, we are not aware of all the end 
uses of the customers of our module vendor partners. 
iii.  The  end  customers  that  we  DO  know  generally  have  no  idea  how  to  evaluate 
patents related to 4G/5G technology and have no idea how to go about licensing the 
related SEPs. 

In  summary,  the  value  chain  has  a  small  number  of  vendors  of  the  cellular  technology 
solution,  whether  at  the  chipset  or  module  level,  and  a  very  large  number  of  companies 
looking  to  provide  IoT  solutions  that  include  cellular  connectivity.  The  efficient  solution 
would  be  to  license  at  the  module  level  as  the  module  contains  all  the  technology  in  the 
standard. 
It is hard to imagine how we can have licensing rates differentiated based on end use – there 
are too many end uses now and there will be new uses invented. And how will the SEP holders 
try to  capture the thousands of companies  using SEP technology? Only the lawyers really 
profit from all this.” 

  “SEP holders should not be able to select the level in the value chain for licensing. This way 
they  can  distort  the  competition  among  manufacturers  of  the  same  product  by  selectively 
enforcing the patent on the basis of commercial considerations. If only one manufacturer will 
pay royalties, this will produce distortion effect: either because it will remain the only lawful 
competitor or because the others will have a competitive advantage at price level. In our view 
a balanced licensing system should include an obligation for the SEP holder to license any 
undertaking which requests it, independently from the level of the value chain they are in. 

The appropriate level of licensing should therefore be at the component supplier level. The 
component suppliers are able to pass the cost down the value chain, and in this way a level 
playing field among manufacturers is preserved. Further, the component suppliers know best 
which technology is incorporated and can assess relevant SEPs, thus being in the best position 
to negotiate the royalties.  
This market distortion is particularly problematic in a market such as technologies for smart 
grids, where sales happen through public tendering procedure and where specific technologic 
requirements are requested by EU law at reasonable economic costs (e.g. interoperability of 
devices). If the SEP holder is allowed to claim royalties from manufacturers of smart energy 
devices,  it  will  be  even  more  difficult  to  pass  the  cost  down  to  the  public  undertaking. 
Therefore, the royalty payment will cut margins and disincentivise innovation in this strategic 

143 

 
market for the EU. Additionally, in order to preserve the level playing field, if the product is 
sold through public tendering, royalty value should be the same for each manufacturer and 
shall be disclosed with no confidentiality commitment.” 

The firm’s role as a standard contributor and SEP holder  

Most questions in this category received less than five answers; they are hence omitted in the analysis. 

Participation in standard setting 

Q18. Have you participated in standard setting? 

Yes 
No 
Other 

Ownership of SEPs 

Q19. Do you own any standard essential patents?  

Yes 
No 
Other 

Note: No respondent explained the choice of “Other” 

Motivation to contribute to standards 

Answers 
15 
23 
1 

Answers 
2 
8 
4 

% 
38% 
59% 
3% 

% 
14% 
57% 
29% 

Q20. What were your motivations to make a technical contribution to protocols and technologies in 
standards? Or for not doing so? 
(Note: The answers were grouped according to themes that emerged from the responses.) 

 

Improving technology: 

o  “Agroblockchain Technology.” 

o  “Improve the Standard.” 

o  “To  improve  the  standard  for  the  good  of  all,  and  to  ensure  that  everyone  can 
implement it without hindrance – to give confidence to all users of the standard that 
this is genuinely open to all.” 

o  “Part of our role in the EU projects. It also strengthens the industry. Standards help 

and give direction to innovation.” 

  Facilitating adoption of own technology: 

o  “Since day 1 [Firm] has seen the standard as the only way to reach a massive market 

as IoT. We believe that in the coming.” 

o  “Interest in have wide adoption of technology to create larger market for products.” 

o  “Most companies I advise want to contribute their technologies to standards if the IPR 
policy  of  the  SDOs  is  FRAND  based.  They  want  to  be  able  to  leverage  their 

144 

 
 
 
 
 
 
 
technologies  in  future  cross  licensing  negotiations  and/or  monetise  their  potential 
standards essential patents.” 

o  “Influencing the standards according to our technical choices or strategic choices or 

IP choices.” 

  Learning about technology and market: 

o  “Awareness of ongoing activities to proper align internal product development.” 

o  “We want to be abreast of the latest evolutions of the standard so that we can include 
this in our product roadmap so we are members of ETSI and are active participants in 
the meetings.” 

o 

 “Technology watch  

-  on future RFC and state of the art. 

-  understanding the strategy of the competitors / leading vendors, and especially 

trying to understand their underlying strategy on IP / patents. 

-  understanding security agencies’ positions (US mostly).” 

  Networking: 

- 

- 

“Create credibility for us and being well identified in the eco-system. 

“Participating to SDOs also allow the participants to create their network and have 
direct access to the other representatives. This is really useful for SMEs.” 

Considerations to contribute to standard development 

Q21.  If  you  have  not  yet  contributed  to  standardisation,  have  you  considered  contributing  to 
standardisation?  (e.g.  by  developing  patents  and  declaring  them  as  standard-essential;  or 
participating in Standard Development Organisation(s) committees and developing a standard?) 

Yes 
No 
Depends 

Comments:  

  Firms answering “yes”: 

Answers 
7 
14 
1 

% 
32% 
64% 
5% 

o  “If we can contribute, we are very much willing to do so!” 

o  “We made some requests of modification of the USD348 standard but are too small to 

contribute ourselves.” 

o  “But as a SME it’s hard to get in!” 

  Firms answering “no”: 

(Note: The answers were grouped according to themes that emerged from the responses.) 

o  Lack of resources / expertise:  

348 USD is a standard for interoperability between 3D software solutions. 

145 

 
 
 
 
                                                 
  “No personnel and financial resources.” 

  “We are too small.” 

  “Too expensive and standardisation is not our expertise. Our expertise is  in 
ruggedisation,  and  we  work  to  ruggedisation  standards  (e.g.  military  grade 
standards).” 

  “No, we don’t have the resources.” 

o  Other reasons: 

  “We are too small to garner the votes necessary for our patents to be adopted 
by the standard setting bodies, which are dominated by the largest companies.” 

 

 

 “In previous companies I have contributed to IETF standard protocols – I have 
noted  the  IETF  has  a  different  approach  to  SEPs  than  (for  example) 
ITU/ETSI.” 

 “We  are  not  communication  components  developers.  We  contribute  in 
standard setting bodies as for mechanical gas products and metering systems 
and as for other technical subjects in which we have specific expertise.” 

  “There are hundreds of standards in EV charging from safety to durability to 
automotive. The only standards we are having problems with is cellular.” 

Potential reasons to contribute to standardization 

Q22. Why would you think it may be useful for you to contribute to standardisation? 
(Note: The answers were grouped according to themes that emerged from the responses.) 

  Benefits of standards:  

o  “Standards are essential to enable innovation, as they create a larger market e.g. when 
a standard infrastructure is available more devices can be brought to market. Generally 
this benefits everyone, including those who have invested in the research to drive the 
standard, as they are best placed to take advantage for their own products.” 

o  “It  is  necessary  for  a  sector  as  AgroTech  and  sensoric,  drone  technology  for 

standards.” 

o  “The standard around Wi-Fi reconfigurability and radio reconfigurability in general, 
as  well  as  entrenched  cybersecurity  aspects,  could  have  the  potential  to  destroy  or 
foster  the  transition  from  a  vertically  integrated  networking  market  to  a  horizontal 
market.  It’s  critical  that  the  standard  is  done  keeping  this  in  mind.  As  most 
contributors  to  the  involved  standards  seem  influenced  by  large  global  hardware 
companies, which are not necessarily interested to foster the transition to a horizontal 
market (which should be considered positive for consumers, for the environment, for 
SMEs, for European's sovereignty), [Firm], a European Digital SME, feels obligated 
to contribute.” 

o  “Standards are necessary to create an ecosystem and finally a choice for the users.” 

o  “Certify the implementation of the standards generates user confidence and helps the 

European market surveillance observatory. […]” 

o  “I feel that there is a big gap between what is expected from SME’s and especially 

Start-ups and that the Start-up community is not at all aware of the issue.” 

146 

 
o  “Part of our role in the EU projects. It also strengthens the industry. Standards help 

and give direction to innovation.” 

o  “Participate to the creation of global standards to enable interoperability.” 

 

Improve technology: 

o  “To get the best technological solution.” 

o  “Because  we  invent  a  lot  of  new  applications.  We  build  enormous  amounts  of 
knowledge in special areas. We are very creative in solving difficult problems in the 
field.” 

o  “Contribute my best technologies to the standards.”  

o  “Improve the Standard.” 

o  “It  gives clarity to  the  market  and designs clear responsibilities at  any level  of the 

value chain. It helps ensuring safety and quality.” 

 

Influence technology development: 

o  “Set directions in the market.” 

o  “Generate  competitive  advantage  to  our  company  and  limit  disadvantages  form 

unfavourable directions.” 

o  “We are developing a new technology and it can be very useful for us if it becomes a 

standard patent. We believe that what we are doing will change the world.” 

o  “The USD349 has become essential in our market and it is important to develop it to 

meet our needs.” 

  Learn about technology developments: 

o  “Awareness of ongoing activities to proper align internal product development.” 

o  “Create a strong network, learn from the other contributors.” 

o  “New experience for our company and new potential market.” 

o  “To know in advance the technology in details.” 

Obstacles to contributing to standardisation 

Q23. What are the obstacles for you to contribute to standardisation? 
(Note: The answers were grouped according to themes that emerged from the responses.) 

  Resource constraints (time, cost, people): 

o  “Effort and resources.” 

o  “Ability to dedicate time and resources.” 

o  “No personal and financial resources.” 

349 USD is a standard for interoperability between 3D software solutions. 

147 

 
 
                                                 
o  “Contributing  is  a  very  slow,  time-consuming,  and  complex  process.  It  spans  over 
multiple years of activity and its results are not tangible in the typical lifetime of a 
digital company/startup.” 

o  “We are too small.” 

o  “Time and resources... we are a small startup and we invest much more time on the 
subject  compared  to  our  size  and  other  EU  groups.  (Microsoft  has  a  team  of  400 
people dedicated to this topic...)” 

o  “Money, resource, time.” 

o  “Internal capacity to dedicate to such topics.” 

o  “Efforts needed.” 

o  “Costs  related  to  travels.  Face  to  face  meetings  are  required  to  allow  efficient 

negotiations and cannot be replaced by virtual meetings.” 

o  “Resources – just don’t have enough time or people.” 

o  “Time consuming and bureaucracy.” 

o  “Knowledge and experience.” 

o  “Cost” 

o  “Resources and focus.” 

o  “Financial and human resources; not big enough versus Qualcomm, Nokia, etc.” 

  Standard-setting dominated by big players:  

o  “Closed standards groups (ETSI).” 

o  “Interest  for  Actors,  Knowledge,  Time  to  Participation  of  Process.  Professional 

Secrets and Industrial Secrets.” 

o  “Standard owners/developers who want to charge royalty fees do not want others to 
participate. Standard developers are often not interested in developing open standards 
and open-source their work.” 

o  “Overwhelming number of patents in existence makes it challenging to standardize.” 

o  “All USD350 contributors are large international companies. We are too small to be 

listened to on our own proposals for changing the standard.” 

o  “How to get in against the big ones.” 

  Complexity:  

o  “For us it is still very new, so we are learning by doing. Sometimes it gets a bit difficult 
to understand how all the process work and what are the first steps to do and in which 
timings.” 

o  “Don’t know where to start, need guidance to get an overview.” 

350 USD is a standard for interoperability between 3D software solutions. 

148 

 
 
 
                                                 
ANNEX 9: PUBLIC CONSULTATION – DETAILED SUMMARY 

This  document  should  be  regarded  solely  as  a  summary  of  the  contributions  made  by 
stakeholders  to  public  consultation  on  the  Standard  Essential  Patents.  It  cannot  in  any 
circumstances be regarded as the official position of the Commission or its services. Responses 
to the consultation activities cannot be considered as a representative sample of the views of the 
EU population. 

This  annex  provides  a  detailed  summary  of  the  responses  to  the  public  consultations  and  call  for 
evidence  on  potential  future  European  Commission  initiative  on  the  Standard  Essential  Patents 
(SEP). 

Call for Evidence 

The  consultation  took  place  between  14  February  2022  and  09  May  2022.  During  that  period  97 
replies and 49 position papers were submitted. 
All position papers are published351 and they are not susceptible to summary. Among the responses 
with  important  additional  elements  are  the  contributions  by  Apple,  Avvika  AB,  Boehmert  & 
Boehmert, DVB, InnovUp, Internet Society, National Standards Authority of Ireland (NSAI), Nokia, 
Ordine dei Consulenti in Proprietà Industriale and PROSA. 

Summary of replies to the Open Public Consultations 

The  consultation  took  place  between  14  February  2022  and  09  May  2022.  During  that  period  74 
replies  to  the  questionnaire  arrived.  Respondents  were  asked  to  provide  basic  information  about 
themselves  such  as  country  of  origin,  area  of  activity,  registration  in  transparency  register. 
Subsequently they could reply on the following blocks of questions: general questions, questions on 
the  licensing  process  and  related  problems,  questions  on  transparency  of  SEP  licensing,  on 
essentiality  of  SEPs,  on  Fair,  reasonable  and  non-discriminatory  (FRAND)  licensing  terms  and 
finally questions on SEP enforcement.  

Respondents’ characteristics 

Two thirds of replies came from the European Union. The highest number of EU replies came from 
Germany. The remaining one third of replies came from countries outside the EU, with the highest 
number coming from the USA. The graph below (Fig.1) presents responses per country of origin. 

Almost  60%  of  the  74  replies  came  from  companies  (39  replies)  or  business  associations  (7). 
Followed by seven replies from academia, two from public authorities, one from non-governmental 
organisation (NGO) and one from trade union. Six replies came from EU and non-EU citizens (see 
Fig. 2). 

Among  39  companies,  77%  were  large  entities  and  23%  were  small  and  medium-sized  entities 
(SMEs).  

351 https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13109-Intellectual-property-new-
framework-for-standard-essential-patents/feedback_en?p_id=28414115  

149 

 
 
 
 
                                                 
30% of respondents identified themselves as both SEP holders and implementers, 13% as only SEP 
implementers  and 4% as only SEP holders.  Around 50% identified themselves as  “other” (which 
consists of for instance attorneys, advisers, academia…).  
Around  half  of  respondents  (35)  are  registered  in  the  transparency  register.352  The  Transparency 
Register is a tool to allow European citizens to see what interests and on whose behalf the respondent 
represents. 

 Figure 19: Distribution of responses per country of origin of respondent 

Source: Commission own analysis 

352 https://ec.europa.eu/transparencyregister/public/homePage.do. 

150 

2365322221111115511110510152025 
 
                                                 
 Figure 19: Distribution of responses per country of origin of respondent 

Figure 20: Distribution of responses by type of respondent 

Source: Commission own analysis 

Methodology 

For  the  purpose  of  quantitative  analysis,  responses  of  stakeholders  were  grouped  into  broader 
categories (using self-declarations of the respondents): 

 
 

 

 

 

replies of all respondents (table abbreviation: “All”), 
replies of respondents who identified themselves as “company/business organisation” 
(abbreviation: “Companies”), 
replies of “business associations” together with “trade unions” (abbreviation: 
“Associations/trade union”), 
replies of “public authorities”, “non-governmental organisations (NGO)”, 
“academic/research institutions” and of “others” (abbreviation: 
“Academia/Authorities/NGO/other”) 
replies of EU and non-EU citizens (abbreviation: “Citizens”) 

To simplify presentation, in case of questions with more granular scale of possible answers (Likert 
scale),  answers  pointing  to  the  same  sentiment  were  grouped  together  (e.g.  “Fully  agree”  and 
“Somewhat agree”). 

Additionally, we wanted to present a summary of the views of SEP holders in comparison to those 
of implementers. However, there is no clear delineation (based on the self-identification) between 
those that are SEP holders and those that are implementers – i.e., in a large number of instances the 

151 

Company/business organisation, 53%Business association, 9%Academic/research institution, 9%EU citizen, 8%Non-EU citizen, 8%other, 7%Public authority, 3%NGO, 1%Trade union, 1% 
 
 
submitter identifies as a SEP holder and an implementer353. We have, therefore, compiled the views 
into two groups based on replies to question two (Q2) and three (Q3) as proxies for Group A and 
Group  B  responses354.  Using  these  proxies,  we  had  29  Group  A  respondents  and  18  Group  B 
respondents.  Group A are responses we perceive as promoting more of an implementer’s views, and 
Group B are those that we believe promote primarily the views of a SEP holder. Note that in many 
instances, companies may fall into Group A or Group B depending on their response to a particular 
question. 

For  simplicity,  we  present  their  replies  for  each  question  in  tables  below  under  captions 
“Implementers” and “SEP Holders” respectively.  

Since there was a significant number of replies from outside of the EU, we present tables with replies 
of EU and non-EU respondents. Self-declaration of the country of origin was checked and corrected 
based on the headquarters localisation of the respondent.355 Replies of EU and non-EU citizens were 
not taken into account in these tables. As the result of these corrections there were 40 respondents 
from the EU and 22 from outside of the EU. 

Finally  in  case  of  questions  of  special  relevance  to  SMEs,  replies  of  all  those  who  identified 
themselves as SMEs are presented. 

Replies to general questions 

Quantitative summary 

Around 60% of respondents considered that the current legal framework sufficiently protects against 
implementers “hold-out” (e.g. unreasonably delaying the conclusion of a licence by an implementer). 
Around  30%  had  opposing  views.  The  responses  showed  similar  pattern  across  different 
stakeholders’  groups  (companies,  associations,  academia,  respondents  from  the  EU  and  non-EU 
countries).  

Respondents  were  divided  on  the  issue  whether  the  current  legal  framework  provides  sufficient 
protection  against  SEP  holders  “hold-up”  (e.g.  using  the  threat  of  injunction  to  extract  excessive 
rents) with 48% agreeing and 43% disagreeing. Companies, citizens and non-EU respondents mainly 
disagreed. While academia/authorities/NGOs/others, and EU based respondents tended to agree with 
that the current legal framework provides sufficient protection against SEP holders “hold-up”. 

The  final  question  in  this  section  asked  about  impact  of  the  current  SEP  licensing  framework  on 
SMEs and start-ups. Around half of all respondents assessed the impact as negative, a third thought 
there  is  no  impact,  and  around  5%  deemed  it  positive.  Responses  showed  similar  pattern  for  all 
analysed groups, except for associations, implementers and SEP holders. Around half of associations 
and SEP holders considered that there was no impact, while around 80% of implementers thought 
that impact is negative. 

Tables with replies per question 

353 Based on self-identification, there were only nine implementers (13% of replies) and three SEP holders (4% of replies), 
while the remaining respondents identified themselves either as “both implementer and holder” (30% of replies) or as 
“other” (52% of replies). 
354 Those who agreed with Q2 (that current legal framework provides sufficient protection against implementers hold-
out) and disagreed, were neutral or had no opinion on Q3 (that current legal framework provides sufficient protection 
against SEP holders hold-up) were included in Group A. Those who disagreed, were neutral or had no opinion on Q2 and 
agreed with Q3 where included in Group B. 
355 There were four corrections from EU to non-EU and one from non-EU to EU. 

152 

 
 
 
                                                 
Q2. Do you consider that the current legal framework for SEPs356 provides sufficient legal protection 
against  “hold-out”  (broadly  opportunistic  behaviour  by  SEP  implementers  such  as  delaying  the 
conclusion of a licence for as long as possible)?  

Agree 
Neutral 
Disagree 
No. of replies 

All 

59% 
12% 
29% 
68 

Companies 

56% 
11% 
33% 
36 

Associations/ 
trade union 
63% 
0% 
38% 
8 

Academia/Autho-
rities/NGO/other 
57% 
29% 
14% 
14 

Citizens 

70% 
0% 
30% 
10 

Note: Agree composes of “Fully agree” and “Somewhat agree”; Disagree composes of  “Rather disagree” and “Fully disagree”; 
“No opinion / cannot answer” answers not taken into account. 

Agree 
Neutral 
Disagree 
No. of replies 

Implementers 

SEP 
Holders 

100% 
0% 
0% 
29 

0% 
22% 
78% 
18 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. 

Agree 
Neutral 
Disagree 
No. of replies 

EU 

58% 
16% 
26% 
38 

non-EU 

55% 
10% 
35% 
20 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. 

Summary of comments 

There are concerns regarding “hold-out”, some claiming it is a systemic issue and already sufficiently 
addressed by the current framework, and others claiming there is no empirical evidence and that it is 
an unproven theory that there is hold-out on the market.  

Proponents of the current legal framework being sufficient legal protection: 

356 Communication from the Commission to the European Parliament, the Council and the European Economic and Social 
Committee  on  Setting  out  the  EU  approach  to  Standard  Essential  Patents,  COM(2017)712  final,  29.11.2017, 
https://ec.europa.eu/docsroom/documents/26583, endorsed by Council Conclusions on the  enforcement of Intellectual 
Property  Rights,  6681/18,  1.3.2018,  http://data.consilium.europa.eu/doc/document/ST-6681-2018-INIT/en/pdf; 
Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual 
property rights (“IPRED”), OJ L 157, 30.4.2004, pp. 45-86, http://data.europa.eu/eli/dir/2004/48/oj; Regulation (EU) No. 
608/2013 of the European Parliament and of the Council of 12 June 2013 concerning customs enforcement of intellectual 
property rights and repealing Council Regulation (EC) No 1383/2003 (“Regulation concerning customs enforcement of 
IPRs”), OJ L 181, 29.6.2013, pp. 15-34, http://data.europa.eu/eli/reg/2013/608/oj; Regulation (EU) No. 1025/2012 of the 
European  Parliament  and  of  the  Council  of  25  October  2012 on  European  standardisation  (“Regulation  on  European 
standardisation”), 
https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=CELEX%3A32012R1025&qid=1676580774315;  Communication  from  the  Commission  – 
Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-
operation agreements (notably chapter 7) (“Horizontal Co-operation Guidelines”), OJ C 11, 14.1.2011, pp. 1-72, CELEX: 
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52011XC0114(04); 
the 
Commission – Guidelines on the application of Article 101 of the Treaty on the Functioning of the European Union to 
technology 
https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=uriserv%3AOJ.C_.2014.089.01.0003.01.ENG; Judgment of the Court of Justice of the European 
Union (“CJEU”) of 16 July 2015, Huawei Technologies Co. Ltd v ZTE Corp. and ZTE Deutschland GmbH, C-170/13, 
ECLI:EU:C:2015:477,  https://e-justice.europa.eu/ecli/ECLI:EU:C:2015:477;  national  patent  laws  and  judgments  of 
national courts. 

agreements,  OJ  C 

Communication 

14.11.2012, 

28.3.2014, 

transfer 

12-33, 

from 

3-50 

316, 

89, 

pp. 

OJ 

p. 

L 

153 

 
 
 
 
                                                 
Proponents  of  the  current  legal  framework  urge  the  EC  to  reject  claims  that  seek  to  position 
appropriate negotiations by a potential licensee when approached by a SEP holder as ‘hold-out’. 

According to those opinions, the current FRAND framework for the most part does not support hold-
out behaviour since implementers need to conduct diligence on the essentiality and validity of SEPs 
before agreeing to take a licence. This may not constitute delay tactics. Where needed, SEP licensors 
always retain the option of responding to perceived delay by accused infringers by asserting SEPs 
and seeking a determination from a court regarding a reasonable royalty. European courts provide 
sufficient legal protection and are effective against hold-out, but the system could be improved if it 
were less expensive and quicker. 

Some  respondents  claim  that  the  national  court  practice  increasingly  favours  SEP  holders.  This 
particularly applies in Germany after the Sisvel v. Haier decisions of Germany’s Federal Court of 
Justice. They ask that the New Framework for SEPs bring the licensing negotiations back in line with 
the CJEU’s ruling and ensure that injunctions are available only in exceptional circumstances in the 
SEP context. 

Proponents for current framework not being sufficient for legal protection against hold-out: 

Some respondents claim that they face significant hold-out from implementers who refuse to engage 
in good faith negotiations aimed at concluding a FRAND licence. Even if the CJEU Huawei v ZTE 
decision  has  brought  some  improvements  as  it  reaffirms  that  there  are  obligations  on  both  SEP 
holders and implementers, there is still hold out according to such respondents, proving that the legal 
protections are insufficient. 

Respondents  claim  that  hold-out  is  incentivized  when  it  is  difficult  for  innovators  to  obtain 
injunctions and appropriate damages. In fact, according to some respondents there are no financial 
consequences  for  bad  faith  implementers,  as  the  worst  they  can  get  after  years  of  hold-out  is  a 
FRAND  royalty  rate  determination.  Such  implementers,  however,  continue  to  benefit  from 
technologies that are covered by patent rights, thus denying the innovators the return on investment 
which  is  necessary  for  sustaining  the  innovation  cycle.  Respondents  explain  that  such  behaviour 
would disregard the emerging guidance from various courts in Europe cautioning against hold-out 
behaviour.  They  warn  against  distortion  of  competition,  discrimination  against  companies  that 
respect  IP  by  taking  a  license,  and  weakening  of  the  incentives  for  companies  to  innovate.  Such 
respondents consider that that EU courts should be able to issue injunctions and award royalties and 
damages to incentivize implementers to settle rather than to hold out. 

Some respondents caution that excessive protection and regulation could  obstruct the competitive 
market  principles  and  should  not  be  undertaken  lightly.  Such  new  framework  should,  however, 
reduce the motivation for “hold-out” or create incentives for early licensing. 

Q3. Do you consider that the current legal framework for SEPs provides a sufficient legal protection 
against  “hold-up”  (broadly  opportunistic  behaviour  by  SEP  holders  such  as  using  their  market 
power to extract excessive rents or terms from implementers)? 

All 

Companies 

Associations/trade 
union 

Academia/Autho-
rities/NGO/other 

Citizens 

43% 
9% 
48% 

Agree 
Neutral 
Disagree 
No. of replies  67 

43% 
0% 
57% 
7 
Note: Agree composes of “Fully agree” and “Somewhat agree”; Disagree composes of “Rather disagree” and “Fully disagree”; 
“No opinion / cannot answer” answers not taken into account. 

62% 
8% 
31% 
13 

38% 
14% 
49% 
37 

40% 
0% 
60% 
10 

154 

 
 
 
Agree 
Neutral 
Disagree 
No. of replies 

Implementers 

0% 
7% 
93% 
28 

SEP 
Holders 

100% 
0% 
0% 
18 

Note:  Implementers  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. 

Agree 
Neutral 
Disagree 
No. of replies 

EU 

47% 
8% 
44% 
36 

non-EU 

38% 
14% 
48% 
21 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. 

Summary of comments 

Proponents for the current legal framework being sufficient: 

Some respondents argue that SEP implementers do not need to acquire any technology from the SEP 
holder to  implement  a particular SEP, since the  technology is  described  in  a public specification, 
which can be implemented without delay.  

Some respondents explain that the CJEU guidance in Huawei v ZTE and the subsequent decisions 
from various courts in Europe provide a clear indication that there is sufficient legal protection against 
‘hold-up’. They state that hold-up supposes the use of market power to extract excessive rents. As 
noted by the UK Supreme Court in the Unwired Planet v Huawei decision, the threat of an injunction 
cannot be employed by the claimants as a means of charging exorbitant fees, or for undue leverage 
in negotiations, since they cannot enforce their rights unless they have offered to license their patents 
on terms which the court is satisfied are fair, reasonable and non-discriminatory. According to such 
respondents, there is still no abundant evidence available that establishes the existence of hold-up in 
the FRAND context.  

Proponents for the current legal framework being insufficient: 

Respondents commented that the FRAND obligation is a good tool to protect licensees against hold-
up, but its ambiguity is used by SEP holders to maximize royalties. This harms innovation, SMEs 
and  the  marketplace.  According  to  them,  hold-up  is  the  fundamental  reason  there  are  so  few 
companies entering or able to maintain their businesses in this space against SEP holders who may 
use SEP hold-up to distort markets, eliminate competition, and harm the European economy. 

Some  respondents  believe  that  some  courts  have  (mis)interpreted  Huawei  v.  ZTE  to  impose 
unrealistic  requirements  on  implementers  to  prove  their  willingness  [to  license],  while  failing  to 
scrutinise whether the SEP owner’s licence offer is truly FRAND. This places undue pressure on 
negotiations and may force the potential licensee to  accept  non-FRAND  rates that  go beyond the 
value of the patented invention or pay for patents that are not standard-essential. 

Some argue that the framework fails in three ways: (i) it allows injunctions in all cases; (ii) it fails to 
require information necessary for FRAND licensing, e.g., full price and license terms; and (iii) it fails 
to treat a standard as a whole (the “full stack”). 

Some respondents argue that the current legal framework does not deal effectively with the issue that 
some SEP holders only want to license manufacturers of “end products” and refuse to grant licenses 
to  upstream  implementers.  According  to  them,  this  strategy  is  aimed  at  maximizing  the  threat 
resulting from injunctions at the level of the most valuable products to extract the highest possible 
royalty rates. 

155 

 
 
 
Q4. What is the impact of the current framework for SEP licensing on start-ups and SMEs? 

It puts start-ups and SMEs at competitive 
disadvantage 
It  does  not  impact  start-ups  and  SMEs 
differently than other stakeholders 
It  is  more  favourable  to  start-ups  and 
SMEs 
Other, please specify 
No. of replies 

All 

51% 

31% 

5% 

14% 
65 

Companies  Associations/ 
trade union 

Academia/ 
Authorities/
NGO/other 

Citizens 

52% 

26% 

3% 

19% 
31 

38% 

50% 

0% 

13% 
8 

53% 

27% 

7% 

13% 
15 

55% 

36% 

9% 

0% 
11 

It puts start-ups and SMEs at competitive disadvantage 
It does not impact start-ups and SMEs differently than other stakeholders 
It is more favourable to start-ups and SMEs 
Other, please specify 
No. of replies 

Implementers 

SEP 
Holders 

79% 
13% 
8% 
0% 
24 

6% 
56% 
6% 
33% 
18 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. 

It puts start-ups and SMEs at competitive disadvantage 
It does not impact start-ups and SMEs differently than other stakeholders 
It is more favourable to start-ups and SMEs 
Other, please specify 
No. of replies 

SME 

Large 

48% 
40% 
0% 
12% 
25 

52% 
21% 
7% 
21% 
29 

Note: SME: those who chose as organisation size: “Micro (1 to 9 employees)” or “Small (10 to 49 employees)” or “Medium (50 to 
249 employees)”; Large: those who chose “Large (250 or more)” 

It puts start-ups and SMEs at competitive disadvantage 
It does not impact start-ups and SMEs differently than other stakeholders 
It is more favourable to start-ups and SMEs 
Other, please specify 
No. of replies 

EU 

54% 
35% 
3% 
8% 
37 

non-EU 

41% 
18% 
6% 
35% 
17 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. 

Summary of comments 

Positive impact  

Some argue that SMEs benefit from standards. For example, in some cases such as the LTE patent 
pool, SMEs are given preferential treatment in terms of licensing conditions, etc. SMEs can also be 
the developers of standards. And they also benefit from the existence of standards and a balanced 
SEP licensing framework.  

Other respondents argue that start-ups and SMEs generally are "under radar" and too small for any 
bigger licensor to be interested in them. They may continue infringing unnoticed. In practice, there 
are hardly any litigation against start-ups/SMEs, as litigation would be inefficient for the SEP holder.  

Negative impact  

Some  respondents  explained  that  the  SEP  marketplace  is  not  transparent  enough  for  SEPs  to  be 
identified and licences agreed before a product is launched, especially where the technology is time-
156 

 
 
 
 
 
 
 
sensitive (e.g., the product life cycle is short), or for SMEs to provide for the accurate costing of SEP 
licences in their business plans. 

Some respondents  claim that there is  a negative impact because of power asymmetry and lack of 
transparency  puts  SMEs  at  a  disadvantage.  SMEs  face  the  same  problems  as  larger  companies; 
however, they are less equipped to weather the legal risks, costs, and complexity of transacting with 
SEP licensors as they do not have in-house expertise in all three areas of ICT, standardization and 
patent  licensing  and  cannot  afford  to  external  experts  like  larger  companies.  Also,  SMEs  could 
probably not afford an injunction and therefore the mere threat of an injunction forces them to choose 
between accepting potentially supra-FRAND rates or being excluded from the market. 

A  respondent  explained  that  the  current  legal  framework  furthermore  favours  foreign  companies 
outside the EU. When those located outside the EU face injunction in the EU, they lose access to one 
national market. But when start-ups and SMEs located in the EU face injunction in the EU, they may 
lose their whole business. This may lead to limited innovation and delaying uptake of for example 
IoT. 

Questions on the licensing process 

Quantitative summary 

Around half of respondents reported seeking a licence before a SEP holder approaches them. SEP 
holder usually contacted the respondents around 3 years after the first implementation of a standard 
in a product. Licence negotiations with a large SEP holder concerned in general between 1 and 50 
SEP. 

Almost three quarters of respondents request a licence in order not to infringe a SEP and 60% to be 
able to plan production and costs. 

In terms of consequences of the current SEP licencing practices: Two thirds of all respondents and 
majority  of  Implementers  try  to  share  SEP  cost/risks  with  their  suppliers.  Around  40%  of  all 
respondents, and two thirds of Implementers will try to settle with a SEP holder as quickly as possible 
to  avoid  litigation  or  will  search  for  other  technology  or  royalty  free  standard.  Around  a  third  of 
respondents (and a half of Implementers) will increase prices and may become less competitive. 

The main reasons for licencing/having SEP are securing the return on investment (70% of answers), 
followed by use of SEP for defensive/bargaining purposes (60%) and participation in standardisation 
process in the future (40%). 

SEP holders start contacting implementers on average two years after publication of a standard. On 
average around 60% of contacted implementers, reply within one year. Around 70% take a licence 
without any litigation. It takes on average 3 years and 3 months to conclude a licence.   

Q5.  What  is  the  impact  on  your  business  of  recent  litigations  in  courts  in  different  jurisdictions, 
including China, Germany, India and the UK? 

Summary of comments  

Positive impacts  

According  to  some,  recent  court  decisions  from  the  European  and  US  courts  can  provide  useful 
guidance for parties negotiating in good faith to come to a licence agreement. Even if there are some 
differences between decisions (as they are based on different factual circumstances), they do provide 
further guidance.   

Negative impacts  

157 

 
 
 
According to others, injunctions for SEPs under FRAND commitment have become more readily 
available. Such respondents pointed out in particular to the decision of the Germany’s Federal Court 
of Justice Sisvel vs. Haier. They claim that the court effectively contradicted the CJEU’s judgment 
Huawei  v.  ZTE  and  brought  back  the  Orange  Book  Standard.  It  re-shifted  the  main  burden  of 
negotiations on licensees and increased the availability of injunctions. Those respondents explain that 
similar  trends  can  be  noticed  in  neighbouring  jurisdictions  (see,  e.g.,  Philips  v  Wiko  in  the 
Netherlands). They claim that this can lead to forum shopping since the different jurisdictions have 
different opportunities for injunctions.  

Furthermore,  a  litigator  specialising  in  FRAND  matters  can  see  a  split  between  the  courts  which 
apply the law of the contract (China, India, US, UK, France) and those which either refuse (Germany) 
or avoid the issue (NL). This has a major impact on both licensing-in and licensing-out strategies 
because  it  creates  lots  of  forum  shopping  strategies,  therefore  creating  more  confusion  for  the 
legitimate players (licensors and implementers).  

Some respondents see hold-up occur in the broader IT, mobile and automotive industry, and expect 
litigation to  emerge in  the  IoT sector soon  as well. Those  respondents  consider potential hold-up 
problematic considering the 5G rollout and widespread adoption of IoT devices. They see these issues 
emerge in relation to a small set of SEP holders active in the narrow field of wireless communication 
and codec standards.  

Q6. In your experience, in licensing negotiations, how many SEPs are discussed technically between 
an implementer and a SEP holder with a large portfolio? 

All 

Companies 

Associations/trade 
union 

Academia/Autho-
rities/NGO/other 

Citizens 

60% 
< 20 
21% 
20-50 
6% 
50-100 
4% 
100-200 
6% 
200-400 
> 400 
4% 
No. of replies  53 
63 
Average* 

53% 
27% 
7% 
3% 
3% 
7% 
30 
75 

60% 
20% 
20% 
0% 
0% 
0% 
5 
28 

57% 
14% 
0% 
0% 
29% 
0% 
7 
96 

82% 
9% 
0% 
9% 
0% 
0% 
11 
25 

* Weighted average calculated using the middle of ranges, for the last open range value of 600 assumed. 

< 20 
20-50 
50-100 
100-200 
200-400 
> 400 
No. of replies 
Average* 

Implementers 

SEP 
Holders 

68% 
14% 
5% 
5% 
5% 
5% 
22 
63 

53% 
24% 
12% 
6% 
6% 
0% 
17 
49 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. 
* Weighted average calculated using the middle of ranges, for the last open range value of 600 assumed. 

< 20 
20-50 
50-100 
100-200 
200-400 
> 400 

EU 

56% 
19% 
11% 
4% 
7% 
4% 

non-EU 

53% 
33% 
0% 
0% 
7% 
7% 

158 

 
 
 
 
 
No. of replies 
Average* 

EU 

27 
70 

non-EU 

15 
77 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. 
* Weighted average calculated using the middle of ranges, for the last open range value of 600 assumed. 

Summary of comments 

Some  respondents  claim  that  it  is  very  difficult  to  provide  a  realistic  average  as  there  are  many 
variables that impact the number. In some licensing negotiations claim charts of less than 20 SEP 
families  are  exchanged,  in  others  claim  charts  of  more  than  400  SEP  families  are  exchanged. 
Different elements may play a role, such as: contract renewal or not, number of standards covered, 
the involved products, existence of cross licensing (SEP families of both parties involved), agreement 
between  the  parties,  etc.  However,  technical  discussions  between  SEP  holder  and  implementer 
usually only take place based on so-called “proud lists” with claim charts.  

QUESTIONS FOR SEP IMPLEMENTERS 

Q7. Have you ever sought a licence before being approached by a SEP holder? 

Yes 
No 
No  opinion 
answer 
No. of replies 

/ 

cannot 

All 

46% 
20% 
35% 

46 

Companies 

Associations/ 
trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

50% 
17% 
33% 

30 

50% 
0% 
50% 

4 

40% 
20% 
40% 

5 

29% 
43% 
29% 

7 

Yes 
No 
No opinion / cannot answer 
No. of replies 

Implementers 

SEP 
Holders 

52% 
9% 
39% 
23 

67% 
11% 
22% 
9 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. 

Yes 
No 
No opinion / cannot answer 
No. of replies 

EU 

44% 
20% 
36% 
25 

non-EU 

57% 
7% 
36% 
14 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. 

Summary of comments 

Yes 

Some respondents underline that pursuant to Huawei v. ZTE SEP holders notify a user of a standard 
that it is potentially infringing its patents – not the other way around. However, in some instances, 
implementers may have proactively sought a SEP license or inquired about FRAND royalty rates, 
for  example,  when  required  to  make  product  development  decisions  or  to  renew  a  contract. 
Furthermore, suppliers  may also ask for licenses when their customers request indemnification as 
part of the supply arrangement. Some note that if they approach SEP holders, they often do not obtain 
a licence. 

159 

 
 
 
 
 
 
 
According to some respondents, proactively seeking a license works well when the licensor provides: 
(1) detailed information about their SEP portfolio, (2) complete proposed license terms, and (3) a 
rational price based on the value of the corresponding technology and their share of the patent stack 
for the corresponding standard. Such examples illustrate how FRAND licences can, and should, be 
transacted. 

No 

Some respondents explain that it would be impractical for implementers to seek licences first as there 
are too many SEP holders. Because licensing negotiations take time, by time all licences are in place, 
the licensed product may be obsolete. In addition, an implementer cannot know how many SEPs have 
been declared until several years after the technical specification is published. An implementer would 
also rarely know ex-ante the margin it will be able to make on its product. This is why, according to 
those respondents, FRAND terms need to be negotiated ex-post. 

Others  claim  that  the  existing  lack  of  transparency  about  the  SEPs,  the  royalties  and  the  level  of 
licensing do not create an environment of trust conducive to a proactive approach from implementers 
to SEP holders. 

Respondents  in  the  automotive  sector  do  not  approach  SEP  holders  because  they  consider  that 
licences should be in principle acquired by upstream suppliers. Upstream licensing has long been, 
and continues to be, the default in the automotive industry for both SEPs and non-SEPs since a single 
vehicle can consist of over 10,000 individual parts supplied by specialised suppliers and it is neither 
practical nor feasible for them to have detailed technical knowledge of each part. Upstream suppliers 
know better the technology they implement than downstream users, and are therefore better placed 
to assess the FRAND-ness of a licence offer. Further, implementers cannot evaluate patents owned 
by other companies to see if they are valid rights and essential to certain standard.  

Q8. If yes, how did that impact on your business? 

All 

Companies 

Associations
/trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

17% 

It had no impact 
It put me at competitive disadvantage  8% 
4% 
It  caused  me  delay  of  the  time-to-
market 
It gave me competitive advantage 
Other, please specify 
No. of replies 

4% 
67% 
24 

It had no impact 
It put me at competitive disadvantage 
It caused me delay of the time-to-market 
It gave me competitive advantage 
Other, please specify 
No. of replies 

27% 
13% 
7% 

7% 
47% 
15 

0% 
0% 
0% 

0% 
100% 
3 

0% 
0% 
0% 

0% 
100% 
3 

0% 
0% 
0% 

0% 
100% 
3 

Implementers 

SEP 
Holders 

15% 
0% 
0% 
0% 
85% 
13 

33% 
0% 
0% 
17% 
50% 
6 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. 

It had no impact 
It put me at competitive disadvantage 
It caused me delay of the time-to-market 

160 

EU 

17% 
8% 
0% 

non-EU 

22% 
11% 
11% 

 
 
 
 
 
 
It gave me competitive advantage 
Other, please specify 
No. of replies 

EU 

8% 
67% 
12 

non-EU 

0% 
56% 
9 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. 

Summary of comments 

Impact  

There are positive and negative impacts from seeking SEP licenses early. Many respondents consider 
it provided legal certainty (also to customers) over costs and enabled proper planning of business 
activities and no competitive disadvantage assuming other implementers also pay similar royalties. 
Some also claims that seeking SEP licenses early can also facilitate market entry at a reduced IP risk 
and establish product differentiating features against business competitors.  

Others note that at the same time, seeking SEP licenses early can hinder the ability for a business to 
compete in the market when there is no chance for product differentiation and if business competitors 
can  effectively  compete  in  the  same  market  without  having  to  take  a  license.  Furthermore,  some 
respondents have experienced some cases in the past as an implementer where the SEP holder took 
advantage of the fact that they proactively sought a license and asked for an excessively high royalty. 
In such cases, it will take time to conclude the negotiation, and this could lead to a delay for entering 
the  market.  Such  behaviour  seems  less  prevalent  where  the  SEP  holder  is,  at  the  same  time,  an 
implementer of the same standard(s) and has a more balanced approach to royalty demands. 

No impact 

In other respondents’ opinion, this has had no real impact on the business; access to the standard is 
ensured via the FRAND commitment and the exact timing of the start of license negotiations does in 
principle not impact such access.   

Q9. How much time after the first implementation of a standard in your products are you, on average, 
contacted by a SEP holder with an invitation to take a licence? 

All 

Companies 

Associations/ 
trade union 

Academia/ 
Authorities/
NGO/other 

Citizens 

less than 6 months 
6 – 12 months 
1 – 2 years 
2 – 4 years 
4 – 6 years 
More than 6 years 
I was never approached 
No. of replies 
Average years* 
Avg. 
for 
approached** 

those 

4% 
8% 
8% 
42% 
8% 
12% 
19% 
26 
2.8 

3.4 

7% 
7% 
13% 
47% 
13% 
7% 
7% 
15 
2.9 

3.1 

0% 
0% 
0% 
100% 
0% 
0% 
0% 
2 
3.0 

3.0 

0% 
50% 
0% 
0% 
0% 
0% 
50% 
2 
0.4 

0.8 

0% 
0% 
0% 
29% 
0% 
29% 
43% 
7 
3.1 

5.5 

*  Weighted  average  calculated using  the  middle  of  ranges,  for  the  last  open  range  value of  8  assumed;  **  without  “I  was never 
approached” 

less than 6 months 
6 – 12 months 
1 – 2 years 
2 – 4 years 

161 

Implementers 

SEP 
Holders 

8% 
17% 
8% 
33% 

0% 
0% 
20% 
60% 

 
 
 
 
 
4 – 6 years 
More than 6 years 
I was never approached 
No. of replies 
Average years* 
Avg. for those approached** 

Implementers 

SEP 
Holders 

17% 
8% 
8% 
12 
2.8 
3.0 

0% 
20% 
0% 
5 
3.7 
3.7 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. 
*  Weighted  average  calculated using  the  middle  of  ranges,  for  the  last  open  range  value of  8  assumed;  **  without  “I  was never 
approached” 

EU 

non-EU 

less than 6 months 
6 – 12 months 
1 – 2 years 
2 – 4 years 
4 – 6 years 
More than 6 years 
I was never approached 
No. of replies 
Average years* 
Avg. for those approached** 
Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. 
*  Weighted  average  calculated using  the  middle  of  ranges,  for  the  last  open  range  value of  8  assumed;  **  without  “I  was never 
approached” 

17% 
17% 
0% 
50% 
0% 
17% 
0% 
6 
3.0 
3.0 

0% 
8% 
15% 
46% 
15% 
0% 
15% 
13 
2.4 
2.9 

Summary of comments 

Respondents note that there is no single answer to this question. Some claim that the timing depends 
on the relevant standard, the behaviour of the SEP holder as well as the product concerned. Some 
consider  that  the  point  in  time  when  SEP  holders  contact  can  also  differ  depending  on  various 
elements such as (i) market expansion of products and businesses employing the standard, (ii) volume 
of products sold by implementers, and (iii) prosecution status of SEP holders' applications. According 
to some, the most typical pattern is for SEP holders to wait until there is significant revenue from the 
standard  which  follows  irreversible  product  strategy  and  investment  decisions  from  the  standards 
implementer  perspective.  Those  respondents  claim  that  the  implementer  therefore  has  little  or  no 
visibility  into  royalty  cost  at  the  time  these  product  development  decisions  need  to  be  made.  For 
them, it follows that the implementation of the standard in products may not always be the ‘triggering’ 
event for the SEP holder to reach out. The distribution/commercialization of the standard compliant 
product seems a more apparent ‘triggering’ event. 

Q10. What would be the main reason for you to request a licence?  

All  Companies 

Associations
/trade union 

Not to infringe a SEP without a licence 
To have legal certainty over my costs and plan my 
business activities 
To be able to sell my products 
To be able to indemnify my customer 
To  be  able  to  carry  our  R&D  and  develop  new 
products 
To be able to compete with other suppliers 
Other (please specify) 

72% 
60% 

35% 
23% 
23% 

16% 
19% 

71% 
68% 

32% 
21% 
25% 

14% 
18% 

80% 
60% 

60% 
40% 
40% 

40% 
20% 

162 

Academia/ 
Authorities/ 
NGO/other 
67% 
67% 

67% 
67% 
33% 

33% 
67% 

Citizens 

71% 
29% 

14% 
0% 
0% 

0% 
0% 

 
 
 
 
 
No. of replies 

Note: multiple answers possible 

All  Companies 

Associations
/trade union 

43 

28 

5 

Academia/ 
Authorities/ 
NGO/other 
3 

Citizens 

7 

Not to infringe a SEP without a licence 
To have legal certainty over my costs and plan my business activities 
To be able to sell my products 
To be able to indemnify my customer 
To be able to carry our R&D and develop new products 
To be able to compete with other suppliers 
Other (please specify) 
No. of replies 

Implementers 

SEP 
Holders 

82% 
73% 
45% 
32% 
27% 
18% 
9% 
22 

44% 
56% 
11% 
11% 
11% 
22% 
44% 
9 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. 

Not to infringe a SEP without a licence 
To have legal certainty over my costs and plan my business activities 
To be able to sell my products 
To be able to indemnify my customer 
To be able to carry our R&D and develop new products 
To be able to compete with other suppliers 
Other (please specify) 
No. of replies 

EU 

74% 
57% 
30% 
22% 
22% 
13% 
22% 
23 

non-EU 

69% 
85% 
54% 
38% 
38% 
31% 
23% 
13 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. 

Summary of comments 

Respondents from the automotive industry explain that licences to SEPs are indispensable for the 
automotive industry and automotive manufacturers would need to take them if SEP holders refuse to 
license anybody else in the supply chain. Such respondents note that any company that decides to 
market unlicensed products is exposed to injunctions, damages claims, civil and criminal liability 
(for  example,  see  Section  142,  German  Patent  Act).  For  them,  legal  certainty  is  of  particular 
importance as they assemble thousands of individual parts delivered just-in-time. 

Respondents who supply components note further that their customers typically want products free 
of defects, including free of third-party rights. If the product is missing a license, the customer might 
seek indemnification at a later point in time when the market has already settled. The indemnification 
costs  could  then  easily  make  an  established  business  model  unprofitable  and  wipe  out  extensive 
investments.  Planning  upfront  is  also  difficult  without  knowing  the  potential  costs  for  necessary 
licenses. 

Some respondents noted that SMEs planning to use open standards request licenses for some or all 
the  listed  reasons  in  this  question.  They  note  that  open  standards  are  developed  in  a  spirit  of 
collaboration  and  transparency.  However,  licensing  of  those  standards  is  “cloaked  in  secrecy  and 
obfuscation”.  They  claim  that  stopping  the  practise  of  requiring  non-disclosure  agreements  to  be 
signed before licensing terms are received will bring much needed transparency to the process and 
allow SME's to have legal certainty over their costs and business activities. 

Q11. What are the average costs you incur for estimating your SEPs exposure per product that you 
want  to  bring  on  the  market?  These  costs  include  cost  for  searching  patent  databases  on 
enforceability, validity and ownership of the patent, assessing the essentiality of the patents, whether 

163 

 
 
 
 
 
there  is  an  infringement,  the  potential  number  of  true  SEPs  and  the  share  of  the  individual  SEP 
holders in those. 

All 

Companies 

Associations/ 
trade union 

Academia/ 
Authorities/
NGO/other 

Citizens 

< 10.000 euros 
10.000-50.000 euros 
50.000-100.000 euros 
100.000-250.000 euros 
250.000-500.000 euros 
> 500.000 euros 
No. of replies 
Average (EUR)* 

37% 
21% 
5% 
11% 
0% 
26% 
19 
228,000  

46% 
15% 
8% 
15% 
0% 
15% 
13 
155,000  

0 

0% 
0% 
0% 
0% 
0% 
100% 
1 
750,000  

20% 
40% 
0% 
0% 
0% 
40% 
5 
313,000  

*  Weighted  average  calculated  using  the  middle  of  ranges,  for  the  last  open  range  value  of  EUR  750,000  assumed,  rounded  to 
thousands 

< 10.000 euros 
10.000-50.000 euros 
50.000-100.000 euros 
100.000-250.000 euros 
250.000-500.000 euros 
> 500.000 euros 
No. of replies 
Average (EUR)* 

Implementers 

SEP 
Holders 

33% 
0% 
0% 
22% 
0% 
44% 
9 
374,000  

100% 
0% 
0% 
0% 
0% 
0% 
4 
5,000  

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. 
*  Weighted  average  calculated  using  the  middle  of  ranges,  for  the  last  open  range  value  of  EUR  750,000  assumed,  rounded  to 
thousands 

< 10.000 euros 
10.000-50.000 euros 
50.000-100.000 euros 
100.000-250.000 euros 
250.000-500.000 euros 
> 500.000 euros 
No. of replies 
Average (EUR)* 

EU 

50% 
13% 
13% 
13% 
0% 
13% 
8 
 131,000  

non-EU 

33% 
17% 
0% 
17% 
0% 
33% 
6 
 286,000  

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. 
*  Weighted  average  calculated  using  the  middle  of  ranges,  for  the  last  open  range  value  of  EUR  750,000  assumed,  rounded  to 
thousands 

Summary of comments 

Some respondents claim that the costs in relation to ownership, enforceability, infringement etc. are 
typically incurred by the  SEP holder  as it is the  SEP holder that provides this information. Some 
explain that for a SEP holder, there is a need to analyse the value of its own SEPs. To the extent that 
bilateral negotiations are required, the values of both companies’ portfolios need to be analysed so 
they can be reflected to achieve a cross-license value. 

Some respondents note that they devote significant resources to evaluating SEPs that may be related 
to  their  products,  although  they  do  not  directly  track  these  costs  on  a  per  product  basis.  These 
expenditures include substantial costs for salaries of personnel, for SEP analytics services, for outside 
attorneys, and for conducting SEP negotiations, ranging from travel to engaging outside experts to 
assess the merits of SEPs.  

164 

 
 
 
 
 
 
 
 
 
 
 
According to some, conditions also vary depending on the size of the portfolio, the products, and the 
licensing circumstances for the relevant technical standard(s). If a viable patent pool does exist (e.g., 
capturing a significant amount of overall SEPs or potential SEPs), the cost for investigation may be 
substantially reduced.  

Other  respondents  note  that  significant  costs  may  be  imposed  on  licensees  to  evaluate  the  SEP 
landscape and particularly so when SEP holders are not forthcoming regarding the details of their 
SEP portfolios. Some respondents explain that, in theory, because there are some 100,000 patents 
declared essential to 5G alone (many of which may not be essential), spending EUR 1000 (1 or 2 
hours  of  attorney  fees)  to  verify  if  500  of  those  patents  are  valid,  essential  and  infringed,  would 
already consume the upper limit of EUR 500,000 referred to in this question.  

Some respondents explain that it may be impossible to remain a market leader without implementing 
the latest technologies in light electronic appliances (such as computers, radios, audio equipment, 
and televisions) and products on the IoT market. A new product would require FRAND negotiations. 
Because  of  uncertainties  about  the  scope  of  a  SEP  holder’s  obligations  to  provide  necessary 
information to implementers, implementers must bear the costs of developing arguments for FRAND 
negotiations. In addition, such FRAND arguments must be provided within a short time, costs tend 
to be higher. According to that respondent, because of those costs, many implementers prefer to get 
a license without pushing back on SEP holders’ demands. 

Q12. What is the main effect for SEP implementers, in particular start-ups and SMEs, of the costs 
involved in licensing SEPs (search, negotiation and litigation costs)?  

All 

Companies 

Associations
/trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

I  ask  my  suppliers  to  indemnify  me  for  possible 
patent infringement 
I  look  for  alternatives  (e.g.  not  using  standardised 
technology or royalty free standards) 
I  settle  as  quickly  as  possible  for  a  SEP  licence, 
because it is cheaper than litigation 
I become less competitive 
I  increase  final  price  to  my  business  or  retail 
customers 
I go out of business/change business 
I take licence only if absolutely necessary 
Other, please specify 
No. of replies 

65% 

63% 

38% 

38% 

38% 

33% 

33% 

20% 
18% 
38% 
40 

25% 

25% 

29% 

21% 
4% 
42% 
24 

80% 

60% 

80% 

20% 

60% 

40% 
20% 
40% 
5 

Note: multiple answers possible; “No opinion / cannot answer” answers not taken into account. 

50% 

25% 

25% 

25% 

50% 

25% 
75% 
50% 
4 

71% 

29% 

57% 

71% 

14% 

0% 
29% 
14% 
7 

Implementers 

SEP 
Holders 

90% 
I ask my suppliers to indemnify me for possible patent infringement 
62% 
I settle as quickly as possible for a SEP licence, because it is cheaper than litigation 
I increase final price to my business or retail customers 
57% 
I look for alternatives (e.g. not using standardised technology or royalty free standards)  52% 
43% 
I become less competitive 
38% 
I go out of business/change business 
14% 
I take licence only if absolutely necessary 
24% 
Other, please specify 
21 
No. of replies 

25% 
0% 
13% 
0% 
0% 
0% 
0% 
75% 
8 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “No opinion / cannot answer” answers not taken into account. 

165 

 
 
 
 
SME 

Large 

75% 
I ask my suppliers to indemnify me for possible patent infringement 
63% 
I settle as quickly as possible for a SEP licence, because it is cheaper than litigation 
I increase final price to my business or retail customers 
63% 
I look for alternatives (e.g. not using standardised technology or royalty free standards)  50% 
38% 
I go out of business/change business 
38% 
I take licence only if absolutely necessary 
25% 
I become less competitive 
25% 
Other, please specify 
8 
No. of replies 

Note: multiple answers possible; “No opinion / cannot answer” answers not taken into account. 

60% 
24% 
28% 
36% 
20% 
8% 
24% 
48% 
25 

EU 

non-EU 

I ask my suppliers to indemnify me for possible patent infringement 
63% 
I look for alternatives (e.g. not using standardised technology or royalty free standards)  33% 
29% 
I settle as quickly as possible for a SEP licence, because it is cheaper than litigation 
25% 
I increase final price to my business or retail customers 
17% 
I go out of business/change business 
13% 
I become less competitive 
13% 
I take licence only if absolutely necessary 
33% 
Other, please specify 
24 
No. of replies 

67% 
56% 
44% 
67% 
44% 
56% 
22% 
67% 
9 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; “No opinion / cannot answer” answers not taken 
into account. 

Summary of comments 

Some  responded  that  the  reason  they  settle  as  fast  as  possible  is  the  high  cost  of  litigation  and 
injunctions. For them it is better to accept a potentially non-FRAND agreement than pursue litigation. 

Some  noted  that  SMEs  often  do  not  have  the  resources  to  deal  with  larger  enterprises  holding 
numerous SEPs. As a result, SMEs may face potential litigation with no predictable outcome or may 
be forced to accept royalty demands made by the SEP holders. In the worst case, the SME may be 
forced to change their product, or abandon their business plan altogether, if they cannot afford the 
litigation or the potentially burdensome FRAND SEP licences. However, some responses claim that 
SMEs and start-ups are rarely the primary focus of any licensing program. 

One respondent suggested that licensing costs should already be included in the financial projections 
("bill of licenses") for new products by any responsible SEP implementer, and hence budgeted for in 
the final price to be paid by consumers. Provided there is a level playing field, this should not impact 
an implementer’s competitive position. Others suggested that measures should be taken to protect 
and guide SMEs during the licensing negotiations, e.g. licensing rates transparency and availability 
of experts. 

QUESTIONS FOR SEP HOLDERS 

Q13. What are top three reasons for licensing/having SEPs? 

All 

Companies 

Associations
/trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

For return on investment in R&D 
For defensive purposes/better bargaining power 
For  continuation  of 
future  participation 
standardisation 
For cross licensing 
It is our main source of income 

in 

72% 
60% 

44% 

36% 
28% 

71% 
61% 

42% 

39% 
26% 

166 

67% 
67% 

33% 

33% 
0% 

50% 
25% 

50% 

25% 
25% 

83% 
83% 

33% 

67% 
33% 

 
 
 
 
 
Other, please specify…. 
No. of replies 

Note: multiple answers possible. 

All 

Companies 

Associations
/trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

24% 
38 

24% 
25 

33% 
3 

50% 
4 

0% 
6 

For defensive purposes/better bargaining power 
For cross licensing 
For return on investment in R&D 
For continuation of future participation in standardisation 
It is our main source of income 
Other, please specify…. 
No. of replies 

Implementers 

SEP 
Holders 

91% 
73% 
36% 
27% 
0% 
18% 
11 

58% 
8% 
100% 
58% 
42% 
25% 
12 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3.; multiple answers possible. 

For return on investment in R&D 
For defensive purposes/better bargaining power 
For continuation of future participation in standardisation 
For cross licensing 
It is our main source of income 
Other, please specify…. 
No. of replies 

EU 

78% 
56% 
39% 
28% 
22% 
33% 
18 

non-EU 

57% 
57% 
50% 
43% 
29% 
21% 
14 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; multiple answers possible. 

Summary of comments 

Some respondents explain that the reasons for having/licensing SEPs is a company's strategic choice 
towards  open  innovation  i.e.  to  contribute  innovative  technologies  to  standardization  and  debate 
about  it in  the standardization context.  It  enables the emergence of open standards on the market 
which are much more virtuous  than proprietary standards. To enable this virtuous  cycle, efficient 
protection and enforcement of IP and in particular standard essential patents is necessary in order to 
efficiently get an effective return on investment.   

Some  respondents  claim  that  SEP  holders  seek  to  simplify  access  to  technologies  by  reducing 
licensing  barriers  and  by  lowering  transaction  costs.  It  is  their  belief  that  through  efficient  and 
effective IP licensing, the necessary incentives for R&D are created, fostering a self-sustaining cycle 
that  can  fund  future  R&D  activities.  Technological  progress  and  the  entire  society  would  suffer 
should the decision be made to reduce either (i) incentives to innovate or (ii) the comfort given to 
innovators  by  strong  IP  protection  required  to  fight  free  riders.  In  a  market-based  economy, 
companies  cannot  keep  making  huge  investments  unless  they  make  a  reasonable  return  on  their 
successful inventions 

Respondents  explain  that  companies  seek  to  own  and  maintain  SEP  portfolios  to  protect  their 
business  –  so  they  use  their  SEPs  mainly  for  defensive  purposes.  Some  claims  that  for  some 
technology areas, there has been benefit in owning and licensing SEPs to penetrate and drive adoption 
of  the  technology/standard  and  therefore  develop  the  market.  For  example,  in  the  case  of  format 
licenses, there was clarity in the licensing model at an early stage which led implementers to readily 
adopting the technology and as a result the market developed rapidly. 

167 

 
 
 
 
 
Q14.  On  average,  how  much  time  after  publication  of  a  standard  do  you  first  start  inviting  SEP 
implementers to take a license for applications known at the time of its adoption?   

All 

Companies 

Associations/ 
trade union 

Academia/ 
Authorities/
NGO/other 

Citizens 

less than 6 months 
6 – 12 months 
1 – 2 years 
2 – 4 years 
4 – 6 years 
More than 6 years 
Never 
No. of replies 
Average years* 
Avg. for those who start** 

13% 
13% 
13% 
17% 
13% 
8% 
25% 
24 
2.1 
2.8 

19% 
13% 
13% 
19% 
13% 
6% 
19% 
16 
2.0 
2.5 

0% 
50% 
50% 
0% 
0% 
0% 
0% 
2 
1.1 
1.1 

0% 
0% 
0% 
17% 
17% 
17% 
50% 
6 
2.7 
5.3 

0 

* Weighted average calculated using the middle of ranges, for the last open range value of 8 assumed; ** without “Never” 

less than 6 months 
6 – 12 months 
1 – 2 years 
2 – 4 years 
4 – 6 years 
More than 6 years 
Never 
No. of replies 
Average years* 
Avg. years for those who start** 

Implementers 

SEP 
Holders 

0% 
0% 
17% 
0% 
0% 
17% 
67% 
6 
1.6 
4.8 

38% 
0% 
25% 
13% 
25% 
0% 
0% 
8 
2.1 
2.1 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. 
* Weighted average calculated using the middle of ranges, for the last open range value of 8 assumed; ** without “Never” 

less than 6 months 
6 – 12 months 
1 – 2 years 
2 – 4 years 
4 – 6 years 
More than 6 years 
Never 
No. of replies 
Average years* 
Avg. years for those who start** 

EU 

25% 
13% 
13% 
25% 
25% 
0% 
0% 
8 
2.3 
2.3 

non-EU 

10% 
20% 
20% 
10% 
0% 
10% 
30% 
10 
1.6 
2.3 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. 
* Weighted average calculated using the middle of ranges, for the last open range value of 8 assumed; ** without “Never” 

Summary of comments 

The  comments  vary  largely  and  are  not  susceptible  to  summary.  With  regard  to  patent  pools  a 
respondent  noted  that  the  initial  steps  to  create  a  patent  pool  often  starts  around  the  time  of  the 
finalization of a standard. The process to create a pool includes understanding the viability of a pool, 
engaging with the relevant patent owners, preparing the terms of the pool, evaluating patents and 
generating an understanding of the market of the products that implement the standard. This process 
may take up to 2 years and needs to be completed before corresponding licenses can be offered to 
implementers. 

168 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q15. Do you contact all known SEP implementers from the selected category? 

All 

32% 
68% 
25 

Companies 

Associations/ 
trade union 

31% 
69% 
16 

0% 
100% 
2 

Academia/ 
Authorities/ 
NGO/other 

67% 
33% 
3 

Citizens 

25% 
75% 
4 

Yes 
No 
No. of replies 

Note: “No opinion/ no answer” answers not taken into account. 

Yes 
No 
No. of replies 

Implementers 

29% 
71% 
7 

SEP 
Holders 

30% 
70% 
10 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “No opinion/ no answer” answers not taken into account. 

Yes 
No 
No. of replies 

EU 

38% 
62% 
13 

non-EU 

25% 
75% 
8 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. “No opinion/ no answer” answers not taken into 
account. 

Summary of comments 

The  comments  differ  on  this  question  as  well.  Respondents  note  that  there  are  significant  costs 
involved in searching the market to identify the infringing products and there are markets in which 
new  players  come  and  go  at  a  pace  that  cannot  be  fully  addressed  by  any  organization.  It  is  not 
possible to search the entire market, which  - in the SEP ecosystem  - is usually global. Typically, 
because of this SEP holders leave out start-ups and SMEs.  

Some do contact all SEP implementers known to them at a pace that is possible to handle for their 
organization. Regarding patent pools, it depends on the individual case, contact would be made by 
the patent pool administrator with as many implementers as practical.  

Q16. What percentage of these SEP implementers reply within a year after sending the first letter? 

All 

31% 
0% 
13% 
6% 
13% 
38% 
16 
58% 

Companies 

Associations/ 
trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

18% 
0% 
18% 
9% 
18% 
36% 
11 
64% 

0% 
0% 
0% 
0% 
0% 
100% 
1 
93% 

50% 
0% 
0% 
0% 
0% 
50% 
2 
53% 

100% 
0% 
0% 
0% 
0% 
0% 
2 
13% 

< 25% 
25-40% 
40-55% 
55%-70% 
70-85% 
> 85% 
No. of replies 
Average %* 

Note: “It depends (please explain)” not presented 
* Weighted average calculated using the middle of ranges, for the last open range value of 92.5% assumed. 

< 25% 
25-40% 
40-55% 

169 

Implementers 

0% 
0% 
0% 

SEP 
Holders 

33% 
0% 
17% 

 
 
 
 
 
 
 
55%-70% 
70-85% 
> 85% 
No. of replies 
Average %* 

Implementers 

SEP 
Holders 

0% 
33% 
67% 
3 
88% 

17% 
0% 
33% 
6 
53% 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed,  were  neutral  or  had  no  opinion  on  Q2  and  agreed  with  Q3.  “It  depends  (please  explain)”  not  presented 
* Weighted average calculated using the middle of ranges, for the last open range value of 92.5% assumed. 

< 25% 
25-40% 
40-55% 
55%-70% 
70-85% 
> 85% 
No. of replies 
Average %* 

EU 

43% 
0% 
0% 
14% 
14% 
29% 
7 
52% 

non-EU 

0% 
0% 
29% 
0% 
14% 
57% 
7 
78% 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. “It depends (please explain)” not presented 
* Weighted average calculated using the middle of ranges, for the last open range value of 92.5% assumed. 

Summary of comments 

There  are  differences  e.g.  between  jurisdictions  and  industries,  but  overall  in  one  respondent’s 
experience, most of the letters they sent are replied within a year after they were sent. However, a 
(swift) reply to a letter may not always be a sign of true willingness by the implementer. Respondents 
claim that the replies received are often an attempt to postpone discussions as much as possible and 
are rarely a clear indication of true willingness to take a license. Recent case-law offers a number of 
indicative examples, in which the implementer’s response to a notification letter was not considered 
to be an expression of a sincere willingness to obtain a FRAND licence (e.g. Sisvel v Haier, German 
Federal Court of Justice). 

Some argue that the effect from the Huawei v. ZTE CJEU judgment is that most SEP implementers 
now respond without too much delay. Unfortunately, in many cases this is just stating/ posturing the 
position that one is willing to take a license, without making significant further steps towards actual 
signing up to a license. 

Respondents explain that this works differently with patent pools because licensing negotiations are 
conducted  by  licensing  administrators  under  FRAND  obligations.  Licensing  administrators  may 
suggest taking legal action if no response is received to their first letter after a certain time, never 
exceeding one year. Given that such SEP pools include SEPs of many holders, the negotiation power 
of SEP pools may be important. 

Q17. What percentage of the SEP implementers that reply take a license without litigation? 

< 25% 
25-40% 
40-55% 
55%-70% 
70-85% 
> 85% 
No. of replies 

All 

14% 
14% 
0% 
7% 
14% 
50% 
14 

Companies 

Associations/ 
trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

10% 
10% 
0% 
10% 
20% 
50% 
10 

0 

170 

50% 
0% 
0% 
0% 
0% 
50% 
2 

0% 
50% 
0% 
0% 
0% 
50% 
2 

 
 
 
 
 
 
 
 
 
 
 
All 

68% 

Companies 

Associations/ 
trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

73% 

53% 

63% 

Average %* 

Note: “It depends (please explain)” not presented 
* Weighted average calculated using the middle of ranges, for the last open range value of 92.5% assumed. 

< 25% 
25-40% 
40-55% 
55%-70% 
70-85% 
> 85% 
No. of replies 
Average %* 

Implementers 

SEP 
Holders 

0% 
0% 
0% 
0% 
33% 
67% 
3 
88% 

0% 
20% 
0% 
20% 
0% 
60% 
5 
75% 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed,  were  neutral  or  had  no  opinion  on  Q2  and  agreed  with  Q3.  “It  depends  (please  explain)”  not  presented 
* Weighted average calculated using the middle of ranges, for the last open range value of 92.5% assumed. 

< 25% 
25-40% 
40-55% 
55%-70% 
70-85% 
> 85% 
No. of replies 
Average %* 

EU 

33% 
17% 
0% 
17% 
17% 
17% 
6 
48% 

non-EU 

0% 
0% 
0% 
0% 
17% 
83% 
6 
90% 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. “It depends (please explain)” not presented 
* Weighted average calculated using the middle of ranges, for the last open range value of 92.5% assumed. 

Summary of comments 

Some  respondents  consider  that  the  statistics  may  not  be  meaningful  as  even  if  most  of  the 
implementers  take a license without litigation, the ones who do not  are almost  always the largest 
implementers.  

Some respondents explain that it is important to take into consideration the impact of litigation in 
general  on  the  willingness  of  implementers  to  take  a  license  without  litigation.  The  effect  of  a 
litigation against a particular implementer may lead other implementers to take a licence. If patents 
were not enforced, the vast majority of implementers would consider that there is no reason to take a 
license. 

Some respondents say that in their experience the greatest difficulty is with Asian-based companies, 
where it has proven difficult to settle without litigation and the threat of injunction. 

Q18. On average, how much time after your first letter do implementers take a licence?  

less than 6 months 
6-12 months 
1-2 years 
2-4 years 
4-6 years 

All 

0% 
0% 
26% 
53% 
11% 

Companies 

Associations/
trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

0% 
0% 
27% 
60% 
7% 

171 

0% 
0% 
100% 
0% 
0% 

0% 
0% 
0% 
33% 
33% 

 
 
 
 
 
 
 
 
 
 
 
 
All 

11% 
19 
3.3 

Companies 

Associations/
trade union 

7% 
15 
3.1 

0 

Academia/ 
Authorities/ 
NGO/other 

0% 
1 
1.5 

Citizens 

33% 
3 
5.3 

More than 6 years 
No. of replies 
Average years* 

* Weighted average calculated using the middle of ranges, for the last open range value of 8 assumed. 

less than 6 months 
6-12 months 
1-2 years 
2-4 years 
4-6 years 
More than 6 years 
No. of replies 
Average years* 

Implementers 

SEP 
Holders 

0% 
0% 
100% 
0% 
0% 
0% 
3 
1.5 

0% 
0% 
11% 
78% 
11% 
0% 
9 
3.1 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3.  
* Weighted average calculated using the middle of ranges, for the last open range value of 8 assumed. 

less than 6 months 
6-12 months 
1-2 years 
2-4 years 
4-6 years 
More than 6 years 
No. of replies 
Average years* 

EU 

0% 
0% 
14% 
71% 
0% 
14% 
7 
3.5 

non-EU 

0% 
0% 
44% 
44% 
11% 
0% 
9 
2.6 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. 
* Weighted average calculated using the middle of ranges, for the last open range value of 8 assumed. 

Summary of comments 

Experience amongst the respondents with regard to handheld cellular devices shows that licensing 
discussions  may  take  up  to  6  years,  often  involving  litigation.  In  general,  willingness  to  enter 
meaningful discussions has been extremely low in the past decade. A respondent claimed that it could 
be characterized as a “systemic hold-out”. 

Respondents claim that there may not be typical timeframe within which a licence is concluded, as 
the  duration  of  a  negotiation  would  depend  on  various  factors.  They  claim  that  SEP  licensing 
negotiations  are  characterized  by  an  information  asymmetry.  This  asymmetry  is  magnified 
significantly  when  licensees  are  smaller  players  and  have  limited  experience  and  expertise  in 
negotiating SEP licences. SEP holders may withhold  information  without an NDA, and often the 
negotiation  of  an  NDA  is  prolonged  for  a  long  time  due  to  unreasonable  terms  proposed  by  the 
licensor (not allowing the potential licensee to verify information with suppliers, for example). SEP 
holders may also not provide sufficient information to substantiate their FRAND offer. Licensing 
negotiations may also be highly complex, e.g., when including cross licensing arrangements or other 
commercial agreements unrelated to the SEPs at issue. 
Some  respondents  explain  that  technology  in  brown  goods357,  IoT  and  automotive  is  rapidly 
advancing so negotiations usually proceed fast. Otherwise negotiated technology will be outdated 
already  at  the  time  of  obtaining  a  license.  They  claim  that  if  licensing  negotiations  cannot  be 

357 Television sets, audio equipment, and similar household appliances. 

172 

 
 
 
 
 
 
                                                 
concluded in a timely manner and no powerful objections are raised by the potential licensee, SEP 
holders would resort to litigation, and in this case, almost all of the implementers immediately choose 
to  take  a  license,  try  to  keep  their  costs  at  a  minimum  and  avoid  injunctions.  In  some  cases, 
counterclaims are brought, and licensing negotiations almost reach a stalemate because of conflicting 
court  decisions  (which  is  possible  e.g.  if  different  jurisdictions  are  involved)  or  the  refusal  of 
decisions by appeal courts. In such cases, the process generally takes 4-6 years. 

Also here, respondents believe that the geographical location of the implementer correlates with the 
implementer's  timeliness  in  responding  to  our  offer  to  license.  In  particular,  it  is  stated  that 
implementers  based in  China are very slow to  respond. There is  a wide  range, and  as a  result an 
average  figure  is  not  informative;  for  instance,  a  respondent  had  experience  with  Chinese 
implementers which ignored its communications for over a year or wait until other larger OEM’s 
take a license or simply file suit in a Chinese court without any notice. 

Another  respondent  indicated  that  a  6-18  months  timeframe  is  an  indicator  of  a  willing  licensee. 
According to that respondent there could be a presumption that, absent specific circumstances, the 
implementer is not willing 18 months after the start of the negotiations. 

Questions on the problems related to SEP licensing 

Quantitative summary 

Lack of transparency on FRAND royalty rate, on SEP landscape (who owns SEP) and divergent court 
rulings  were  named  as  the  key  problems  by  three  quarters  of  all  respondents,  including  all 
respondents from “Implementers” group. For “SEP Holders” the main problems were hold out and 
anti-suit injunctions.  

Tables with replies per question 

Q19. What problems do you encounter when it comes to SEP licensing? 

“Agree and strongly agree” answers only 

All 

Companies 

Associations
/trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

Lack of transparency on FRAND royalty rate 
Lack  of  transparency  of  the  SEPs  landscape  in 
general  and  of  the  share  of  the  different  SEP 
holders 
Divergent court rulings 
Court  rulings  ordering  to  take  a  worldwide 
licence 
Lack of guidance on the FRAND concept 
Lack of clarity on the level of licensing 
The licensing process is too expensive 
Injunctions 
Hold up / Unavailability of a licence 
Anti-suit injunctions 
Hold out 
No. of replies* 

Note:  “Other 
*range, different number of replies per question 

specify)”  not 

(please 

included 

68% 
67% 

67% 
60% 

57% 
55% 
53% 
53% 
52% 
47% 
38% 
58-64 
the 
in 

61% 
66% 

64% 
52% 

86% 
86% 

86% 
71% 

75% 
56% 

50% 
50% 

80% 
70% 

78% 
90% 

53% 
49% 
42% 
49% 
47% 
44% 
34% 
33-38 

50% 
75% 
50% 
38% 
50% 
75% 
67% 
8-9 
table;  “No  opinion”  answers  not 

86% 
57% 
67% 
71% 
71% 
29% 
29% 
6-7 

taken 

“Agree and strongly agree” answers only 

Implementers 

Lack of transparency on FRAND royalty rate 
Lack of transparency of the SEPs landscape in general and of the share of the different 
SEP holders 

100% 
97% 

173 

60% 
60% 
90% 
70% 
60% 
44% 
30% 
9-10 
into  account 

SEP 
Holders 

19% 
13% 

 
 
 
“Agree and strongly agree” answers only 

Implementers 

SEP 
Holders 

Court rulings ordering to take a worldwide licence 
Lack of guidance on the FRAND concept 
Divergent court rulings 
Hold up / Unavailability of a licence 
Lack of clarity on the level of licensing 
Injunctions 
The licensing process is too expensive 
Anti-suit injunctions 
Hold out 
No. of replies* 

96% 
93% 
86% 
86% 
83% 
83% 
68% 
29% 
4% 
28-29 

6% 
19% 
38% 
6% 
13% 
6% 
25% 
81% 
100% 
15-17 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “Other (please specify)” not included in the table; “No opinion” 
answers not taken into account 
*range, different number of replies per question 

“Agree and strongly agree” answers only 

Lack of transparency on FRAND royalty rate 
Divergent court rulings 
Lack of transparency of the SEPs landscape in general and of the share of the different 
SEP holders 
Lack of guidance on the FRAND concept 
Lack of clarity on the level of licensing 
Anti-suit injunctions 
Hold up / Unavailability of a licence 
Court rulings ordering to take a worldwide licence 
The licensing process is too expensive 
Hold out 
Injunctions 
No. of replies* 

EU 

71% 
70% 
69% 

59% 
58% 
56% 
52% 
50% 
50% 
47% 
45% 
30-35 

non-EU 

58% 
56% 
63% 

53% 
47% 
32% 
50% 
61% 
39% 
26% 
58% 
18-19 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. “Other (please specify)” not included in the 
table; “No opinion” answers not taken into account 
*range, different number of replies per question 

“All answers” 

Agree 

Neutral 

Disagree 

No. 

Lack of transparency on FRAND royalty rate 
Lack of transparency of the SEPs landscape in general and 
of the share of the different SEP holders 
Divergent court rulings 
Court rulings ordering to take a worldwide licence 
Lack of guidance on the FRAND concept 
Lack of clarity on the level of licensing 
The licensing process is too expensive 
Injunctions 
Hold up / Unavailability of a licence 
Anti-suit injunctions 
Hold out 
Other (please specify) 

68% 
67% 

67% 
60% 
57% 
55% 
53% 
53% 
52% 
47% 
38% 
86% 

5% 
6% 

17% 
17% 
13% 
13% 
32% 
16% 
11% 
27% 
16% 
14% 

27% 
27% 

17% 
22% 
30% 
32% 
15% 
31% 
36% 
27% 
46% 
0% 

63 
64 

60 
58 
63 
60 
60 
62 
61 
60 
61 
7 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

“Companies” 

Agree 

Neutral 

Disagree 

No. 

Lack of transparency of the SEPs landscape in general and 
of the share of the different SEP holders 
Divergent court rulings 
Lack of transparency on FRAND royalty rate 
Lack of guidance on the FRAND concept 
Court rulings ordering to take a worldwide licence 

66% 

64% 
61% 
53% 
52% 

5% 

17% 
8% 
8% 
21% 

29% 

19% 
32% 
39% 
27% 

38 

36 
38 
38 
33 

174 

 
“Companies” 

Agree 

Neutral 

Disagree 

No. 

Injunctions 
Lack of clarity on the level of licensing 
Hold up / Unavailability of a licence 
Anti-suit injunctions 
The licensing process is too expensive 
Hold out 
Other (please specify) 

49% 
49% 
47% 
44% 
42% 
34% 
75% 

22% 
11% 
14% 
28% 
36% 
17% 
25% 

30% 
40% 
39% 
28% 
22% 
49% 
0% 

37 
35 
36 
36 
36 
35 
4 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

Summary of comments 

Some argue that any lack of transparency regarding the aspects  identified above  are of particular 
importance for SMEs and start-ups, as they often do not have adequate knowledge and are unable to 
take appropriate action against SEP holders.  

Other respondents believe there is no lack of transparency and that the SEPs are accessible through 
existing  databases.  Publicly  and  commercially  available  information,  case  law  and  government 
policy may be relied upon for constructive SEP licensing discussions in good faith. Some consider 
that absolute transparency is impossible to achieve. 

Some  believe  that  divergence  on  treatment  of  SEPs  by  national  government  policies  and  court 
decisions, including valuation, availability of injunctive relief and antisuit injunctions render SEP 
licensing difficult and costly.  Others claim that court rulings within Europe are quite  convergent, 
however globally, there is still some divergence, particularly as it relates to availability of injunctive 
relief.  

Some respondents consider that it may be desirable to promote establishment of patent pools where 
essentiality check, uniform licensing conditions and one stop-shop efficiency can be achieved. 

QUESTIONS FOR SEPS IMPLEMENTERS 

Q20.  Under  which  circumstances  would  you  consider  not  using  a  certain  standard?  Question  of 
particular relevance for start-ups and SMEs 

“Agree and strongly agree” answers only 

All 

Companies 

Associations
/trade union 

Academia/ 
Authorities/ 
NGO/other 

There  is  an  alternative  technology  which  is 
available at better conditions 
There is no real need to implement the standard. 
The standardised technology is a mere add on. 
The requested royalty is too high 
Licensing  negotiations  and  litigation  are  too 
costly 
The SEP holder refuses to give a licence 
It  is  not  clear  which  patents  are  truly  essential 
and 
for  a  particular 
licence 
implementation 
It is not clear which SEPs my products actually 
implement/use 
No. of replies* 

require  a 

Note:  “Other 
*range, different number of replies per question 

specify)”  not 

(please 

included 

86% 

73% 

70% 
51% 

48% 
29% 

87% 

81% 

71% 
52% 

50% 
30% 

83% 

67% 

67% 
67% 

67% 
33% 

67% 

67% 

67% 
33% 

50% 
50% 

29% 

30% 

33% 

33% 

31-35 
the 
in 

20-23 

2-3 
6 
table;  “No  opinion”  answers  not 

taken 

into  account 

Citizens 

100% 

33% 

67% 
33% 

0% 
0% 

0% 

3 

“Agree and strongly agree” answers only 

Implementers 

There is an alternative technology which is available at better conditions 

90% 

175 

SEP 
Holders 

75% 

 
 
“Agree and strongly agree” answers only 

Implementers 

SEP 
Holders 

The requested royalty is too high 
There is no real need to implement the standard. The standardised technology is a mere 
add on. 
The SEP holder refuses to give a licence 
Licensing negotiations and litigation are too costly 
It is not clear which patents are truly essential and require a licence for a particular 
implementation 
It is not clear which SEPs my products actually implement/use 
No. of replies* 

80% 
74% 

72% 
67% 
35% 

33% 
18-21 

29% 
75% 

0% 
13% 
0% 

0% 
7-8 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “Other (please specify)” not included in the table; “No opinion” 
answers not taken into account 
*range, different number of replies per question 

“Agree and strongly agree” answers only 

There is an alternative technology which is available at better conditions 
There is no real need to implement the standard. The standardised technology is a mere 
add on. 
The requested royalty is too high 
Licensing negotiations and litigation are too costly 
The SEP holder refuses to give a licence 
It is not clear which patents are truly essential and require a licence for a particular 
implementation 
It is not clear which SEPs my products actually implement/use 
No. of replies* 

EU 

78% 
67% 

62% 
52% 
45% 
30% 

30% 
20-23 

non-EU 

100% 
100% 

89% 
56% 
75% 
38% 

33% 
8-9 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. “Other (please specify)” not included in the 
table; “No opinion” answers not taken into account 
*range, different number of replies per question 

“All answers” 

Agree 

Disagree 

No. 

There is an alternative technology which is available at better conditions 
There is no real need to implement the standard. The standardised technology 
is a mere add on. 
The requested royalty is too high 
Licensing negotiations and litigation are too costly 
The SEP holder refuses to give a licence 
It  is  not  clear  which  patents  are  truly  essential  and  require  a  licence  for  a 
particular implementation 
It is not clear which SEPs my products actually implement/use 
Other (please specify) 

86% 
73% 

70% 
51% 
48% 
29% 

29% 
100% 

14% 
27% 

30% 
49% 
52% 
71% 

71% 
0% 

35 
33 

33 
35 
31 
34 

35 
5 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

“Companies answers” 

Agree 

Disagree 

No. 

There is an alternative technology which is available at better conditions 
There is no real need to implement the standard. The standardised technology 
is a mere add on. 
The requested royalty is too high 
Licensing negotiations and litigation are too costly 
The SEP holder refuses to give a licence 
It  is  not  clear  which  patents  are  truly  essential  and  require  a  licence  for  a 
particular implementation 
It is not clear which SEPs my products actually implement/use 
Other (please specify) 

87% 
81% 

71% 
52% 
50% 
30% 

30% 
100% 

13% 
19% 

29% 
48% 
50% 
70% 

70% 
0% 

23 
21 

21 
23 
20 
23 

23 
3 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

176 

 
“SMEs answers” 

Agree 

Disagree 

No. 

There is an alternative technology which is available at better conditions 
There is no real need to implement the standard. The standardised technology 
is a mere add on. 
Licensing negotiations and litigation are too costly 
The requested royalty is too high 
The SEP holder refuses to give a licence 
It  is  not  clear  which  patents  are  truly  essential  and  require  a  licence  for  a 
particular implementation 
It is not clear which SEPs my products actually implement/use 
Other (please specify) 

88% 
75% 

75% 
71% 
63% 
38% 

38% 

13% 
25% 

25% 
29% 
38% 
63% 

63% 

8 
8 

8 
7 
8 
8 

8 
0 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account. All respondents who identified themselves as SMEs (please note that only 1 SME that is a company 
replied to this question) 

Summary of comments 

Some respondents noted that it was not unusual for companies, particularly start-ups and SMEs, to 
seek to use an alternate standard or abandon plans for a product because of concerns over the amount 
of royalties. According to them nearly all examples relate to cellular SEPs (versus other SEPs). The 
exponential  growth  of  the  cellular  ecosystem  over  the  last  30  years  underlines  its  attractiveness, 
especially for innovative new businesses (including SMEs and start-ups).   

Some  respondents  explain  that  OEMs  are  legally  obliged  to  implement  cellular  communications 
SEPs  and  must  use  them  regardless  of  the  circumstances  described  above.  Emergency  calling 
(“eCall”) became a mandatory feature of all vehicles produced after April 2018. If the parts providing 
eCall  functionality  are  not  supplied,  no  vehicle  can  leave  the  production  line.  Any  injunction 
prohibiting the use of connectivity standards in a car may indirectly also prohibit the sale of the car 
as such. 

Some respondents explain that suppliers are subject to instructions from their customers. In those 
cases, inclusion of the standard is already required to market a competitive product.  

Furthermore, respondents explain that they have no choice but to use a particular standard if they 
want  to  ensure  compliance  to  the  function  and  cybersecurity  of  the  product.  For  example,  in  the 
telecommunication industry, it is usually not an option to use non-standard alternative technology. 

One  respondent  explains  that  standard  implementation  decisions  are  made  well  before  patent 
licensing becomes an issue and that the question gets the timeline wrong. As an implementer, they 
would not know the amount of the royalty, or the patents asserted until  years after they make the 
decision to implement a standard. 

Q21. Which of the following behaviours would you assess as hold-up or opportunistic behaviour by 
a SEP holder? 

“Agree and strongly agree” answers only 

All 

Compa
nies 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

Associa-
tions/ 
trade 
union 
83% 

84% 

86% 

67% 

83% 

84% 

83% 

67% 

79% 

75% 

83% 

67% 

83% 

83% 

100
% 

The SEP holder adopts discriminatory or exclusionary licensing 
terms or practices 
The SEP holder requires implementers to pay royalties for rights 
to  patents  that  are  not  relevant  to  the  implementer’s  specific 
products 
The SEP holder insists on a new licence at a higher price in the 
context of a patent pool when the implementer has a licence for 
the same patents of the same SEP holder. 

177 

 
 
 
 
“Agree and strongly agree” answers only 

All 

Compa
nies 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

Associa-
tions/ 
trade 
union 
83% 

78% 

74% 

67% 

The SEP holder requires implementers to pay royalties for rights 
to  patents  that  are  not  essential  to  the  relevant  standardized 
technology 
The SEP holder refuses to license 
The  SEP  holder refuses  to  disclose  the  terms  of  prior  licences 
with similarly situated companies 
The  SEP  holder  attempts  to  base  the  royalty  owed  on  prior 
licences that were not reasonably comparable (due to differences 
in patents, duration, geographic scope, implementer type, etc.). 
The SEP holder refuses to license to a certain level in the value 
chain 
The SEP holder brings the accused infringer’s customers into the 
licensing dispute, by either contacting them, threatening to sue 
them, or actually suing them 
The SEP holder discloses the SEP to the Standard Development 
Organisation (“SDO”) after the standard was adopted 
The  SEP  holder  refuses  to  license  at  a  certain  price  I  find 
commercially acceptable 
No. of replies* 

78% 
72% 

77% 
65% 

83% 
83% 

67% 
67% 

71% 

63% 

83% 

67% 

64% 

56% 

83% 

67% 

60% 

58% 

50% 

67% 

51% 

48% 

67% 

33% 

48% 

41% 

67% 

67% 

42-46  28-32 

6 

3 

100
% 

83% 
100
% 
100
% 

83% 

80% 

60% 

50% 

5-6 
into  account 

Note:  “Other 
*range, different number of replies per question 

specify)”  not 

(please 

included 

in 

the 

table;  “No  opinion”  answers  not 

taken 

“Agree and strongly agree” answers only 

Implementers 

SEP 
Holders 

The SEP holder requires implementers to pay royalties for rights to patents that are not 
relevant to the implementer’s specific products 
The SEP holder adopts discriminatory or exclusionary licensing terms or practices 
The SEP holder refuses to license 
The SEP holder requires implementers to pay royalties for rights to patents that are not 
essential to the relevant standardized technology 
The SEP holder insists on a new licence at a higher price in the context of a patent 
pool when the implementer has a licence for the same patents of the same SEP holder. 
The SEP holder refuses to disclose the terms of prior licences with similarly situated 
companies 
The  SEP  holder  attempts  to  base  the  royalty  owed  on  prior  licences  that  were  not 
reasonably  comparable  (due  to  differences  in  patents,  duration,  geographic  scope, 
implementer type, etc.). 
The SEP holder brings the accused infringer’s customers into the licensing dispute, by 
either contacting them, threatening to sue them, or actually suing them 
The SEP holder discloses the SEP to the Standard Development Organisation (“SDO”) 
after the standard was adopted 
The SEP holder refuses to license at a certain price I find commercially acceptable 
The SEP holder refuses to license to a certain level in the value chain 
No. of replies* 

100% 

100% 
100% 
100% 

100% 

100% 

96% 

84% 

82% 

74% 
96% 
22-25 

67% 

50% 
33% 
33% 

14% 

0% 

0% 

0% 

0% 

0% 
0% 
7-9 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “Other (please specify)” not included in the table; “No opinion” 
answers not taken into account 
*range, different number of replies per question 

“Agree and strongly agree” answers only 

The SEP holder requires implementers to pay royalties for rights to patents that are not 
relevant to the implementer’s specific products 
The SEP holder adopts discriminatory or exclusionary licensing terms or practices 
The SEP holder refuses to license 
The SEP holder requires implementers to pay royalties for rights to patents that are not 
essential to the relevant standardized technology 

EU 

84% 

79% 
76% 
76% 

non-EU 

80% 

93% 
79% 
73% 

178 

 
“Agree and strongly agree” answers only 

The SEP holder insists on a new licence at a higher price in the context of a patent 
pool when the implementer has a licence for the same patents of the same SEP holder. 
The SEP holder refuses to disclose the terms of prior licences with similarly situated 
companies 
The  SEP  holder  attempts  to  base  the  royalty  owed  on  prior  licences  that  were  not 
reasonably  comparable  (due  to  differences  in  patents,  duration,  geographic  scope, 
implementer type, etc.). 
The SEP holder refuses to license to a certain level in the value chain 
The SEP holder brings the accused infringer’s customers into the licensing dispute, by 
either contacting them, threatening to sue them, or actually suing them 
The SEP holder discloses the SEP to the Standard Development Organisation (“SDO”) 
after the standard was adopted 
The SEP holder refuses to license at a certain price I find commercially acceptable 
No. of replies* 

EU 

70% 

68% 

63% 

60% 
52% 

50% 

non-EU 

86% 

67% 

73% 

63% 
67% 

50% 

43% 
23-25 

53% 
14-16 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. “Other (please specify)” not included in the 
table; “No opinion” answers not taken into account 
*range, different number of replies per question 

“All answers” 

Agree  Neutral  Disagree  No. 

The  SEP  holder  adopts  discriminatory  or  exclusionary  licensing  terms  or 
practices 
The SEP holder requires implementers to pay royalties for rights to patents that 
are not relevant to the implementer’s specific products 
The SEP holder insists on a new licence at a higher price in the context of a 
patent pool when the implementer has a licence for the same patents of the same 
SEP holder. 
The SEP holder requires implementers to pay royalties for rights to patents that 
are not essential to the relevant standardized technology 
The SEP holder refuses to license 
The SEP holder refuses to disclose the terms of prior licences with similarly 
situated companies 
The SEP holder attempts to base the royalty owed on prior licences that were 
not reasonably comparable (due to differences in patents, duration, geographic 
scope, implementer type, etc.). 
The SEP holder refuses to license to a certain level in the value chain 
The  SEP  holder  brings  the  accused  infringer’s  customers  into  the  licensing 
dispute, by either contacting them, threatening to sue them, or actually suing 
them 
The SEP holder discloses the SEP to the Standard Development Organisation 
(“SDO”) after the standard was adopted 
The  SEP  holder  refuses  to  license  at  a  certain  price  I  find  commercially 
acceptable 
Other (please specify) 

84% 

11% 

83% 

11% 

5% 

7% 

79% 

12% 

10% 

78% 

11% 

11% 

78% 
72% 

4% 
4% 

18% 
24% 

71% 

11% 

18% 

64% 
60% 

6% 
11% 

30% 
29% 

51% 

14% 

35% 

48% 

23% 

30% 

86% 

0% 

14% 

44 

46 

42 

46 

45 
46 

45 

47 
45 

43 

44 

7 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

“Companies answers” 

Agree  Neutral  Disagree  No. 

The  SEP  holder  adopts  discriminatory  or  exclusionary  licensing  terms  or 
practices 
The SEP holder requires implementers to pay royalties for rights to patents that 
are not relevant to the implementer’s specific products 
The SEP holder refuses to license 
The SEP holder insists on a new licence at a higher price in the context of a 
patent pool when the implementer has a licence for the same patents of the same 
SEP holder. 
The SEP holder requires implementers to pay royalties for rights to patents that 
are not essential to the relevant standardized technology 

86% 

10% 

84% 

10% 

77% 
75% 

3% 
14% 

3% 

6% 

20% 
11% 

29 

31 

30 
28 

74% 

13% 

13% 

31 

179 

 
“Companies answers” 

Agree  Neutral  Disagree  No. 

The SEP holder refuses to disclose the terms of prior licences with similarly 
situated companies 
The SEP holder attempts to base the royalty owed on prior licences that were 
not reasonably comparable (due to differences in patents, duration, geographic 
scope, implementer type, etc.). 
The  SEP  holder  brings  the  accused  infringer’s  customers  into  the  licensing 
dispute, by either contacting them, threatening to sue them, or actually suing 
them 
The SEP holder refuses to license to a certain level in the value chain 
The SEP holder discloses the SEP to the Standard Development Organisation 
(“SDO”) after the standard was adopted 
The  SEP  holder  refuses  to  license  at  a  certain  price  I  find  commercially 
acceptable 
Other (please specify) 

65% 

6% 

29% 

63% 

17% 

20% 

31 

30 

58% 

10% 

32% 

31 

56% 
48% 

9% 
14% 

34% 
38% 

41% 

24% 

34% 

83% 

0% 

17% 

32 
29 

29 

6 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

Summary of answers 

Some respondents commented that the statement “The SEP holder refuses to license at a certain price 
I find commercially acceptable” should read “The SEP holder refuses to license at a certain price I 
find FRAND”. 

Mostly agree 

Some respondents proposed the inclusion of the following to the list under this question:  

  SEP holders requiring potential licensees to enter into restrictive NDAs 
  SEP holders refusing to disclose information necessary to evaluate essentiality, infringement 

and validity 

  SEP holders not explaining how terms are FRAND 
  SEP holders heavily redacting comparable agreements to prevent comparison  
  SEP holders seeking a global portfolio rate whilst threatening an injunction 
  Defensive suspension  

Mostly disagree  

Some respondents explain that most of the practices listed are not opportunistic. A SEP holder that 
refuses to license at all or refuses to license a particular implementer but takes no action to enforce 
its patents is not engaging in hold-up. It is simply allowing the implementer to use its technology.  

Regarding ‘excessive demands by the SEP owner’ some respondents explain that a royalty demand 
thus  court 
by  a  SEP  holder  cannot  be  enforced  without  court 
evaluation/adjudication) and as such hold-up is not possible where a FRAND commitment has been 
given. Furthermore, a SEP holder can be bound by confidentiality clauses enforced upon demand of 
an implementer. 

intervention 

(and 

With respect to post-standardization disclosures, IPR policies of SDOs do not require patent searches 
and  patent  prosecution  takes  time,  and  therefore  it  is  not  uncommon  for  patent  holders  to  have 
insufficient information to make disclosures pre-standardization. 

One respondent clarified that they understand the question “The SEP holder requires implementers 
to pay royalties for rights to patents that are not essential to the relevant standardized technology” to 
be forcing a license combining SEPs with non-SEPs or forcing payment for non-SEPs that are not 
used. According to this and other respondents, it is possible that a SEP holder also has non-SEPs that 
may be infringed. There is nothing opportunistic about requiring a license for implemented patents, 
even if the product also practices SEPs. 

180 

 
QUESTION FOR SEP HOLDERS 

Q22.  Which of the following behaviours would you assess as hold-out or opportunistic behaviour by 
implementers? 

“Agree and strongly agree” answers only 

All 

Compa-
nies 

Repeatedly ask for information that the SEP holder has already 
provided 
Insist  repeatedly  that  the  licence  offer  is  not  FRAND  without 
providing substantive arguments to demonstrate why 
Ignore notifications and other communications for months 

Express a  willingness to take a FRAND  licence  - but only for 
each individual patent for which infringement, essentiality, and 
validity is confirmed by the courts 
Refuse to accept licence terms that have been confirmed by an 
EU court to be FRAND, and that are relevant and comparable for 
that implementer. 
Refuse  or delay signing a non-disclosure agreement as a hold-
out tactic 
Table a counter-offer only once litigation has been initiated 
Buy  time  by  professing  willingness  to  engage  in  constructive 
licensing negotiations - even as behaviour suggests otherwise 
Refuse to enter into a global licence agreement despite having a 
global business for products that use standards 
Insist on obtaining unreasonable amounts of information (e.g. a 
claim  chart  for  every  SEP  in  a  portfolio)  without  appropriate 
confidentiality arrangements in place 
Table  counter-offers  that  are  obviously  unreasonable  and 
unacceptable  for  the  rights  holder  (e.g.  a  licensing  rate  of  just 
0.001 per cent per patent family) 
Claim to lack information or to not understand the licence offer 
Redirect the SEP holder to upstream suppliers for licences 
Redirect the SEP holder to a subsidiary or holding company 
No. of replies* 

Associa-
tions/ 
trade 
union 
50% 

Academia/ 
Authorities/ 
NGO/other 

75% 

80% 

89% 

78% 

81% 

50% 

75% 

76% 

78% 

50% 

75% 

63% 

74% 

33% 

50% 

Citizens 

75% 

100
% 
100
% 
50% 

63% 

70% 

33% 

50% 

75% 

58% 

65% 

17% 

75% 

58% 
56% 

63% 
56% 

17% 
33% 

75% 
75% 

54% 

59% 

17% 

75% 

51% 

63% 

17% 

50% 

50% 

67% 
75% 

50% 

25% 

46% 

59% 

17% 

25% 

25% 

35% 
28% 
26% 
24% 
17% 
19% 
40-41  26-27 

0% 
0% 
0% 
6 

25% 
50% 
25% 
4 

25% 
25% 
25% 
3-4 
into  account 

Note:  “Other 
*range, different number of replies per question 

specify)”  not 

(please 

included 

in 

the 

table;  “No  opinion”  answers  not 

taken 

“Agree and strongly agree” answers only 

Implementers 

SEP 
Holders 

Repeatedly ask for information that the SEP holder has already provided 
Insist repeatedly that the licence offer is not FRAND without providing substantive 
arguments to demonstrate why 
Ignore notifications and other communications for months 
Express a willingness to take a FRAND licence - but only for each individual patent 
for which infringement, essentiality, and validity is confirmed by the courts 
Refuse to accept licence terms that have been confirmed by an EU court to be FRAND, 
and that are relevant and comparable for that implementer. 
Buy time by professing willingness to engage in constructive licensing negotiations - 
even as behaviour suggests otherwise 
Refuse or delay signing a non-disclosure agreement as a hold-out tactic 
Refuse to enter into a global licence agreement despite having a global business for 
products that use standards 
Table a counter-offer only once litigation has been initiated 
Claim to lack information or to not understand the licence offer 
Redirect the SEP holder to a subsidiary or holding company 

56% 
50% 

44% 
28% 

28% 

17% 

6% 
6% 

6% 
6% 
6% 

181 

100% 
100% 

100% 
100% 

100% 

100% 

100% 
100% 

100% 
50% 
31% 

 
 
“Agree and strongly agree” answers only 

Implementers 

SEP 
Holders 

Insist on obtaining unreasonable amounts of information (e.g. a claim chart for every 
SEP in a portfolio) without appropriate confidentiality arrangements in place 
Table counter-offers that are obviously unreasonable and unacceptable for the rights 
holder (e.g. a licensing rate of just 0.001 per cent per patent family) 
Redirect the SEP holder to upstream suppliers for licences 
No. of replies* 

0% 

0% 

0% 
17-18 

100% 

100% 

46% 
12-13 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “Other (please specify)” not included in the table; “No opinion” 
answers not taken into account 
*range, different number of replies per question 

“Agree and strongly agree” answers only 

Repeatedly ask for information that the SEP holder has already provided 
Insist  repeatedly  that  the  licence  offer  is  not  FRAND  without  providing  substantive 
arguments to demonstrate why 
Ignore notifications and other communications for months 
Express a willingness to take a FRAND licence - but only for each individual patent for 
which infringement, essentiality, and validity is confirmed by the courts 
Refuse to accept licence terms that have been confirmed by an EU court to be FRAND, 
and that are relevant and comparable for that implementer. 
Buy time by professing willingness to engage in constructive licensing  negotiations - 
even as behaviour suggests otherwise 
Refuse  to  enter  into  a  global  licence  agreement  despite  having  a  global  business  for 
products that use standards 
Refuse or delay signing a non-disclosure agreement as a hold-out tactic 
Table a counter-offer only once litigation has been initiated 
Insist on obtaining unreasonable amounts of information (e.g. a claim chart for every 
SEP in a portfolio) without appropriate confidentiality arrangements in place 
Table  counter-offers  that  are  obviously  unreasonable  and  unacceptable  for  the  rights 
holder (e.g. a licensing rate of just 0.001 per cent per patent family) 
Claim to lack information or to not understand the licence offer 
Redirect the SEP holder to upstream suppliers for licences 
Redirect the SEP holder to a subsidiary or holding company 
No. of replies* 

EU 

83% 
78% 

78% 
74% 

70% 

57% 

55% 

52% 
52% 
52% 

48% 

32% 
26% 
17% 
22-23 

non-EU 

79% 
71% 

64% 
50% 

50% 

50% 

53% 

69% 
64% 
57% 

50% 

21% 
21% 
14% 
13-15 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. “Other (please specify)” not included in the 
table; “No opinion” answers not taken into account 
*range, different number of replies per question 

“All answers” 

Agree  Neutral  Disagree  No. 

Repeatedly ask for information that the SEP holder has already provided 
Insist  repeatedly  that  the  licence  offer  is  not  FRAND  without  providing 
substantive arguments to demonstrate why 
Ignore notifications and other communications for months 
Express a willingness to take a FRAND licence - but only for each individual 
patent  for  which  infringement,  essentiality,  and  validity  is  confirmed  by  the 
courts 
Refuse to accept licence terms that have been confirmed by an EU court to be 
FRAND, and that are relevant and comparable for that implementer. 
Refuse or delay signing a non-disclosure agreement as a hold-out tactic 
Table a counter-offer only once litigation has been initiated 
Buy  time  by  professing  willingness  to  engage  in  constructive  licensing 
negotiations - even as behaviour suggests otherwise 
Refuse to enter into a global licence agreement despite having a global business 
for products that use standards 
Insist on obtaining unreasonable amounts of information (e.g. a claim chart for 
every SEP in a portfolio) without appropriate confidentiality arrangements in 
place 

80% 
78% 

76% 
63% 

7% 
7% 

10% 
10% 

12% 
15% 

15% 
27% 

63% 

10% 

27% 

58% 
58% 
56% 

8% 
15% 
17% 

35% 
28% 
27% 

54% 

10% 

37% 

51% 

10% 

39% 

41 
41 

41 
41 

41 

40 
40 
41 

41 

41 

182 

 
“All answers” 

Agree  Neutral  Disagree  No. 

Table counter-offers that are obviously unreasonable and unacceptable for the 
rights holder (e.g. a licensing rate of just 0.001 per cent per patent family) 
Claim to lack information or to not understand the licence offer 
Redirect the SEP holder to upstream suppliers for licences 
Redirect the SEP holder to a subsidiary or holding company 
Other (please specify) 

46% 

12% 

41% 

35% 
32% 
37% 

28% 
24% 
17% 
100%  0% 

38% 
44% 
46% 
0% 

41 

40 
41 
41 
2 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

“Companies answers” 

Agree  Neutral  Disagree  No. 

Repeatedly ask for information that the SEP holder has already provided 
Insist  repeatedly  that  the  licence  offer  is  not  FRAND  without  providing 
substantive arguments to demonstrate why 
Ignore notifications and other communications for months 
Express a willingness to take a FRAND licence - but only for each individual 
patent  for  which  infringement,  essentiality,  and  validity  is  confirmed  by  the 
courts 
Refuse to accept licence terms that have been confirmed by an EU court to be 
FRAND, and that are relevant and comparable for that implementer. 
Refuse or delay signing a non-disclosure agreement as a hold-out tactic 
Insist on obtaining unreasonable amounts of information (e.g. a claim chart for 
every SEP in a portfolio) without appropriate confidentiality arrangements in 
place 
Table a counter-offer only once litigation has been initiated 
Refuse to enter into a global licence agreement despite having a global business 
for products that use standards 
Table counter-offers that are obviously unreasonable and unacceptable for the 
rights holder (e.g. a licensing rate of just 0.001 per cent per patent family) 
Buy  time  by  professing  willingness  to  engage  in  constructive  licensing 
negotiations - even as behaviour suggests otherwise 
Claim to lack information or to not understand the licence offer 
Redirect the SEP holder to upstream suppliers for licences 
Redirect the SEP holder to a subsidiary or holding company 
Other (please specify) 

89% 
81% 

78% 
74% 

7% 
7% 

11% 
4% 

4% 
11% 

11% 
22% 

70% 

7% 

22% 

65% 
63% 

4% 
7% 

31% 
30% 

63% 
59% 

15% 
11% 

22% 
30% 

59% 

7% 

33% 

56% 

19% 

26% 

38% 
41% 
44% 

35% 
26% 
19% 
100%  0% 

27% 
33% 
37% 
0% 

27 
27 

27 
27 

27 

26 
27 

27 
27 

27 

27 

26 
27 
27 
2 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

Summary of answers 

Agree 

Courts in the EU have confirmed that almost all of the aforementioned examples may constitute hold-
out  given the individual  circumstances of the specific dispute.  (e.g. the  German  Federal Court of 
Justice and the UK Supreme Court indicate that “willingness” requires more than pure statements).  

 Disagree 

Some respondents commented that the scenarios are very broad and subjective, and that the reasons 
to such behaviour might be completely justified and acts in good faith (contrary to what is implied in 
the questions). Some of the statements in  the question (such as  ‘buying time’) refer to  subjective 
assessments.  What  one  party  may  perceive  as  ‘buying  time’  may  be  good  faith  efforts  trying  to 
understand and assess whether an offer is FRAND. 

While  no  empirical  evidence  base  points  to  their  occurrence  being  widespread/systemic,  some 
respondents  note  that  such  instances  are  already  fully  addressable  via  judicial  mechanisms  under 
today's system in the EU. 

Questions on transparency 

183 

 
 
Quantitative summary 

Respondents asked for more public information on SEP as regards “patent and application number” 
(88% of all responses), “relevant standard, version, section of the standard” (80%), “contact details 
of SEP holder” (80%), “transfer of ownership” (77%), “licensing programs” (76%) and “standard 
FRAND terms and conditions” (72%). 

Patent  pools  should  disclose  “standards  subject  to  pool  licensing”  (100%),  “product  royalties  per 
programme” (94%) and “list of SEP holders” (87%). 

Around 70% of respondents considered that a confidential repository of licensing agreements could 
help judges and arbitrators to determine a FRAND rate. Such repository should contain information 
on “licensed SEPs” (96%), “royalties” (96%) and “methodology used to calculate the royalty” (94%). 

Tables with replies per question 

Q23. In your view, which of the information below should the SEP holder provide publicly? 

“Agree and strongly agree” answers only 

All 

Compa-
nies 

Associati
ons/ 
trade 
union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

Patent and application number 
Contact details of SEP holder 
Relevant standard, version, section of the standard 
Transfer of ownership, if any 
Licensing programs 
Standard FRAND terms and conditions 
High-level claim charts 
Information  on  the  enforceability  of  the  patent  (e.g. 
application, granted, validity) 
Product categories that use the SEPs 
Essentiality confirmed by an independent third party 
List of licensees 
Detailed claim charts 
No. of replies* 

Note:  “Other 
*range, different number of replies per question 

specify)”  not 

(please 

included 

in 

the 

88% 
80% 
80% 
77% 
76% 
72% 
63% 
56% 

84% 
73% 
76% 
72% 
73% 
64% 
54% 
59% 

86% 
86% 
86% 
86% 
71% 
86% 
71% 
29% 

92% 
85% 
85% 
83% 
80% 
75% 
67% 
56% 

52% 
50% 
46% 
45% 
62-66 
table;  “No  opinion”  answers  not 

54% 
51% 
36% 
46% 
36-37 

29% 
29% 
43% 
43% 
7 

50% 
55% 
64% 
45% 
9-13 

100% 
100% 
89% 
78% 
89% 
89% 
89% 
67% 

67% 
56% 
67% 
44% 
9 

taken 

into  account 

“Agree and strongly agree” answers only 

Implementers 

SEP 
Holders 

Patent and application number 
Relevant standard, version, section of the standard 
Transfer of ownership, if any 
Licensing programs 
Standard FRAND terms and conditions 
Contact details of SEP holder 
High-level claim charts 
Essentiality confirmed by an independent third party 
Detailed claim charts 
Information on the enforceability of the patent (e.g. application, granted, validity) 
List of licensees 
Product categories that use the SEPs 
No. of replies* 

100% 
100% 
96% 
93% 
93% 
89% 
86% 
75% 
71% 
71% 
64% 
46% 
28 

65% 
53% 
38% 
50% 
41% 
71% 
25% 
13% 
0% 
19% 
12% 
50% 
16-17 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “Other (please specify)” not included in the table; “No opinion” 
answers not taken into account 
*range, different number of replies per question 

184 

 
 
“Agree and strongly agree” answers only 

Patent and application number 
Relevant standard, version, section of the standard 
Contact details of SEP holder 
Licensing programs 
Transfer of ownership, if any 
Standard FRAND terms and conditions 
High-level claim charts 
Essentiality confirmed by an independent third party 
Information on the enforceability of the patent (e.g. application, granted, validity) 
Product categories that use the SEPs 
Detailed claim charts 
List of licensees 
No. of replies* 

EU 

86% 
82% 
82% 
74% 
73% 
70% 
61% 
49% 
49% 
47% 
46% 
34% 
35-38 

non-EU 

84% 
74% 
68% 
74% 
83% 
67% 
56% 
50% 
67% 
56% 
44% 
58% 
18-19 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. “Other (please specify)” not included in the 
table; “No opinion” answers not taken into account 
*range, different number of replies per question 

“All answers” 

Agree  Neutral  Disagree  No. 

Patent and application number 
Relevant standard, version, section of the standard 
Contact details of SEP holder 
Transfer of ownership, if any 
Licensing programs 
Standard FRAND terms and conditions 
High-level claim charts 
Information  on  the  enforceability  of  the  patent  (e.g.  application,  granted, 
validity) 
Product categories that use the SEPs 
Essentiality confirmed by an independent third party 
List of licensees 
Detailed claim charts 
Other (please specify) 

88% 
80% 
80% 
77% 
76% 
72% 
63% 
56% 

52% 
50% 
46% 
45% 
67% 

8% 
5% 
14% 
6% 
8% 
9% 
9% 
18% 

25% 
22% 
17% 
16% 
17% 

5% 
15% 
6% 
17% 
16% 
19% 
28% 
26% 

22% 
28% 
37% 
39% 
17% 

65 
66 
66 
64 
63 
64 
65 
62 

63 
64 
63 
64 
6 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

“Companies answers” 

Agree  Neutral  Disagree  No. 

Patent and application number 
Relevant standard, version, section of the standard 
Contact details of SEP holder 
Licensing programs 
Transfer of ownership, if any 
Standard FRAND terms and conditions 
Information  on  the  enforceability  of  the  patent  (e.g.  application,  granted, 
validity) 
High-level claim charts 
Product categories that use the SEPs 
Essentiality confirmed by an independent third party 
Detailed claim charts 
List of licensees 
Other (please specify) 

84% 
76% 
73% 
73% 
72% 
64% 
59% 

54% 
54% 
51% 
46% 
36% 
67% 

11% 
5% 
19% 
11% 
6% 
17% 
14% 

14% 
19% 
19% 
14% 
25% 
33% 

5% 
19% 
8% 
16% 
22% 
19% 
27% 

32% 
27% 
30% 
41% 
39% 
0% 

37 
37 
37 
37 
36 
36 
37 

37 
37 
37 
37 
36 
3 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

Summary of comments 

It is very much felt by implementers that most SEP holders do not provide enough information about 
the essentiality of their SEPs to substantiate their claims that they are infringing their patents. As is 
clear  from  the  percentages  above,  most  implementers  would  like  to  have  most  of  the  listed 

185 

 
information to be provided by the SEP holders. For further details as to the information they would 
like to receive when evaluating a licence offer, many implementers refer to Annex B “Documentation 
Relating to Licensing Negotiations” of Consortium Workshop Agreement (CWA) 95000358 which 
mentions in this regard that the details about the asserted patents (including ownership and validity) 
and explanations why these are infringed and how the royalty rate is calculated should be provided 
voluntarily  and  proactively  by  SEP  holders.  In  addition,  a  respondent  suggested  that  all  such 
information should be made available in one place, to allow implementers to compare SEP holders’ 
portfolios on essentiality, remaining lifetime, geographical scope, implementation levels, etc. 

However, SEP holders prefer to keep most information confidential except for the data that is already 
publicly available such as the patent number, standard details and details of the licensing program. 
The more sensitive and confidential information, such as claim charts, third-party essentiality checks 
or list of licensees, they consider better suited for provision under a properly executed non-disclosure 
agreement (NDA) in the interest of both parties. It is mentioned that this is recognized as a general 
practice in section 4.4 of the ETSI Guide on IPR. It does not alter the normal practice of entering into 
a  confidentiality  agreement  covering  license  negotiations  where  both  parties  typically  exchange 
confidential information. Indeed, they stress that also licensees are keen to maintain the terms and 
conditions of the FRAND license strictly confidentiality in fear of being the next "target" for another 
SEP holder and have intervened to that effect before the courts. Most SEP holders are particularly 
reluctant to publicly disclose claim charts, or third-party essentiality checks. The latter in particular 
shouldn’t be imposed without corresponding obligations on implementers to provide assessments of 
products’ use of the standard. 

As arguments in favour of as much transparency as possible it was mentioned that: 

-  Transparency is the foundation of an efficient market for SEP licences, in which costs are as 
low  as  possible,  SEP  holders  receive  FRAND  royalty  payments  as  soon  as  possible,  and 
implementers have high certainty about the costs of SEP licensing. Information relevant to 
setting FRAND rates and other terms should be publicly available, unless its disclosure would 
plausibly damage a party. This will allow licensors and implementers to identify each other 
and agree licence terms without undue delay. 

-  Transparency  is  the  prerequisite  of  predictability  of  the  full  patent  licensing  cost  of 
implementing a standard before making the decision of whether to implement the standard 
and it is consistent with the very spirit of the patent system, which is based on disclosure by 
inventors of the content of their inventions and public access through patent offices to the 
description of inventions and the status of patents.  

-  Detailed  claim  charts,  sufficient  information  about  the  license  offer  and  its  economic  key 
points will be of particular relevance to start-ups, because they do not have the expertise in-
house to do in-depth technical evaluations and economic analyses of entire SEP-ecosystems. 

The hold-up problem and appearance of hold-out result from a significant lack of transparency, which 
creates information asymmetries and excessive leverage. Many of the problems raised in this survey 

358  See  CWA95000.pdf  (standict.eu).  In  2017,  industry  players  under  the  auspices  of  CEN-CENELEC  attempted  to 
establish  business-led  guidance  in  the  form  of  a  so-called  ‘consortium  workshop  agreement’  (CWA).  This  Annex 
provides a list of information and documents that may typically be required by a potential licensee in order to evaluate a 
license offer, including: 1) Basic information that should always be voluntarily and proactively provided by the  SEP 
holder; 2) Information that should be made available upon request by the potential licensee; 3) Additional information 
that should be made available when the asserted SEP’s include patents that are, or have previously been included in a 
licensing program or patent pool. 

186 

 
                                                 
would be resolved by making the FRAND rate transparent and making it easy for companies to verify 
that an offered rate is FRAND and that the SEPs are actually standard essential and infringed. 

Q24. In your view, which of the information below should patent pools make publicly available? 

“Agree and strongly agree” answers only 

All 

Compa-
nies 

Standards subject to pool licensing 

100%  100% 

Associa-
tions/ 
trade 
union 
100% 

Academia/ 
Authorities/ 
NGO/other 

100% 

Product royalties per programme 

94% 

94% 

100% 

80% 

List of SEP holders 
List of certified SEPs 

90% 
87% 

89% 
86% 

100% 
100% 

100% 
73% 

Standard licence agreement per programme 

81% 

75% 

86% 

82% 

Duplicate royalty policy 
Process  for  evaluating  SEPs  to  be  included  in  the  pool 
(essentiality, validity etc.) 
List of licensees 
Illustrative cross-references to standard explaining why the SEPs 
are found to be essential 
Pool Administrators’ shareholders / ownership structure 
List of independent evaluators 
List of licensed products 
No. of replies* 

79% 
76% 

75% 
74% 

81% 
69% 

75% 
72% 

61% 
70% 
57% 
63% 
40% 
48% 
56-63  31-36 

100% 
86% 

86% 
86% 

83% 
71% 
29% 
6-7 

70% 
70% 

73% 
70% 

89% 
64% 
70% 
9-11 

Citizens 

100
% 
100
% 
78% 
100
% 
100
% 
67% 
100
% 
67% 
78% 

78% 
78% 
67% 
9 

Note: “Other (please specify)” and answers on the footnote to “Duplicate royalty policy” not included in the table; “No opinion” 
answers not taken into account 
*range, different number of replies per question 

“Agree and strongly agree” answers only 

Implementers 

SEP 
Holders 

Standards subject to pool licensing 
Product royalties per programme 
List of certified SEPs 
Standard licence agreement per programme 
Duplicate royalty policy[1] 
Process for evaluating SEPs to be included in the pool (essentiality, validity etc.) 
Illustrative  cross-references  to  standard  explaining  why  the  SEPs  are  found  to  be 
essential 
List of SEP holders 
List of licensees 
Pool Administrators’ shareholders / ownership structure 
List of independent evaluators 
List of licensed products 
No. of replies* 

100% 
100% 
100% 
100% 
100% 
96% 
96% 

93% 
89% 
89% 
79% 
39% 
27-28 

100% 
100% 
81% 
63% 
50% 
47% 
47% 

94% 
63% 
33% 
44% 
29% 
10-16 

Note: Implementers: those who agreed with Q2 and disagreed, were neutral or had no opinion on Q3; SEP Holders: those who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “Other (please specify)”  not included in the table; “No 
opinion” answers not taken into account 
*range, different number of replies per question 

“Agree and strongly agree” answers only 

Standards subject to pool licensing 
Product royalties per programme 
List of SEP holders 
List of certified SEPs 
Duplicate royalty policy[1] 

187 

EU 

100% 
92% 
92% 
86% 
84% 

non-EU 

100% 
94% 
94% 
83% 
75% 

 
 
“Agree and strongly agree” answers only 

Standard licence agreement per programme 
Illustrative  cross-references  to  standard  explaining  why  the  SEPs  are  found  to  be 
essential 
List of licensees 
Pool Administrators’ shareholders / ownership structure 
Process for evaluating SEPs to be included in the pool (essentiality, validity etc.) 
List of independent evaluators 
List of licensed products 
No. of replies* 

EU 

78% 
75% 

72% 
71% 
69% 
53% 
40% 
31-36 

non-EU 

78% 
71% 

83% 
65% 
76% 
76% 
53% 
16-18 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. “Other (please specify)” not included in the 
table; “No opinion” answers not taken into account 
*range, different number of replies per question 

“All answers” 

Agree  Neutral  Disagree  No. 

Standards subject to pool licensing 
Product royalties per programme 
List of SEP holders 
List of certified SEPs 
Standard licence agreement per programme 
Duplicate royalty policy 
Process for evaluating SEPs to be  included in the pool (essentiality, validity 
etc.) 
List of licensees 
Illustrative cross-references to standard explaining why the SEPs are found to 
be essential 
Pool Administrators’ shareholders / ownership structure 
List of independent evaluators 
List of licensed products 
Other (please specify) 

100%  0% 
3% 
94% 
3% 
90% 
5% 
87% 
8% 
81% 
13% 
79% 
19% 
76% 

75% 
74% 

13% 
16% 

15% 
26% 
23% 

70% 
63% 
48% 
100%  0% 

0% 
3% 
6% 
8% 
11% 
9% 
5% 

13% 
10% 

15% 
11% 
30% 
0% 

63 
62 
63 
63 
63 
56 
62 

63 
62 

60 
62 
61 
6 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 
answers on the footnote to “Duplicate royalty policy” not included in the table 

“Companies answers” 

Agree  Neutral  Disagree  No. 

Standards subject to pool licensing 
Product royalties per programme 
List of SEP holders 
List of certified SEPs 
Duplicate royalty policy[1] 
List of licensees 
Standard licence agreement per programme 
Illustrative cross-references to standard explaining why the SEPs are found to 
be essential 
Process for evaluating SEPs to be  included in the pool (essentiality, validity 
etc.) 
Pool Administrators’ shareholders / ownership structure 
List of independent evaluators 
List of licensed products 
Other (please specify) 

100%  0% 
3% 
94% 
6% 
89% 
8% 
86% 
16% 
81% 
11% 
75% 
14% 
75% 
22% 
72% 

0% 
3% 
6% 
6% 
3% 
14% 
11% 
6% 

69% 

25% 

6% 

22% 
37% 
26% 

61% 
57% 
40% 
100%  0% 

17% 
6% 
34% 
0% 

36 
36 
36 
36 
31 
36 
36 
36 

36 

36 
35 
35 
3 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account answers on the footnote to “Duplicate royalty policy” not included in the table 

Summary of comments 

In  general,  respondents  consider  that  patent  pool  administrators,  as  the  licensing  agent  of  SEP 
holders,  share  the  same  obligations  as  the  SEP  holder  and  should  readily  provide  necessary 

188 

 
 
 
information in the course of a SEP licensing negotiation. Some respondents are of the opinion that 
patent pools may even face higher competition concerns than bilateral licensing due to their combined 
market power, and as such it is appropriate for pools to be more transparent.  

However, opinions differ as to what information should be made publicly available. For instance, 
according to a patent pool administrator, most of the information needed for licensors and licensees 
of  all  sizes  to  make  informed  decisions  is  already  available  through  public  means  and  can  be 
supplemented  as  needed  through  other  appropriate  channels  where  confidentiality  or  other 
considerations  need  to  be  taken  into  account.  In  particular,  SEP  holders  and  patent  pool 
administrators  differ  of  opinion  as  to  access  to  information  concerning  the  set-up  and  internal 
workings of the pool. Where SEP holders and some patent pool administrators think that this info 
should not necessarily be public, some implementers would like to know the details of the share of 
patents held by each SEP holder, how royalties are shared amongst pool members and which other 
mechanisms exist to compensate SEP holders.  

In addition, many implementers stress the importance of disclosure of the royalty rates, together with 
the  explanation  of  their  calculation  and  the  justification  why  they  are  FRAND  (by  referring  to 
comparable  licences).  To  avoid  double  dipping,  some  implementer  respondents  would  also  like 
patent pool administrators to be transparent about already existing licenses in the value chain which 
cover the products of the licensee. 

Q25. Which of the information below should a SEP implementer of the standard provide publicly? 

“Agree and strongly agree” answers only 

All 

Compa-
nies 

An indication of the standard being used 

52% 

44% 

Associa-
tions/ 
trade 
union 
14% 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

Contact details of implementer 
An  indication  of  the  standard  and  the  relevant  version  of  the 
standard 
An indication of the standard, the relevant version and section of 
the standard 
An indication of the standard, the relevant version, section and 
product category of the standard 
No. of replies* 

67% 

60% 
58% 

48% 
43% 

40% 
35% 

14% 
14% 

29% 

17% 

14% 

50% 

25% 

14% 

14% 

40% 

100
% 
89% 
86% 

71% 

71% 

Note:  “Other 
*range, different number of replies per question 

specify)”  not 

(please 

included 

in 

the 

table;  “No  opinion”  answers  not 

61-63  35-37 

7 

10-12 
taken 

7-9 
into  account 

“Agree and strongly agree” answers only 

Implementers 

SEP 
Holders 

An indication of the standard being used 
Contact details of implementer 
An indication of the standard and the relevant version of the standard 
An indication of the standard, the relevant version and section of the standard 
An indication of the standard, the relevant version, section and product category of the 
standard 
No. of replies* 

38% 
32% 
26% 
22% 
15% 

47% 
56% 
47% 
29% 
19% 

26-28 

16-17 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “Other (please specify)” not included in the table; “No opinion” 
answers not taken into account 
*range, different number of replies per question 

“Agree and strongly agree” answers only 

An indication of the standard being used 
An indication of the standard and the relevant version of the standard 
Contact details of implementer 

EU 

47% 
41% 
36% 

non-EU 

42% 
32% 
47% 

189 

 
 
“Agree and strongly agree” answers only 

An indication of the standard, the relevant version and section of the standard 
An indication of the standard, the relevant version, section and product category of the 
standard 
No. of replies* 

EU 

28% 
24% 

non-EU 

16% 
6% 

33-37 

17-19 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. “Other (please specify)” not included in the 
table; “No opinion” answers not taken into account 
*range, different number of replies per question 

“All answers” 

Agree  Neutral  Disagree  No. 

An indication of the standard being used 
Contact details of implementer 
An indication of the standard and the relevant version of the standard 
An indication of the standard, the relevant version and section of the standard 
An  indication  of  the  standard,  the  relevant  version,  section  and  product 
category of the standard 
Other (please specify) 

52% 
48% 
43% 
29% 
25% 

11% 
13% 
13% 
18% 
21% 

37% 
39% 
44% 
53% 
54% 

100%  0% 

0% 

62 
61 
63 
62 
61 

5 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

“Companies answers” 

Agree  Neutral  Disagree  No. 

An indication of the standard being used 
Contact details of implementer 
An indication of the standard and the relevant version of the standard 
An indication of the standard, the relevant version and section of the standard 
An  indication  of  the  standard,  the  relevant  version,  section  and  product 
category of the standard 
Other (please specify) 

44% 
40% 
35% 
17% 
14% 

14% 
17% 
14% 
19% 
24% 

42% 
43% 
51% 
64% 
62% 

100%  0% 

0% 

36 
35 
37 
36 
37 

2 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

Summary of comments 

The majority of both SEP holder and implementer respondents do not see a need to publicly provide 
detailed  information  about  the  use  of  the  standard  by  implementers  other  than  the  standard 
implemented  (so  the  public  can  tell  what  systems  the  product  will  be  compatible  with)  and 
appropriate contact information.   

Main argument is that the implementer of (certain) SEPs is not necessarily the licensee. For many 
standard implementers, the components implementing parts of a standard come from another party 
(e.g., an IC supplier), and so the standard implementer has little information beyond the mere fact 
that the component purportedly practices the standard. As mentioned by some implementers in the 
car sector, automotive OEMs only know the identity of their direct supplier and are unable to provide 
contact details of other companies in the design chain. Also, the requirement would be costly, vast 
and unwieldy if it extended to every company in a value chain. Moreover, as mentioned by a large 
implementer,  standards  implementers  have  not  made  a  FRAND  commitment,  and  do  not  acquire 
market power from using a standard. It is of the opinion that product suppliers should not be required 
to  publicly  disclose  what  standards  their  products  support.  Information  about  the  technologies  or 
standards  that  a  product  is  implementing  may  be  commercially  and  competitively  sensitive 
information. Where needed, sensitive information can be shared in bilateral negotiations, potentially 
under NDA. 

Another  reason  given by some respondents  is that  information  about the  use of standards in  user 
products  is  usually  available  from  publicly  accessible  sources,  e.g.  via  the  internet,  product  data 
sheets  or  functional  descriptions  for  the  product  or  when  an  implementer  of  an  ETSI  standard 
undertakes conformance testing of products vis-à-vis a standard. In addition, experts on the standard 

190 

 
usually know which applications come into question for the standard. Potential users can therefore 
be identified relatively easily through market research. 

Q26. How useful would the existence of a confidential repository of licensing agreements be to help 
judges and arbitrators determine a FRAND rate? 

All 

Companies 

Associations/ 
trade union 

Academia/Authorities/
NGO/other 

Citizens 

Very useful 
Useful 
Somewhat useful 
Not useful 
No. of replies 

21% 
17% 
32% 
30% 
63 
Note: “No opinion” answers not taken into account. 

24% 
15% 
29% 
32% 
34 

Very useful 
Useful 
Somewhat useful 
Not useful 
No. of replies 

29% 
0% 
29% 
43% 
7 

8% 
31% 
38% 
23% 
13 

22% 
22% 
33% 
22% 
9 

Implementers 

SEP 
Holders 

31% 
19% 
23% 
27% 
26 

12% 
0% 
53% 
35% 
17 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “No opinion” answers not taken into account 

Very useful 
Useful 
Somewhat useful 
Not useful 
No. of replies 

EU 

25% 
17% 
28% 
31% 
36 

non-EU 

11% 
17% 
39% 
33% 
18 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. “No opinion” answers not taken into account 

Summary of comments 

Respondents arguing that it would not be useful  

Respondents that considered that it would not be useful to have a repository of confidential licensing 
agreements could be grouped in four different groups. 

The first group claims that effective mechanisms already exist for courts, arbitrators and competition 
authorities to obtain information they may require in determining FRAND rates. Those mechanisms 
appropriately  take  into  account  various  national  legal  considerations  (including  due  process, 
confidentiality and relevance). 

The second group considers that as  a matter of principle, private  parties should always be free to 
conclude commercial agreements in confidence. There should hence never be an obligation to submit 
licensing agreements to a repository. A voluntary repository, however, would not be useful because 
it could provide for a skewed data set.  

And a third group considers that since everyone should pay the same amount for the same thing, and 
that  amount  should  be  set  in  advance  before  standard  implementation.  A  repository  of  licensing 
agreements is not necessary to achieve this outcome.  

Last  but  not  least  the  fourth  group  expresses  scepticism  as  to  the  quality,  reliability  and  the 
completeness of such a repository. 

191 

 
 
 
 
 
Some respondents explain that as past practice has shown licensing agreements’ information content 
is limited. In order to understand an agreement’s rationale and mathematics much more information 
is needed as e.g. negotiation history, business history, complementary agreements. An agreement’s 
pure numbers (royalty rate) are not good for a reference. 

Some respondents claim that a license repository would be open to opportunistic conduct that would 
likely make it ineffective. For example, SEP holders can control to which companies they first license 
and can opportunistically choose targets more likely to acquiesce to create favourable examples. Such 
licenses may not  be truly  FRAND as they may  be concluded under the threat  of an injunction or 
litigation  more  generally.  There  are  also  dangers  that  side  deals  with  related  transactions  (e.g. 
agreements to buy goods and services) may not be properly reflected in the repository. 

Respondents arguing that it would be useful  

Those respondents argued that implementers can only assess whether they are discriminated against 
if SEP holders disclose prior licences. SEP implementers need a clear legal framework for claiming 
and enforcing disclosure of relevant licences and other agreements. Otherwise, discrimination will 
remain the norm rather than an exception.  

Some request that information on comparable licences is known at the earliest stage of a product 
development by all stakeholders. 

According to some respondents, a repository of licensing agreements would increase access to licence 
agreements  and  information  that  is  currently  not  shared  with  courts  and  arbitrators  because  of 
confidentiality considerations. This would translate into better adjudication about FRAND terms and 
increasing the level playing field and equal treatment of licensees.  

Some argue that such repository should not be confidential at all. Transparency is key for efficient 
licensing and the implementation of new technologies. SMEs which plan to upgrade their products 
with connectivity must calculate their business case. Licensing costs have a significant impact. For 
SMEs lack of transparency is unacceptable.  

Finally,  a  respondent  explains  that  proprietary  databases  on  patent  licences  already  exist  but  are 
fragmented and incomplete since they rely on usually redacted financial disclosures and voluntary 
submissions by the contract parties. Examples are KTmine, Royalty Range, RoyaltySource, IPScio, 
Questel  Orbit  etc.  Well-funded  patent  offices,  such  as  the  EPO,  could  be  in  the  right  position  to 
maintain  such  a  confidential  repository  also  because  they  already  (yet  ineffectively)  impose  the 
recordation of patent licences and transfers into their official registers. 

Q27.  If  there  should  be  a  repository  who  should  have  access  to  such  confidential  repository  of 
licensing agreements? 

All 

84% 
71% 
50% 
48% 
27% 
23% 
31% 

Judges 
Arbitrators 
Mediators 
Lawyers 
Public authorities 
Trustees 
Other 
specify) 
No. of replies 

(please 

62 
Note: multiple answers possible 

Companies 

Associations/ 
trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

82% 
65% 
56% 
47% 
26% 
24% 
26% 

34 

100% 
100% 
43% 
57% 
14% 
43% 
29% 

7 

192 

92% 
75% 
50% 
42% 
33% 
17% 
33% 

12 

67% 
67% 
33% 
56% 
33% 
11% 
44% 

9 

 
 
 
Judges 
Arbitrators 
Lawyers 
Mediators 
Public authorities 
Trustees 
Other (please specify) 
No. of replies 

Implementers 

SEP 
Holders 

92% 
84% 
80% 
60% 
48% 
36% 
44% 
25 

88% 
65% 
12% 
35% 
0% 
12% 
18% 
17 

Note: Implementer: those who agreed with Q2 and disagreed, were neutral or had no opinion on Q3; Holder: those who disagreed, 
were neutral or had no opinion on Q2 and agreed with Q3; multiple answers possible. 

Judges 
Arbitrators 
Mediators 
Lawyers 
Public authorities 
Trustees 
Other (please specify) 
No. of replies 

EU 

94% 
83% 
60% 
49% 
29% 
29% 
26% 
35 

non-EU 

72% 
50% 
39% 
44% 
22% 
17% 
33% 
18 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; multiple answers possible. 

Summary of comments 

The opinions on who should have access to the repository vary. 

Public  

Those that argue that such a repository must be public consider that it will enable willing licensees, 
in  particular  SMEs  to  identify  necessary  licences  and  to  determine  the  FRAND  value  for  such  a 
licence. Every licensee will be enabled to calculate a business case for the provision of goods and 
services it intends to provide. It furthermore will enable any customers to determine at an early stage 
whether or not a supplier took all necessary licences. Licensors will not have the burden to search for 
and contact every potential licensee. License negotiations will be accelerated as validity, relevance 
and licensing terms and conditions will not have to be explained multiple times but just once.  

(Partially) confidential 

Others who consider that the repository should be confidential  argue that when sharing data, it is 
important to keep in mind the protection of business secrets and the fact that the data may have a high 
market value. 

Some  consider  that  to  protect  the  various  interests  and  confidential  information  only  judges, 
arbitrators, mediators and public authorities should have access. 

Others  argue  that  if  such  repository  is  established,  it  is  important  to  ensure  that  all  parties  to  a 
litigation  have  access  to  the  information  to  make  sure  rights  of  defence  are  maintained.  It  is  not 
appropriate in an adversarial system for counsel not to have access to documents that the judge or 
arbitrator will rely on to make decisions. Accordingly, counsel at least will need to have access which 
will  present  a  substantial  danger  of  improper  disclosure  that  will  need  to  be  addressed.  In-house 
counsels  should  not  have  access,  as  these  agreements  could  include  sensitive  information  from 
competitors. Clients don't need to have access to the repository, but they should have access to the 
anonymised  database.  Commercially  sensitive  information  can  be  redacted  or  sufficiently 
aggregated. 

193 

 
 
 
Q28 Under what conditions should access to the confidential repository of licensing agreements be 
granted? 

Summary of answers 

Some respondents explain that the repository could be used for pre-defined purposes, including (i) 
assessing the value of SEP licensing offers, (ii) determining the FRAND value of SEP licences, and 
(iii) determining whether there is any unjustified discrimination. 

According to some respondents access could be granted on the following conditions: (i) only if the 
implementer makes an unconditional commitment to take a license once a FRAND rate determination 
is made; (ii) only to a limited number of outside attorneys and financial experts who agree to maintain 
the confidentiality of the terms.  

Other respondents consider that the confidential repository should be accessible to potential licensees 
early in the negotiation process to balance information asymmetries and reduce transaction costs. To 
protect confidentiality, access should be conditioned on (i) there being a valid negotiation between 
two parties, and (ii) parties agreeing to destroy and actually destroying any information received from 
the repository once the negotiation is complete. The confidential repository will do little to reduce 
negotiating costs and increase transparency if it is only available in limited circumstances. Indeed, it 
could increase litigation if that were the only avenue to get access to the confidential repository. 

Q29. No licence agreement is the same. They are catered to the needs of the concluding parties and 
the agreed terms and rates may be influenced by elements other than merely SEPs. If there were an 
obligation to submit licensing agreements to a confidential repository and parties were obliged to 
“unpack” the complex licensing agreements,  i.e.  provide a clear picture of  the agreed terms and 
conditions, which elements of the agreement would need to be explained in a form to be submitted to 
the confidential repository of licensing agreements, summarising those agreements? 

All 

Compa-
nies 

Associa-
tions/ 
trade 
union 

Academia/ 
Authorities
/NGO/ 
other 

Citizens 

Licensed SEPs 

Royalties 

96% 

96% 

100% 

90% 

96% 

96% 

100% 

90% 

Methodology used to calculate the royalty 

94% 

92% 

100% 

90% 

Duration 

Licensed product 
Geographical scope 
Discounts 
Grant-backs 
Parties 
Reciprocity obligations 
Defensive  suspension  (clause  that  allows  a  SEP  holder  to 
terminate a licence upon the occurrence of a certain event, like 
being  sued  for  patent  infringement  by  a  implementer  or 
implementer’s customer) 
Patent related (validity) 
Payment conditions (term, interest for late payments) 
Legal (applicable law, competent forum/court) 

87% 

83% 

100% 

80% 

87% 
85% 
83% 
81% 
79% 
74% 
70% 

88% 
83% 
83% 
79% 
79% 
67% 
58% 

100% 
100% 
100% 
100% 
100% 
100% 
100% 

90% 
80% 
80% 
90% 
80% 
90% 
80% 

64% 
64% 
62% 

67% 
67% 
58% 

50% 
25% 
75% 

80% 
80% 
70% 

100
% 
100
% 
100
% 
100
% 
78% 
89% 
78% 
67% 
67% 
67% 
78% 

44% 
56% 
56% 

194 

 
 
 
 
All 

Compa-
nies 

Associa-
tions/ 
trade 
union 

Academia/ 
Authorities
/NGO/ 
other 

Citizens 

Non-disclosure requirements 
Compliance (reporting obligations and auditing conditions) 
No. of replies 

60% 
51% 
47 

54% 
46% 
24 

75% 
50% 
4 

70% 
60% 
10 

56% 
56% 
9 

Note: multiple answers possible 

Licensed SEPs 

Royalties 

Methodology used to calculate the royalty 
Discounts 
Geographical scope 
Duration 
Parties 
Licensed product 
Grant-backs 
Reciprocity obligations 
Patent related (validity) 
Defensive suspension (clause that allows a SEP holder to terminate a licence upon the 
occurrence of a certain event, like being sued for patent infringement by a implementer 
or implementer’s customer) 
Non-disclosure requirements 
Legal (applicable law, competent forum/court) 
Payment conditions (term, interest for late payments) 
Compliance (reporting obligations and auditing conditions) 
No. of replies 

Implementers 

SEP 
Holders 

100% 

100% 

100% 
100% 
95% 
91% 
91% 
86% 
86% 
82% 
82% 
77% 

77% 
73% 
68% 
59% 
22 

91% 

91% 

82% 
73% 
82% 
91% 
73% 
82% 
82% 
73% 
27% 
73% 

27% 
55% 
45% 
36% 
11 

Note: Implementer: those who agreed with Q2 and disagreed, were neutral or had no opinion on Q3; Holder: those who disagreed, 
were neutral or had no opinion on Q2 and agreed with Q3; multiple answers possible. 

Licensed SEPs 
Royalties 
Methodology used to calculate the royalty 
Discounts 
Licensed product 
Geographical scope 
Duration 
Parties 
Grant-backs 
Reciprocity obligations 
Patent related (validity) 
Defensive suspension (clause that allows a SEP holder to terminate a licence upon the 
occurrence of a certain event, like being sued for patent infringement by a implementer 
or implementer’s customer) 
Legal (applicable law, competent forum/court) 
Payment conditions (term, interest for late payments) 
Non-disclosure requirements 
Compliance (reporting obligations and auditing conditions) 
No. of replies 

EU 

93% 
93% 
93% 
85% 
85% 
81% 
81% 
81% 
78% 
70% 
63% 
63% 

63% 
59% 
52% 
41% 
27 

non-EU 

100% 
100% 
91% 
82% 
100% 
91% 
91% 
82% 
100% 
91% 
82% 
82% 

64% 
82% 
82% 
73% 
11 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; multiple answers possible. 

Summary of comments 

195 

 
 
 
 
Some respondents explain that first, the comparable licenses have to be identified. Once comparable 
licenses are identified, it is necessary to unpack them to identify the one-way royalty paid for a license 
to the SEP portfolio at issue. To do so, one must identify and isolate the value of other considerations 
included in the license, which may be difficult or impossible. In addition, any “unpacking” rule that 
requires only some terms of sometimes complex business arrangements to be disclosed is subject to 
being gamed by parties wishing to avoid disclosure. 

Some respondents claim that the list only contains elements from the licence agreement and does not 
take  into  account  potential  interdependencies  between  elements  and  their  relative  importance. 
According  to  those  respondents,  the  list  does  not  contain  any  element  that  relates  to  the  general 
background against which the licence agreement was signed. According to them FRAND requires 
the  licence  to  be  considered  as  a  whole  (internally)  against  the  circumstances  in  which  it  was 
negotiated (externally). Such elements can include the overall economic situation (both general and 
particular), the product market segment, etc. One example of such external situations can be found 
in the decision of the German Federal Court of Justice in the Sisvel v Haier case (5 May 2020 - Case 
No. KZR 36/17) where the “Court held that Sisvel had not discriminated against Haier by offering 
different (higher) rates than those previously agreed with another licensee (allegedly) as a result of 
undue pressure by foreign state authorities”. There might also be other commercial considerations 
that can be part of the agreement. Given the many different product segments, geographies, and other 
commercial  and  economic  considerations,  it  is  impossible  to  provide  an  exhaustive  list  of  all  the 
elements that may be relevant for the unpacking of the agreement. Unpacking’ is a complex activity 
that cannot be captured by a defined procedure or in an excel sheet.   

Some  respondents  note  that  FRAND  terms  may  also  differ  because  the  parties  might  agree  on 
different forms of monetary consideration which allow them to allocate commercial risk as they deem 
appropriate.  Parties  might  also  negotiate  non-monetary,  yet  still  valuable,  terms  consistent  with 
FRAND.   

Some respondents claim that an obligation for the parties to each license agreement submitted to the 
repository to explain and “unpack” licenses would be complex and would likely result in biased and 
incomplete  views.  It  could  also  impact  financial  markets  or  impact  other  regulatory  filings.  Two 
parties would each unpack the same agreement differently. 

Some respondents in favour of a repository consider that such repository should include all listed 
marked information, plus the information regarding the scope of the licence. 

Should the repository be public or accessible to larger circle of authorised persons, the parties, the 
licensed  product  and  royalties  should  be  included  in  redacted  form  similar  to  the  ordinary  non-
confidential versions of competition law decisions. For instance, instead of the explicit name of a 
company, the license repository could indicate its size, turnover, sector, geographical presence and 
so on. 

The process of unpacking would need to be dynamic over time. It is not possible to represent the 
dynamic effects in a form. 

Questions on essentiality 

Quantitative summary 

Around 60% of all respondents and 90% of Implementers supported third party essentiality checks 
as long as independent experts do them. Only 24% of SEP Holders supported such a solution. A third 

196 

 
 
of all respondents considered that essentiality checks should serve only an advisory role with no legal 
consequences. 

Around  two  thirds  of  all  respondents  and  around  80%  of  Implementers  thought  that  essentiality 
assessment might help in assessing SEP exposure of a product and deciding whom to negotiate with, 
smoothen licensing negotiation and prevent over pricing. More than half of SEP Holders disagreed 
with these impacts, but agreed that checks might provide a reliable overview of the share of each SEP 
holders’ essential patents. 

As regards practical implementation, the respondents preferred that European Patent Office (EPO) 
conducts the checks (63% of all replies) on just “one SEP per SEP family” (63%). 

Tables with replies per question 

Q30. The SEPs legal framework does not provide for third party checks outside of court of patents 
declared essential to a standard. How useful would be to set up a system of essentiality checks? 

Useful,  but  only  if  the  assessors  would  have  the  required 
expertise and are totally independent 
Useful,  but  only  if  it  would  be  advisory  and  have  no  legal 
consequences 
Useful.  It  provides  more  transparency  and  reduces  licensing 
costs 
Not useful. It is sufficient to develop private solutions to identify 
declared SEPs that are clearly not a true SEP. 
Not useful. It is sufficient, if SEP owners were obliged to update 
their self-declarations (so as to remove declared SEPs that are no 
longer SEPs) 
Not useful. It is sufficient, if SEP owners were obliged to submit 
claim charts confirmed by an independent third party 
Other, please specify 
No. of replies 

All 

Compa-
nies 

61% 

66% 

Associa-
tions/ 
trade 
union 
71% 

Academia/ 
Authorities/ 
NGO/other 

54% 

34% 

34% 

57% 

31% 

34% 

37% 

43% 

38% 

10% 

11% 

7% 

3% 

0% 

0% 

15% 

8% 

Citizens 

44% 

22% 

11% 

11% 

33% 

0% 

0% 

0% 

0% 

0% 

11% 
9 
Note: multiple answers possible; “No opinion” answers not taken into account; “No opinion” answers not taken into account 

18% 
38 

31% 
13 

19% 
67 

14% 
7 

Implementers 

SEP 
Holders 

Useful,  but  only  if  the  assessors  would  have  the  required  expertise  and  are  totally 
independent 
Useful, but only if it would be advisory and have no legal consequences 
Useful. It provides more transparency and reduces licensing costs 
Not useful. It is sufficient, if SEP owners were obliged to update their self-declarations 
(so as to remove declared SEPs that are no longer SEPs) 
Not useful. It is sufficient to develop private solutions to identify declared SEPs that 
are clearly not a true SEP. 
Not  useful.  It  is  sufficient,  if  SEP  owners  were  obliged  to  submit  claim  charts 
confirmed by an independent third party 
Other, please specify 
No. of replies 

93% 

64% 
46% 
7% 

4% 

0% 

4% 
28 

24% 

0% 
12% 
6% 

18% 

0% 

41% 
17 

Note: Implementer: those who agreed with Q2 and disagreed, were neutral or had no opinion on Q3; Holder: those who disagreed, 
were neutral or had no opinion on Q2 and agreed with Q3; multiple answers possible; “No opinion” answers not taken into account; 
“No opinion” answers not taken into account. 

Useful,  but  only  if  the  assessors  would  have  the  required  expertise  and  are  totally 
independent 

EU 

63% 

non-EU 

65% 

197 

 
 
 
 
 
Useful, but only if it would be advisory and have no legal consequences 
Useful. It provides more transparency and reduces licensing costs 
Not useful. It is sufficient to develop private solutions to identify declared SEPs that 
are clearly not a true SEP. 
Not useful. It is sufficient, if SEP owners were obliged to update their self-declarations 
(so as to remove declared SEPs that are no longer SEPs) 
Not  useful.  It  is  sufficient,  if  SEP  owners  were  obliged  to  submit  claim  charts 
confirmed by an independent third party 
Other, please specify 
No. of replies 

EU 

37% 
37% 
5% 

3% 

0% 

21% 
38 

non-EU 

35% 
40% 
20% 

5% 

0% 

20% 
20 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; “No opinion” answers not taken into account; 
“No opinion” answers not taken into account. 

Summary of comments 

Proponents for a system of essentiality checks  

The majority of all respondents (61%) consider the setting up of a system of essentiality checks as 
useful, if the assessors would have the required expertise and are totally independent users of designs. 
This is particularly true for those respondents who identified themselves as implementers, where 93% 
considered this useful contrary to 24% of SEP holders.  

Those  in  favour  of  such  a  system  point  out  that  third  party  essentiality  checks  would  reduce 
information  asymmetry  and  make  negotiation  more  efficient.  Currently,  the  discrepancy  between 
declared and truly essential patents causes legal and commercial uncertainty for potential licensees, 
who are unable to assess whether they need to acquire a licence, from whom, and what is the value 
of the IPR that they need to obtain. The complex SEP landscape may lead to violations of competition 
law,  as  SEP  holders  can  use  their  position  of  unavoidable  trading  partners  with  respect  to  truly 
standard essential patents to force SEP licensees to also pay for IPR that they do not need. Under the 
current system, licensees need to bear the cost of establishing essentiality of SEPs for each individual 
licence  negotiation.  It  is  a  time  consuming  and  expensive  process  that  slows  down  licensing 
negotiations. Third-party essentiality checks would smoothen SEP licence negotiations. However, 
the trust of potential licensees would be essential to achieve these gains. Untrusted essentiality checks 
would exacerbate the costs and inefficiencies of the current system. The legal framework must ensure 
that the assessors are competent and not subject to capture nor forum shopping and are not funded, 
or vetted, by SEP holders. 

Proponents against a system of essentiality checks  

Those  respondents  against  a  system  of  essentiality  checks  argue  that  making  essentiality  checks 
available may not necessarily facilitate SEP licensing. First, a disadvantage of essentiality checks is 
that they are not legally binding unless confirmed by courts. But even if essentiality is confirmed in 
court, parties may dispute validity, the requested royalty rate and still refuse licenses. Second, it is 
mentioned that the essentiality of a patent  cannot be determined  "objectively”.  It  is  a question of 
probability. Third, even if that is possible, determining essentiality ratios would be voluminous, very 
costly and determinations will still not be legally enforceable. Finally, the SEP holders that seek to 
monetize their portfolios have enough SEPs that at least some are essential to any given standard, 
making  the  question  of  essentiality  less  important  in  the  aggregate.  In  particular,  patent  pool 
administrators point out that private solutions are available and sufficient. With the pool context in 
mind, a starting point for a market driven approach may for instance be one that puts in place an 
accreditation framework (rather than a single independent institution) where independent, specialised 
third parties can seek accreditation based on a determined set of criteria. 

198 

 
 
 
Q31. What would be the main advantage of third-party essentiality checks? 

“Agree and strongly agree” answers only 

All 

Compa-
nies 

It may help to be better informed about the actual SEP exposure 
of a given product 
It may help to reduce the required amount of resources spent on 
licensing of SEPs 
It may help to smoothen licensing negotiations 
It may help to negotiate a fair royalty (preventing over-pricing) 
It may help to provide a trustworthy and reliable overview of the 
share of each SEP holders’ essential patents 
It  may  help  in  deciding  with  whom  to  engage  in  licensing 
discussions 
It may facilitate the construction of better benchmarks to be used 
in case of disputes 
It  may  make  SEP  declarants  to  become  more  selective  in 
submitting  ‘potentially  essential’  or  ‘probably  not  essential’ 
patents 
It may help the SEP holder to meet its obligations as referred to 
in Huawei v ZTE 
No. of replies* 

Associa-
tions/ 
trade 
union 
71% 

Academia/ 
Authorities/ 
NGO/other 

62% 

65% 

65% 

65% 

68% 

71% 

54% 

64% 
63% 
63% 

62% 
59% 
62% 

71% 
86% 
86% 

69% 
69% 
62% 

62% 

59% 

86% 

62% 

58% 

57% 

71% 

60% 

48% 

46% 

43% 

62% 

Citizens 

63% 

63% 

63% 
50% 
50% 

50% 

50% 

43% 

41% 

44% 

29% 

42% 

38% 

59-67  32-39 

7 

10-13 
taken 

7-8 
into  account 

Note:  “Other 
*range, different number of replies per question 

specify)”  not 

(please 

included 

in 

the 

table;  “No  opinion”  answers  not 

“Agree and strongly agree” answers only 

Implementers 

It may help in deciding with whom to engage in licensing discussions 
It may help to reduce the required amount of resources spent on licensing of SEPs 
It may help to smoothen licensing negotiations 
It may help to negotiate a fair royalty (preventing over-pricing) 
It may help to provide a trustworthy and reliable overview of the share of each SEP 
holders’ essential patents 
It may facilitate the construction of better benchmarks to be used in case of disputes 
It may help to be better informed about the actual SEP exposure of a given product 
It  may  make  SEP  declarants  to  become  more  selective  in  submitting  ‘potentially 
essential’ or ‘probably not essential’ patents 
It may help the SEP holder to meet its obligations as referred to in Huawei v ZTE 
No. of replies* 

89% 
86% 
86% 
86% 
85% 

82% 
79% 
59% 

46% 
27-28 

SEP 
Holders 

24% 
29% 
35% 
24% 
41% 

25% 
35% 
24% 

25% 
16-17 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “Other (please specify)” not included in the table; “No opinion” 
answers not taken into account 
*range, different number of replies per question 

“Agree and strongly agree” answers only 

It may help to provide a trustworthy and reliable overview of the share of each SEP 
holders’ essential patents 
It may help to reduce the required amount of resources spent on licensing of SEPs 
It may help to smoothen licensing negotiations 
It may help in deciding with whom to engage in licensing discussions 
It may help to negotiate a fair royalty (preventing over-pricing) 
It may help to be better informed about the actual SEP exposure of a given product 
It may facilitate the construction of better benchmarks to be used in case of disputes 
It  may  make  SEP  declarants  to  become  more  selective  in  submitting  ‘potentially 
essential’ or ‘probably not essential’ patents 
It may help the SEP holder to meet its obligations as referred to in Huawei v ZTE 
No. of replies* 

EU 

70% 

68% 
66% 
65% 
65% 
63% 
59% 
49% 

41% 
34-38 

non-EU 

55% 

60% 
62% 
60% 
65% 
68% 
60% 
50% 

41% 
17-21 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; “Other (please specify)”  not included in the 
table; “No opinion” answers not taken into account 

199 

 
*range, different number of replies per question 

“All answers” 

Agree  Neutral  Disagree  No. 

It  may  help  to  be  better  informed  about  the  actual  SEP  exposure  of  a  given 
product 
It may help to reduce the required amount of resources spent on licensing of 
SEPs 
It may help to smoothen licensing negotiations 
It may help to provide a trustworthy and reliable overview of the share of each 
SEP holders’ essential patents 
It may help to negotiate a fair royalty (preventing over-pricing) 
It may help in deciding with whom to engage in licensing discussions 
It  may facilitate the construction of better benchmarks to be  used in case of 
disputes 
It  may  make  SEP  declarants  to  become  more  selective  in  submitting 
‘potentially essential’ or ‘probably not essential’ patents 
It may help the SEP holder to meet its obligations as referred to in Huawei v 
ZTE 
Other (please specify) 

65% 

18% 

17% 

65% 

9% 

26% 

64% 
63% 

63% 
62% 
58% 

13% 
20% 

8% 
15% 
18% 

22% 
17% 

29% 
23% 
24% 

48% 

28% 

23% 

41% 

19% 

41% 

100%  0% 

0% 

65 

65 

67 
65 

65 
65 
62 

64 

59 

2 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

“Companies answers” 

Agree  Neutral  Disagree  No. 

It may help to reduce the required amount of resources spent on licensing of 
SEPs 
It  may  help  to  be  better  informed  about  the  actual  SEP  exposure  of  a  given 
product 
It may help to provide a trustworthy and reliable overview of the share of each 
SEP holders’ essential patents 
It may help to smoothen licensing negotiations 
It may help in deciding with whom to engage in licensing discussions 
It may help to negotiate a fair royalty (preventing over-pricing) 
It  may facilitate the construction of better  benchmarks to be used in case of 
disputes 
It  may  make  SEP  declarants  to  become  more  selective  in  submitting 
‘potentially essential’ or ‘probably not essential’ patents 
It may help the SEP holder to meet its obligations as referred to in Huawei v 
ZTE 
Other (please specify) 

68% 

5% 

27% 

65% 

22% 

14% 

62% 

27% 

11% 

62% 
59% 
59% 
57% 

18% 
14% 
8% 
22% 

21% 
27% 
32% 
22% 

46% 

35% 

19% 

44% 

9% 

47% 

37 

37 

37 

39 
37 
37 
37 

37 

32 

0 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

Summary of comments 

The majority of all respondents consider as important benefits of a system of third party essentiality 
checks that it may (i) provide better information on the actual SEP exposure of a given product (65%), 
(ii) reduce transaction costs (65%), (iii) smoothen licensing negotiations (64%), (iv) give insight in 
the share of each SEP holders’ essential patents (63%), (v) help to negotiate a fair royalty (63%), (vi) 
help  in  deciding  with  whom  to  engage  in  licensing  discussions  (62%)  and  (vii)  facilitate  the 
construction of better benchmarks to be used in case of disputes (58%) 

As particular advantages for start-ups and SMEs it is mentioned that third party essentiality checks 
could be useful for SMEs as they would provide additional transparency and bring down negotiation 
costs. Given the sheer size of SEP portfolios, potential licensees generally do not have sufficient time 
for carrying out the necessary analyses of SEPs. This would be especially important for start-ups that 
do not have the resources for analysing patents and standards. However, the risk of an ex-parte system 
would be the lack of resources for start-ups and SMEs to rebut an existing but flawed essentiality 
finding.  A  possible  disadvantage  of  a  system  of  third-party  essentiality  checks  is  that  SMEs  are 

200 

 
 
 
 
usually not asked to take a license, so that essentiality checks standing alone may give unsophisticated 
or unadvised SMEs a false impression of the possible costs to implement a standard. 

Q32. If there were a legal obligation to conduct essentiality checks on all declared SEP families that 
SEP holders intend to license, how should those be made? 

“Agree and strongly agree” answers only 

All 

Compa-
nies 

One SEP per family 
Only  SEPs that are licensed on FRAND terms and conditions, 
including cross licensing, excluding SEPs licensed on a royalty 
free basis 
For worldwide SEPs 
Sampling of both ‘Numerator data’ and ‘Denominator data’. 
Sampling  of  ‘Numerator  data’  (which  is  information  on  the 
actual  SEPs  portfolio  of  a  specific  patent  owner  for  a  specific 
standard). 
Sampling of ‘Denominator data’ (which is information on actual 
SEPs  owned  by  all  relevant  patent  owners  for  a  specific 
standard). 
For European SEPs only 
One SEP per family that is being licensed on FRAND terms and 
conditions 
No. of replies* 

Associa-
tions/ 
trade 
union 
67% 
71% 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

30% 
56% 

38% 
50% 
20% 

71% 
14% 

50% 
71% 
57% 

63% 
45% 

71% 
43% 

40% 
37% 
35% 

41% 
30% 
39% 

33% 
14% 
14% 

33% 

30% 

29% 

20% 

71% 

26% 
24% 

27% 
24% 

33% 
50% 

38% 
0% 

0% 
33% 

46-57  26-34 

6-7 

8-10 

Note:  “Other 
*range, different number of replies per question 

specify)”  not 

(please 

included 

in 

the 

table;  “No  opinion”  answers  not 

taken 

“Agree and strongly agree” answers only 

Implementers 

One SEP per family 
Only  SEPs  that  are  licensed  on  FRAND  terms  and  conditions,  including  cross 
licensing, excluding SEPs licensed on a royalty free basis 
For worldwide SEPs 
Sampling of both ‘Numerator data’ and ‘Denominator data’. 
Sampling of ‘Numerator data’ (which is information on the actual SEPs portfolio of a 
specific patent owner for a specific standard). 
Sampling of ‘Denominator data’ (which is information on actual SEPs owned by all 
relevant patent owners for a specific standard). 
For European SEPs only 
One SEP per family that is being licensed on FRAND terms and conditions 
No. of replies* 

54% 
60% 

57% 
44% 
39% 

48% 

40% 
18% 
20-26 

6-7 
into  account 

SEP 
Holders 

71% 
31% 

23% 
20% 
27% 

13% 

15% 
31% 
13-15 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “Other (please specify)” not included in the table; “No opinion” 
answers not taken into account 
*range, different number of replies per question 

“Agree and strongly agree” answers only 

One SEP per family 
Only  SEPs  that  are  licensed  on  FRAND  terms  and  conditions,  including  cross 
licensing, excluding SEPs licensed on a royalty free basis 
For worldwide SEPs 
Sampling of both ‘Numerator data’ and ‘Denominator data’. 
Sampling of ‘Numerator data’ (which is information on the actual SEPs portfolio of a 
specific patent owner for a specific standard). 
Sampling of ‘Denominator data’ (which is information on actual SEPs owned by all 
relevant patent owners for a specific standard). 

EU 

71% 
59% 

41% 
38% 
38% 

32% 

non-EU 

44% 
25% 

33% 
15% 
15% 

15% 

201 

 
 
 
“Agree and strongly agree” answers only 

For European SEPs only 
One SEP per family that is being licensed on FRAND terms and conditions 
No. of replies* 

EU 

32% 
29% 
28-34 

non-EU 

25% 
8% 
12-16 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; “Other (please specify)” not included in the 
table; “No opinion” answers not taken into account 
*range, different number of replies per question 

“All answers” 

Agree  Neutral  Disagree  No. 

One SEP per family 
Only SEPs that are licensed on FRAND terms and conditions, including cross 
licensing, excluding SEPs licensed on a royalty free basis 
For worldwide SEPs 
Sampling of both ‘Numerator data’ and ‘Denominator data’. 
Sampling  of  ‘Numerator  data’  (which  is  information  on  the  actual  SEPs 
portfolio of a specific patent owner for a specific standard). 
Sampling of ‘Denominator data’ (which is information on actual SEPs owned 
by all relevant patent owners for a specific standard). 
For European SEPs only 
One SEP per family that is being licensed on FRAND terms and conditions 
Other (please specify) 

63% 
45% 

40% 
37% 
35% 

16% 
11% 

9% 
20% 
21% 

21% 
43% 

51% 
43% 
44% 

33% 

27% 

39% 

26% 
24% 
75% 

11% 
22% 
0% 

63% 
54% 
25% 

57 
53 

47 
54 
52 

51 

46 
50 
4 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

“Companies answers” 

Agree  Neutral  Disagree  No. 

One SEP per family 
Only SEPs that are licensed on FRAND terms and conditions, including cross 
licensing, excluding SEPs licensed on a royalty free basis 
For worldwide SEPs 
Sampling  of  ‘Numerator  data’  (which  is  information  on  the  actual  SEPs 
portfolio of a specific patent owner for a specific standard). 
Sampling of both ‘Numerator data’ and ‘Denominator data’. 
Sampling of ‘Denominator data’ (which is information on actual SEPs owned 
by all relevant patent owners for a specific standard). 
For European SEPs only 
One SEP per family that is being licensed on FRAND terms and conditions 
Other (please specify) 

71% 
43% 

41% 
39% 

30% 
30% 

27% 
24% 
0% 

12% 
10% 

11% 
18% 

23% 
30% 

4% 
24% 
0% 

18% 
47% 

48% 
43% 

47% 
41% 

69% 
52% 
100% 

34 
30 

27 
28 

30 
27 

26 
29 
1 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

Summary of comments 

The majority of all respondents (63%) would prefer to check one SEP per family if there were a legal 
obligation  to  conduct  essentiality  checks  on  all  declared  SEP  families  that  SEP  holders  intend  to 
license. The approach of a SEP per family is best suited for this (although one should think about 
selecting the family member from the jurisdiction in which litigation is already taking place or this 
is at least foreseeable. The check should be done on a family member that successfully passed a full 
examination  (pref.  with  most  limited  claim)  and  in  the  mother  application  in  case  of 
divisionary/continuation. 

Respondents are moderately positive about sampling. Some, mainly “Implementers”, warn against 
sampling in essentiality assessments since it would always give an approximate - not accurate - view 
of the entire portfolio. If sampling were nevertheless used, it should be random (not selected by the 
SEP holder), and large enough to provide a reliable indication of the overall strength of the portfolio 
and be done in a statistically transparent manner, so that error margins are clear. Moreover, ex-post 
sample-based  methodologies  have  limited  influence  on  over-declarations.  Others,  mainly  “SEP 
Holders”, stress that some level of sampling may be appropriate as essentiality checks on all SEPs 
are cost-prohibitive and would undermine FRAND licensing. Moreover, essentiality checks on all 

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SEPs that SEP holders “intend to license” would make no sense because implementers will demand 
a licence to all disclosed SEPs in order to ensure full freedom to operate. 

As to the geographical coverage of the patents, in particular SEP holders would be in favour of a 
global scope of the essentiality checks since they tend to conclude global licenses for international 
standards.  Patent pool administrators explain that global checks are achieved within the context of 
patent pools by mans of a full evaluation for each patent in certain significant countries and then a 
system of certifications to those evaluated claims for  family patents  in  other  countries.  However, 
some argue against a global reach that a mandatory system of essentiality checks would risk taking 
on a quasi-extra judicial role and could potentially cause tensions with foreign jurisdictions, even if 
the outcome remains for informational purposes only. 

Q33. If a system of third-party essentiality checks would be in place, which authority/body would be 
best placed for doing such essentiality checks?  

The EPO 
The national patent offices 
Specialised law firms 
Other organisation, please specify 
A combination of the bodies listed in letters a, b, 
c  or  d.  If  so,  please  specify  which  bodies  and 
why in your view both should be responsible for 
this task 
No. of replies 

Note: multiple answers possible 

All 

Companies 

Associations
/trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

63% 
28% 
28% 
25% 
11% 

64% 
27% 
30% 
18% 
9% 

83% 
33% 
17% 
17% 
0% 

78% 
44% 
22% 
33% 
22% 

33% 
11% 
33% 
44% 
11% 

57 

33 

6 

9 

9 

Implementers 

SEP 
Holders 

The EPO 
The national patent offices 
Other organisation, please specify 
Specialised law firms 
A combination of the bodies listed in letters a, b, c or d. If so, please specify which 
bodies and why in your view both should be responsible for this task 
No. of replies 

73% 
35% 
27% 
15% 
15% 

26 

60% 
0% 
13% 
47% 
0% 

15 

Note: Implementer: those who agreed with Q2 and disagreed, were neutral or had no opinion on Q3; Holder: those who disagreed, 
were neutral or had no opinion on Q2 and agreed with Q3; multiple answers possible. 

The EPO 
The national patent offices 
Specialised law firms 
Other organisation, please specify 
A combination of the bodies listed in letters a, b, c or d. If so, please specify which 
bodies and why in your view both should be responsible for this task 
No. of replies 

EU 

71% 
32% 
21% 
18% 
9% 

34 

non-EU 

64% 
29% 
43% 
29% 
14% 

14 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; multiple answers possible. 

Summary of comments 

Of  all  respondents  a  majority  (63%)  consider  the  EPO  as  the  best  placed  authority  to  do  the 
essentiality checks. Also, among Implementers and SEP Holders this authority is the preferred option 
(71% and 64% respectively). As for the other possible assessing entities, more than a quarter of all 
respondents  (28%)  consider  the  national  patent  offices  and  specialised  law  firms  best  placed  to 

203 

 
 
 
 
 
perform the checks. However, where Implementers seem to prefer national patent offices over law 
firms  (35% versus 15%), SEP Holders do not  see a role  for NIPOs  as possible assessors and but 
instead mention the law firms (0% versus 47%) as a second-best option after the EPO.   

All  respondents  agree  that  the  body  in  charge  of  the  essentiality  checks  should  be  impartial  and 
independent,  have  the  necessary  expertise  and  access  to  standards  and  technical  specifications 
through arrangements with SDOs. For some, this means that the EPO would be their preferred choice, 
be it alone or together with national patent offices. Others, however, are of the opinion that the EPO 
and  national  patent  offices  are  not  the  best  authorities  for  performing  the  checks,  as  they  lack 
competence  and  their  expertise  concerns  patentability,  prosecution  or  patent  validity.  Other 
arguments raised against patents offices as possible evaluators are that the authority granting a SEP 
should not assess a SEP’s essentiality to ensure highest possible objectivity and may not have the 
necessary resources to handle these checks.  

Nevertheless, those respondents that opted for a combination of bodies, most saw a leading role for 
the EPO, which could do the checks together with national patent offices or outsource the checks to 
specialised firms under a possible certification framework. In such a case, the EPO should ensure the 
quality of the checks, organize the assessment activities internally or with certified institutions and 
ensure the independence and quality of engaged certified institutions.  

Others see a role for a completely new organisation to be in charge of the essentiality checks. One 
respondent suggested that patent offices are not the best in place to do the checks but that a specific 
organisation could appoint several specialized law firms to perform these checks. Furthermore, there 
was mention of WIPO and the creation of a board of experts” (BOE) at SDO level and a “SEP court” 
that unlike the EPO, patent offices or private actors would be able to take decisions between two 
positions defended by two adverse parties. 

Q34. Please explain what are in your view the main challenges to set up such a system, in terms of 
complexity and/or costs. 

Summary of answers 

SEP holders are mostly concerned by the costs of the system and who would have to pay for the 
checks. Requiring the essentiality of each SEP within a portfolio to be subjected to a separate review 
would  inevitably  impose  significant  costs  and  raise  barriers  to  entry  to  effective  licensing  giving 
companies  with  sufficient  financial  resources  an  advantage.  It  is  therefore  suggested  by  some  to 
establish incentives for patent owners to voluntarily initiate essentiality assessments. As an example, 
it is proposed that implementers should agree to accept the findings of third-party essentiality checks 
as a basis for signing up to the FRAND license. Translation costs are also to be taken into account. 

The cost challenge is also closely linked to that of quality. In particular, some large SEP portfolio 
holders stress the importance of high-quality checks. For a new system to be relevant it needs to be 
rigorous,  transparent  and  neutral.  Less  trust  in  the  checks  would  reduce  any  benefit  towards 
improving licensing. However, it would be challenging to create a system of essentiality checks that 
keeps the cost at a reasonable level while safeguarding quality.  

As to the complexity of the system the respondents raise different concerns, concerning the scope, 
neutrality and continuity of the system, the expertise of the checkers, quality and uniformity of the 
checks, staffing capacity, possible abuse of the system and timing. 

First, an issue of concern raised by all stakeholders, is the integrity of the organisation conducting 
the checks, specifically the independence and impartiality of its members. One worry is that it would 
be difficult to find staff with the required competencies that is not already engaged by an SEP holder 
or SEP implementer. Another is the potential for bias due to the source of funding.  

204 

 
 
The stakeholders also point to the choices to be made concerning the scope of the checks. Different 
interests are at take concerning questions as to the legal effect of the checks and whether they can be 
challenged, appealed or reassessed over time. Other questions that need to be answered are: which 
patents  (of  a  family)  need  to  be  checked  and  against  which  standards?  From  which  regions  and 
SDOs? At what moment in time? What will be the definition of essentiality? And who decides which 
patents are going to be checked? 

Another key challenge would be to ensure the required expertise on a continuous basis to be able to 
process huge numbers of potential SEPs in a uniform manner. There are not many engineers with 
that specific knowledge and building up capacity cannot be done overnight. The number of external 
lawyers would be limited, because they would have to meet such strict (predefined) criteria. If this 
requires close cooperation and coordination among different IP authorities, a clear, centralised and 
uniform procedure will need to be implemented to ensure consistent decisions. Moreover, there will 
be challenges in determining the correct staffing level, particularly for smaller or less active standards 
areas,  as  the  workload  will  likely  come  in  waves  as  new  standards  or  versions  of  standards  are 
published. 

Finally, a major challenge pointed out by the SEP holders is to design the system in such a way as to 
avoid delaying tactics by implementers. Some see a risk of new opportunities of hold-out in case 
implementers would decide to challenge the essentiality check. “We don’t want to take a licence yet 
because  we  want  to  first  see  the  essentiality  checks  for  your  Release  18  patents”  is  one  example 
mentioned by a major SEP holder association of how an implementer could use coercive essentiality 
checks as a delaying tactic. Another SEP holder representative, namely a pool administrator, points 
out that a situation where a legal obligation would be put in place with no further obligation put, 
conversely,  on  the  SEP  implementers,  would  just  generate  costs  and  time  waste  without  any  real 
benefit. 

Questions on FRAND (Fair, Reasonable and Non-Discriminatory) terms and conditions 

Quantitative summary 

Between 55% and 75% of all respondents and from 85% to 100% of Implementers, consider that 
SEP  holder  cannot  refuse  a  licence  following  a  request  from  an  implementer.  Majority  of  SEP 
Holders were of the opposite view. 

60% of all respondents and 93% of Implementers consider that licencing could take place at any level 
of the value chain. Around 70% of SEP Holders consider that it should be at one level only (level 
allowing for the best monitoring of applications). 

Around three quarters of respondents (93% of SEP Holders) agreed that fair and reasonable terms 
and conditions might depend on functionalities of the standard implemented in a product. Around 
70% thought these terms could depend on the level of licencing. 

For non-discrimination assessment, it matters if companies that use the same functionalities of the 
standard in similar applications are put at a competitive disadvantage (around 75% of all answers, 
and 94% of SEP Holders answers). 

SEP  Holders  considered  that  discounts  between  28%  and  40%  do  not  cause  discrimination.  For 
Implementers reasonable discounts amount to between 5% and 10%. 

70% of all respondents and 100% of Implementers argued that it is important to know reasonable 
aggregate royalty rate for a product. Only 20% of SEP Holders shared that view. 

Summary of comments 

The summary of FRAND-related comments aims at explaining the main positions and pointing out 
to some comments that may be helpful to further the discussion.  

205 

 
 
I.  Positions based on the principles “access to all”, licensing at only one level in a value 
chain and FRAND terms and conditions based on end-use of the standardised 
technology 

1.  “Access to all” and licensing in the value chain 

The proponents of the principle “access to all” explain that the FRAND commitment is not an active 
obligation to make an offer to license to all third parties. Rather, it requires SEP holders to allow 
access to the standards. It is up to an SEP holder how to provide such access.  

According to those respondents, patent law bestows exclusive rights on patent holders. Hence, SEP 
holders have discretion who to license and at what level of the value chain, unless modified by a 
FRAND commitment. Most FRAND commitments do not specify a licensing level. Competition law 
(Article 102 TFEU) does not imply a preferred licensing level. Any intervention undermining a SEP 
holder’s discretion over  licensing level  would likely  contravene  Articles  30 and 31 of the TRIPS 
Agreement. 

Furthermore, some respondents explain that courts in Europe and other jurisdictions have rejected 
the contention that SEP holders are required to grant licenses to component and chip makers (See 
Nokia v Daimler, LG Mannheim 18 August 2020 - Case No. 2 O 34/19; Sharp v Daimler, District 
Court of Munich, judgment dated 10 September 2020, Case-No. 7 O 8818/19; US Court of Appeal 
for the Ninth Circuit in Federal Trade Commission v Qualcomm Inc., dated 11 August 2020.) See 
also HTC v Ericsson (US Court of Appeal). The US Court of Appeals for the Fifth Circuit ruled on 
28 February 2022 that the supplier does not have a legal right to a licence and that Avanci and its 
licensors have not breached their FRAND obligations, No. 20-11032. 

One respondent explained that FRAND commitments leave at least four possibilities to ensure access 
to standards: (i) concluding a FRAND license; (ii) indirectly benefiting from a license by selling to 
licensed end-device manufacturers holding so-called have-made rights; (iii) concluding non-assertion 
agreements, or (iv) benefiting from the SEP owner’s policy of non-asserting patents at a certain level 
of the production chain. Another respondent added that, within the same value chain, if a license is 
provided upstream then lawful downstream access can be enabled via the principle of exhaustion. 
The specificities of the different SEP implementing industries call for the preservation of FRAND 
licensing flexibility.  

A respondent notes that concerns may arise when an SEP holder seeks to enforce its SEPs towards a 
specific implementer. Consistent with the CJEU judgment in Huawei v. ZTE, a SEP holder cannot 
seek to exclude an implementer from the market without first offering a license on FRAND terms. 
Thus, even if a SEP holder were to have a practice of licensing at one level of the value chain, parties 
at other levels of the chain would have comfort that they would not be subject to a prohibitive order. 
Within this constraint, SEP holders are best suited to determine how to license and from whom to 
seek  a  royalty.  A  ‘refusal  to  license’  at  a  certain  point  in  the  supply  chain,  is  not  necessarily 
exclusionary and does not automatically impact the use of the standardized technology. 

Some respondents explain that a refusal of a licence by a SEP holder does not in itself deny access 
to the technology, and it is therefore not problematic per se. In case a SEP holder is not ready to 
license  its  SEPs  for  a  new  application  (e.g.,  when  valuation  remains  unclear),  it  would  not  be 
unreasonable to not offer licenses until the market has developed. Doing so would prevent potential 
over-valuation or under-valuation of a technical standard in  a new application. Some respondents 
also note that a SEP holder usually prepares a licensing program with an expected level of licensee 
in the value chain to avoid double dipping or free riding. This would create certainty and clarity for 
both  the  SEP  holder  and  implementer  (and  others  in  the  value  chain).  According  to  those  views, 
where a SEP holder is still preparing its licensing programme, it may be reasonable for a SEP holder 
to temporarily refuse a request from implementer for a license. 

206 

 
2.  FRAND terms and conditions 

Some respondents assert that SEP holders are generally well-suited to determine the best manner, in 
which  to  license  and  they  have  the  best  understanding  of  their  technology  and  its  use  in  the 
marketplace. According to them, making changes to currently accepted industry models would be 
difficult to administer and would interfere with the ability of SEP holders to ensure consistent pricing 
among similarly situated licensees. This is because the value of a standard as used in the market only 
becomes apparent at the end-implementer level. In most cases it is then also logical that the royalties 
are  paid  by  the  manufacturer/seller  of  the  end-implementer  product  or  service,  although  in  some 
markets it can be more practical to license at a different level (e.g. Tier 1 suppliers to automotive 
industry).  The  price  would,  however,  be  determined  based  on  the  value  to  the  end-implementer. 
Those respondents consider that a SEP holder cannot be made responsible for the complexities of 
modern opaque supply chains or be bound by agreements between various implementers in the value 
chain.  

Certain respondents also argue that prices need not to be uniform because terms may differ based on 
the technology that is being licensed (based on standard or version of the standard). According to 
them the royalties in a FRAND licence should reflect the economic value that the patented technology 
adds to the end product. 

Some respondents explain that in a market economy, price must be based upon the value conferred. 
This  means  different  prices  for  different  applications.  Critically,  the  value  of  a  technology  also 
depends upon its application/use. 5G can be incorporated in a vending machine to occasionally report 
stock levels. It can be used in a self-driving car. In the former, 5G is used occasionally and provides 
a moderate benefit.  In the car, 5G will be used continuously and will be responsible for mission-
critical safety features that benefit consumers, manufacturers, and society at large. Pricing 5G licence 
the same for vending machines and self-driving cars would not be fair and reasonable. A self-driving 
car licence would be too expensive for the vending machine provider. And a vending machine licence 
applied to self-driving cars would not generate the value to justify investing in the cellular standards.  

A respondent explains that the statement “FR TC may depend on the functionalities of the standard 
that are being implemented” assumes incorrectly that it is  obvious, or easily  ascertainable,  which 
standard functionalities  are implemented in  which products.  For example, the first  HEVC license 
offered  a  fixed  rate  for  Main/Main10  implementations,  with  small  additional  charges  for 
implementation of any of the optional “extensions” (Range Extension, Multi-View, and Scalability). 
The implementers (business people) often did not know whether their products implemented any of 
the optional extensions. Basing FR TC on the “application of the standard” in particular products or 
on “the functionalities of the standard that are being implemented” suggest a range of granular prices 
specific to each product. The realities of the business require less granular pricing applied to a range 
of products, averaged across the various permutations of application and function. 

Some respondents  note that  the level  of complexity of the negotiations will  increase, if questions 
about  the  products’  main  function  are  included.  That  would  be  another  obstacle  to  achieve  an 
agreement. The licensing negotiations should become easier, not more complex. If a question about 
a product’s main  function was clarified with  one implementer, would it mean  that all subsequent 
implementers were bound by such finding? 

Regarding the “ND” assessment, respondents note that European courts are increasingly aligned.  In 
the UK (Unwired Planet v Huawei) Judge Birss analysed in detail the non-discrimination prong of 
FRAND,  concluding  that  there  is  no  requirement  for  “hard-edged”  non-discrimination.  Non-
discrimination in the FRAND context does not mean that every licensee is entitled to the same rate, 
not even similarly situated competitors. This has been confirmed by the UK Supreme Court. 

207 

 
Some  respondents  explain  that  for  the  ND  assessment,  it  is  relevant  whether:  (i)  the  entities  are 
competitors, and (ii) they would be put at a competitive disadvantage, if treated differently. Hence 
the  following  are  generally  not  determinative:  those  using  the  same  functionalities  of  a  standard; 
those using the technology in the same applications; those using the same functionalities of a standard 
in similar or same applications.  

Some  respondents  argue  that  if  entities  are  at  the  same  level  of  the  value  chain  ND  is  relevant, 
provided  they  are  competitors.  Entities  at  different  levels  of  the  value  chain  are  unlikely  to  be 
competitors and not similarly situated. ND relevance has to be determined on a case-by-case basis 
depending on whether they distort competition between similarly situated competitors in the relevant 
market. 

The aspects of non-disclosure requirements, compliance and patent related issues, none of which are 
commercial  in  nature,  seem  unlikely  to  some  respondents  to  distort  competition  (between 
competitors), and thus may have little relevance to the ND part of FRAND.  

Some  respondents  note  that  ND  may  also  be  determined  by  external  factors  such  as  the  business 
environment,  the  size  of  the  business  and  the  extent  of  competition.  In  the  event  of  license 
negotiations,  besides  the  above  situations,  the  negotiation  process,  such  as  all  relevant  reactions 
during the negotiation process should be added to the factors in determining ND. 

Some respondents argue that early bird discounts, volume discounts, early payment discounts and 
annual royalty caps are unlikely to cause discrimination if they are offered to all similarly situated 
implementers. As such, it is hard to say that any discount would be problematic. Such discounts serve 
as an incentive to conclude a FRAND licence and to avoid litigation. What courts have avoided, and 
policy makers should avoid, is a determination that ND operates as a most favoured nation clause 
which causes discounts to be applied to all, even those that do not qualify. 

3.  Arguments against the “license to all” principle 

Some  respondents  believe  that  compelling  licensing  at  all  levels  of  the  value  chain  would  be 
inefficient and impracticable. Per the SEPs Expert Group report of January 2021 such a requirement 
would  significantly  increase  negotiation  costs  for  SEP  holders.  To  avoid  issues  such  as  double 
dipping,  licenses  to  component  makers  at  each  level  would  also  have  to  accurately  define  and 
delineate each SEP from others both with respect to scope and with respect to SEPs used. A final 
difficulty would be that one would need to figure out the portion of the FRAND royalties that would 
be  borne  for  each  component.  The  cost  of  administering  this  solution  would  be  significant  and, 
therefore, the risk of hold-out would also be high. 

Some  respondents  also  note  that  licensing  at  multiple  levels  would  create  further  undue 
administrative  burden  for  the  SEP  owner,  geographical  complications,  and  severe  non-
compliance/under-reporting issues. If multiple parties are made responsible for payment, then usually 
nobody does. If SEP holders lose control of who to license it would have profound implications on 
efficiency, complexity, and cost of licensing. It will also be much more difficult to comply with the 
non-discrimination limb of FRAND. If the SEP holder chooses the licensing level, similarly situated 
parties can be licensed similarly.  

Respondents  warn  that  there  would  be  a  fundamental  difficulty  to  implement  this  principle  in 
practice. They note that monitoring can only be achieved via contractual engagements. There may be 
multiple end-use applications  with  potentially different  values  and the  consequential  challenge of 
anticipating the proper licensing value at the upstream level. In order for such monitoring to work, 
contractual engagements need to be in place at different levels granting the SEP holder enforceable 
auditing  rights.  A  first  level  where  the  licensee/implementer/manufacturer  of  upstream  level 
(intermediate)  products,  agrees  with  the  SEP  holder  (licensor)  that  the  license  agreement  will  be 
subject to the acceptance of auditing rights by the producer of end products to the benefit of the SEP 
holder. Then a subsequent agreement whereby the producer of end products enters into a contractual 
208 

 
arrangement with the SEP holder to provide such auditing rights for the duration of the SEP license 
agreement and a reasonable term thereafter (as audit can only occur ex post). This is very difficult to 
set up in practice and will increase costs substantially for everyone (incl. consumers), but without it, 
monitoring upstream, the downstream activity in a global supply chain is not reasonably possible. 
Barriers  would  include  confidentiality  and  dynamic  market  factors  requiring  frequent  updates  of 
supply chain information.  

Some add that it also would also be difficult if not impossible for consumer product manufacturers 
to track and report each supplier for every component in each product they manufacture.  

A respondent notes that the first-to-request scenario could easily lead to different supply chains being 
licensed at different levels, so competitors at the same level would not be treated similarly. Where 
the choice of licensing level results in uncertainty regarding value or use, the party choosing the level 
should bear the cost of such uncertainty. 

4.  Aggregate royalty 

Some  respondents  argue  that  for  an  operating  company,  the  decision  to  implement  a  particular 
standard into a product is primarily driven by market needs and consumer demand. Thus, not knowing 
the reasonable aggregate royalty for a standard, in most cases, would not impact implementation. 
Respondents  add  that  whether  a  consumer  is  willing  to  pay  €25  or  €250  to  add  connectivity  is  a 
question for the market and such market decisions may not be known at first. Valuation declared ex 
ante can over- or under-value standardized technology. Businesses, whether large or small, must be 
able to operate without perfect information. But because the aggregate royalty will only be a small 
fraction of €25 to €250 value created by the utilisation of the standard, it will not be a primary cause 
of concern for businesses.  

Respondents  explains furthermore that hardly any  company pays  for all SEPs, thus the aggregate 
royalty rate is a hypothetical phenomenon, not a realistic one. Much has been written on theoretical 
"royalty stacks" but these are just that - theoretical. Tangible examples of the existence of such stacks 
are hard to come by. According to such respondents in practice, a reasonable aggregate royalty has 
never  been  known  and  this  has  presented  no  impediment  to  licensing  or  the  adoption  or 
implementation of standards. As a matter of economics, an aggregate royalty acts as an artificial, 
arbitrary cap that is advocated because it allows implementers to argue that royalties should be limited 
irrespective of the economic value provided by the patented technologies. Since many SEPs holders 
obtain  returns  on  their  R&D  investments  in  ways  other  than  by  licensing  their  SEPs,  such  an 
aggregate royalty would be purely hypothetical and essentially irrelevant. 

Another respondent points to some important challenges to such determination, including who would 
make it, when, whether  it would be for the worldwide market,  whether it would be updated on a 
regular basis and what impact would it have on the license agreements.  

Some respondents argue that an approach based on aggregate royalty and the apportionment thereof 
may not be commercially feasible as it would require costly and time-consuming analysis. Top-down 
analysis is only one of SEP valuation approaches. Putting excessive emphasis on top-down places 
significant burden on the SEP licensing practice (e.g., requiring third party essentiality on all declared 
SEPs). Exclusive reliance on top-down may also hamper innovation incentives.  

A respondent notes that past attempts to determine such reasonable aggregate did not lead to a usable 
outcomes.  

Finally,  respondents  underlined  that  the  aggregated  royalty  is  just  one  aspect  and  has  a  limited 
significance  without  knowledge  of  the  number  of  all  SEPs,  number  of  licensors,  their  licensing 
programs for a specific standard, ASP of products, volume and so on. If caps or lump-sum payments 
are agreed the aggregated royalty is of even less significance. 

209 

 
II.  Positions in favour of a qualified “Licence to all” principle which may consider price 

differentiation and one level of licensing in a particular value chain 

1.  “License to all” principle 

Respondents note that open standards were developed as building blocks to foster innovation and 
interoperability.  The  FRAND  commitment,  that  any  willing  licensee  should  receive  a  license, 
supports innovation and interoperability, encourages the take up of open standards. They claim that 
the European Commission in its Horizontal Guidelines provide that licences should be available “to 
all third parties”. A number of respondents argue that a refusal to offer a licence is contrary to the 
purpose  of  the  FRAND  commitment,  undermines  the  purpose  of  standardisation,  violates 
competition law, and harms innovation.  

Respondents also argue that by voluntarily giving a FRAND-commitment, SEP-owners freely choose 
to restrict their right to decide to whom they want to license their SEPs. Against this background, 
“single point licensing” solutions cannot be imposed unilaterally by the SEP holder but would require 
the  consent  of  all  affected  stakeholders  in  a  value  chain  who  are  interested  in  taking  a  license. 
Moreover, any “single point licensing” solution would have to provide adequate protection against 
patent infringement claims to all actors at all levels of the value chain. 

According to  some respondents,  pro-active licensing is  the opposite of patent hold-out.  A willing 
licensee should be able to reach the necessary level of certainty to calculate its business case and to 
start providing innovative products to customers. Since the decision to seek a license could be driven 
by the desire to enter new product markets using standardized technology and gain legal certainty, 
the right to a licence should also not be limited by the licensing practice of the SEP-holder or its 
decision to license its SEPs only to certain market-participants. 

Some respondents explain that in principle, an implementer must be able to obtain a license for his 
products.  An  implementer  cannot  be  forced  to  infringe  another  party's  SEP  under  patent  law  and 
possibly commit a criminal act by doing so in certain jurisdictions, because it cannot take a licence. 
It  should  also  be  able  to  sell  its  products  legally  within  the  meaning  of  Article  42  of  the  UN 
Convention on Contracts for the International Sale of Goods (CISG), irrespective of the level of the 
supply chain at which it is located. This applies especially if it wishes to sell its products to other 
implementers who have not yet concluded a license agreement. If an implementer cannot request a 
licence of its own, it may become dependent on licensed customers. In effect, the refusal to license 
may restrict the economic freedom to operate of an implementer. 

A number of respondents underline that licensing could take place at ANY level in the value chain, 
not at EVERY level (to avoid double-dipping). The market should be able to determine at which level 
licensing should take place. For different value chains, this level can be chosen differently. The most 
appropriate level of licensing may differ by industry, products and market structure. The outcome 
should minimize the effort of licensing, provide certainty to good faith implementers and licensors. 
Some note that it has also to guarantee that the value of a license is not marginalized if licensing takes 
place  on  a  very  low  level  of  the  value  chain.  Some  respondents  within  this  group  consider  that 
discussions of this kind should include both  SEP holders and implementers, and potentially other 
industry stakeholders. Others argue, however, that the power to choose the level of licensing should 
be vested in SEP implementers, as they know best the characteristics of a particular industry. 

A number of respondents argue that component suppliers are best positioned to evaluate the value of 
a SEP  given their practical  expertise in the standard.  Further, component  suppliers can centralize 
licensing and act as a clearinghouse providing licensed products to disparate companies, enabling 
access and furthering the adoption of the standard. If components are already licensed, then SMEs 
and other innovators will be free to focus on their own innovations by incorporating standardized 
functionalities without the fear of being sued and enjoined by SEP holders. 

210 

 
Respondents argue that it should be possible to pass the cost of a license downstream just like any 
other cost. However, they note two issues related to this. First, royalties are requested retroactively 
for products already sold on the market. Second, implementers upstream may not have the negotiation 
power to pass the costs downstream. Even if a licence is given downstream and "have made" rights 
are  granted, the  component supplier may  be obliged contractually to  compensate the end-product 
producer for the cost of the SEP royalties. Since the component manufacturer did not negotiate such 
price, it cannot economically bear the royalty burden thus generated. 

Also here, some respondents caution against introducing a ‘first to request’ approach to determining 
the appropriate level of licensing in a value chain because this might open the SEP licensing process 
to  gamesmanship.  If  the  first  entity  to  ask  for  a  license  can  determine  the  level  of  licensing,  the 
implementer is in a disproportionally weaker position. SEP holders know first of their SEPs before a 
manufacturer  can  assess  whether  its  product  uses  a  given  SEP.  They  claim  that  such  a  right  of 
determination of another would inadmissibly interfere with the right to obtain one's own license and 
thus restrict the freedom of one's own independent economic activity. 

2.  FRAND terms and conditions 

A number of respondents argue that the licensing terms must bear a clear relationship to the economic 
value of the patented technology also in conjunction with all the other technologies incorporated in 
the company’s products at the selected licensing level. 

Some argue that FR TC can be best determined based on the products which main function is that of 
the  standardised  technology.  In  particular,  royalties  should  not  capture  the  value  of  downstream 
innovation and investment by other undertakings. The role of connectivity SEPs is limited to enabling 
technology,  they  provide  the  ability  of  components  to  connect  and  transmit  voice  or  data.  This 
function is exactly the same in vehicles as in mobile handsets. The FR TC should therefore not differ 
depending on the application or use of the product.  

Respondents argue that FR TC can, however, differ depending on the functionalities of the standard 
that are being implemented. R&D investments from SEP holders could then be rewarded if they lead 
to  functionalities  that  are  specifically  relevant  for  a  dedicated  application.  Definition  of 
"functionalities" should, however, be clarified and may correspond to a specific set of sections of a 
standard. 

Some respondents propose that the FR TC, including royalties, may be different depending on the 
percentage of implementation of the standard. If the standard is only partially implemented, only the 
patents applying to that portion are applicable, implying that the royalty cannot be the same for the 
entire SEP portfolio. Some respondents add that the FR TC could be different if the intensity of use 
of the standard is not the same. For example, a device that only transmits a few bytes of technical 
data  in  5G,  as  opposed  to  a  smartphone  that  would  be  used  to  do  5G  intensive  video  streaming, 
downloading, conferencing etc., would not be subject to the same level of royalty. 

With regard to the ND aspect of FRAND some respondents explain that it is intended to counteract 
a distortion of competition, which by definition is "between competitors." Therefore, a SEP holder 
should not discriminate between similarly situated competitors. SEP implementers active in various 
regions may be similarly situated. However, ND does not require that license terms offered or agreed 
to  be  identical  between  similarly  situated  licensees.  Companies  using  the  same  functionality  of  a 
standard and those using the technology in the same applications are not  necessarily competitors. 
Therefore, it is uncertain whether the ND aspect of FRAND applies. Companies at different levels of 
value chains are generally not likely to be competitors in the relevant market and therefore unlikely 
to be in a similar situation. 

Other respondents claim that similarly situated entities are those that use the same functionalities of 
the standard. The use of the technology in different applications may not justify different treatment. 

211 

 
The choice of the level of licensing is neutral for the determination of FRAND terms and conditions. 
Such respondents caution against a general conclusion that discrimination is permitted as long as a 
company is not similarly situated to another. 

Respondents  note  the  following  as  justification  for  discriminatory  treatment:  licences  limited  to 
certain territories and local legal requirements. 

Some  respondents  consider  discounts  for  early  bird,  volume,  etc.  reasonable  when  (i)  the 
implementers  help  to  promote  or  contribute  to  the  diffusion  of  the  relevant  standard  (i.e.,  drive 
widespread implementation of the relevant  technology in  the market);  and (ii) such discounts  are 
made available in a non-discriminate manner to all implementers in a similar situation around the 
same time. The reasonable range of discount should be determined on a case-by-case basis depending 
on the market  circumstances. When evaluating  where discounts  can be  non-discriminating and/or 
anti-competitive, it is important to consider the particular timing and circumstances under which the 
discounts are offered to the implementers. 

Some respondents note that significant early bird discounts without transparency (i.e., as to duration 
and amount) runs the risk of being discriminatory, so cannot speak to discount amount alone. A non-
discriminatory example is the licensor publicly announcing a 20% discount during the first year. In 
contrast, the licensor using a secret, sweetheart deal with an early adopter to create adoption and lock-
in would be discriminatory if higher rates are then charged to later adopters, or to future renewals. 
According to some respondents, volume discounts and annual royalty caps distinctly favour larger 
implementers over smaller ones. Any early payment discount that is not reflective of the risk-adjusted 
time  value  of  money  favours  the  more  liquid  implementers  over  those  less  so  and  thus  may  be 
discriminatory. 

3.  Arguments on “license to all” principle 

Some respondents explain that the doctrine of patent exhaustion provides that the initial sale of a 
patented item terminates all patent rights to that item. Once the patent holder sells a product covered 
by a patent, that patent can no longer be asserted against a downstream buyer or implementer of the 
product.  The  patent  exhaustion  doctrine  is  critical  in  providing  certainty  to  patent  rights,  and  to 
preventing improper ‘double dipping’ in the context of SEP licensing. 

Some respondents  note that it would be preferable if all parties agreed on the licensing level  and 
could  agree  on  one  level  in  line  with  proposals  no.  28-33  of  the  EU  expert  report.  Until  such  an 
agreement has been reached, an implementer should only be able to determine the licensing level for 
itself as long as no other license agreement has been concluded for the same licensed product at any 
other  level.  The  SEP  holder  should  be  able  to  demand  the  acquisition  of  licenses  from  other 
implementers as long as the products manufactured, used or distributed by said implementers are not 
completely covered by license agreements  of the SEP holder at  another level  of the supply chain 
(upstream = exhaustion, downstream = double dipping or have-made rights) or corresponding license 
agreements  are  requested  by  implementers  at  another  level.  If  several  license  agreements  are 
nevertheless  concluded  at  different  levels  in  a  supply  chain,  the  SEP  holder  should  inform  the 
licensees  belonging  to  the  supply  chain  and  do  the  necessary  to  avoid  double  dipping  due  to 
overlapping licensing.  

Some respondents consider that transparency of licensing rules should be sufficient to avoid double 
dipping. Furthermore, some respondents believe that SEP holders should provide clear information 
about existing licensees (who they are, license scope, license duration, etc.), and provide licensing 
mechanisms  (e.g.,  clear  sublicense  rights  in  upstream  licenses,  precise  definitions,  appropriately 
limited  audit  rights)  to  accommodate  situations  where  a  licensee  is  paying  for  only  some  of  the 
products they produce because others are already covered through upstream licenses. 

Such respondents also note that component suppliers that sell licensed components have an incentive 
to make their customers aware that they are receiving licensed components. Developing mechanisms 
212 

 
to  ensure  customers  avoid  the  paying  unnecessary  royalties  would  quickly  become  a  competitive 
necessity for component suppliers.  

Some  respondents  claim  that  accounting  for  double  dipping  would  not  be  a  major  a  concern  and 
should not be an impediment to licensing upstream in the value chain. SEP holders and pools already 
need to account for cross-licenses and other arrangements that result in existing licenses. The SEP 
holder knows who it has licensed, or the potential licensee can ask its suppliers. It is common during 
negotiations for potential licensees to determine whether an upstream supplier is licensed (e.g., as in 
WiFi). Indeed, potential licensees are currently the ones verifying whether licenses already exist and 
persuading SEP holders to account for the existing licenses. SEP holders should maintain an auditable 
record of licensees so double dipping can be detected and remedied even in hindsight. According to 
those statements the burden is manageable (and has been managed) given the sums being paid. Some 
respondents note that where complex distribution and retail chains make exact monitoring practically 
impossible,  the  parties  may  agree  on  reasonable  estimates  for  the  share  of  sales  into  different 
applications. Respondents also point to proposal No. 35 of the EU Expert Report which provides for 
a specific marking of licensed products, which would allow monitoring.  

4.  Aggregate royalty 

A number of respondents consider that it is critical for any company to have realistic estimates of its 
costs. Otherwise, it is unlikely to enter a market. SEP royalties are a key cost and thus it is important 
for a company using a standard to understand aggregate SEP royalties. Transparency in relation to a 
reasonable aggregate royalty is important for SMEs and start-ups wishing to engage in R&D and 
innovation  of  products  implementing  SEPs.  Uncertainty  as  to  the  potential  overall  cost  exposure 
resulting from licensing demands of SEP-holders against the SMEs/start-ups has a strong deterrent 
effect for standard-based innovation. 

Some respondents also explain that opacity on costs that can turn a business case into deep red and 
royalties which can accumulate over years and have to be paid at one point in time can destroy the 
entire company. For start-ups the knowledge of licensing costs can be essential to collect money from 
investors.  Furthermore,  transparency  on  the  reasonable  aggregate  royalty  avoids  patent  hold-up, 
enables a qualified decision on which technology to choose and by that fair competition between 
alternative standards. 

Some respondents  stress that the aggregate  royalty is  also  relevant  for the assessment of an offer 
provided  the  SEP  owner,  which  has  to  reflect  his  share  of  the  overall  stack  of  the  relevant  SEP 
portfolio accordingly.  

Respondents  note  that  the  aggregate  royalty  may  be  per  product,  all  standards  included,  or  per 
standard. In both cases, this allows a SEP implementer: (i) to know his total exposure for a given 
standard, or for the totality of the standards implemented in its product, and (ii) to oppose to each 
SEP holder a ratio between the number of SEPs that this holder holds on the total of the SEPs of the 
standard  versus  the  total  amount  of  royalties  attributed  to  the  standard,  or  to  the  standards, 
implemented.  

Respondents also note that by adding up the royalties claimed for the same standard by different SEP 
holders, the total amount of royalties may become prohibitive. For example, the aggregate royalty 
claimed for Blu-Ray technology was so high that almost none of the implementers had the economic 
leeway to implement this technology into their products and the end-implementers continued to use 
DVDs  and  then  decided  to  satisfy  their  need  for  data  space  via  HDDs.  As  a  consequence,  only 
implementers  that  are  also  SEP  holders  implemented  this  superior  standard  into  their  products, 
thereby stifling innovation and harming consumer welfare in the sense of access to better products. 

Some respondents suggest that the aggregate royalty be determined in a process by both SEP holders 
and SEP implementers before individual licences are concluded. Preferably, the process could be led 
by a leading patent pool and a licensing negotiation group. Other respondents suggest that there could 
213 

 
be a mechanism, for example an SEP Royalty Court, that would ensure that the aggregate royalty 
burden for an entire standard is adjudicated in a single proceeding. Such a mechanism would reduce 
transaction costs and ensure predictability with respect to the cost to implement a particular standard. 
These  proceedings  should  be  open,  transparent,  and  inclusive,  permitting  all  SEP  holders  and  all 
implementers to participate. 

Some respondents also note that regulators may not be well suited to determine and impose aggregate 
rates for standards because they generally lack the expertise. 

III. 

“License to all” principle based on a single value of the standardised technology 
irrespective of the use and licensing the smallest saleable patent practicing unit 
(SSPPU) 

Respondents  argue  that  all  SEPs  should  be  licensed  at  the  top  of  the  value  chain,  and  patent 
exhaustion should apply to subsequent purchases of the licensed technology. If the license is granted 
at the level of the SEP implementer manufacturer of the smallest saleable unit implementing the SEP 
(case of the IEEE statutes), then there is no need to license downstream implementers in view of the 
exhaustion  of  the  right.  This  will  “clean  up”  the  market,  avoid  abuses  and  secure  the  electronic 
components  industry.  The  appropriate  royalty  base  would  thus  be  the  smallest  saleable  patent 
practicing unit (“SSPPU”). In this context, it is important to note that the necessity to monitor this 
data would only arise if and when the parties have agreed to differentiate royalties according to the 
end use (‘application-specific licensing’). 

Some  respondents  argue  that  standards  are  often  not  industry-specific  or  product-specific. 
Communication standards, for example, can be implemented in  phones, cars, planes, thermostats, 
watches,  appliances  and  hundreds  or  thousands  of  other  devices.  All  of  these  very  different 
downstream  devices  can  incorporate  the  same  components  that  implement  the  same  standards. 
According to those views, SEPs generally cover only discrete aspects of particular components, and 
rarely if ever end devices employing the applicable standard. As such, basing royalties on the value 
added by others’ downstream innovations would overcompensate SEP holders to the detriment of 
other industry participants and customers.  

Some respondents refer to the Commission’s SEP Communication stating that licensing terms have 
to bear a clear relationship to the economic value of the patented technology. The value primarily 
needs to focus on the technology itself and in principle should not include any element resulting from 
the decision to include the technology in the standard.359 According to those views, royalties should 
not be based on the market power that a SEP holder obtains from the selection of its technology as 
part of the standard.  

Some respondents argue that FRAND should not depend on the level of licensing or the value of 
products at a certain level of a value chain, but only on the value of the patented technology as such. 
Consequently,  all  standard-implementers  that  are  seeking  a  license  and  make  use  of  the  patented 
technology for the same purposes/functionalities should be considered as similarly situated for the 
purpose of the “ND”- assessment. 

According  to  them,  the  concept  of  non-discrimination  is  an  important  part  of  a  SEP  holder’s 
commitment to license its SEPs under FRAND terms. SEP licensees have a legitimate expectation 
(based on the SEP holder’s commitment) that they will be able to take SEP licenses on terms and 
conditions that are similar to other implementers of the standard. FRAND, however, can be a range 
and licensing terms need not be identical to be non-discriminatory.  

Some argue that it is incorrect to suggest that discrimination is permitted as long as a company is not 
‘similarly situated’ to another. For example, it would be inappropriate for a small market entrant to 

359 com-2017-712_en.pdf. 

214 

 
                                                 
face  discriminatory  licensing  demands  as  compared  to  larger,  existing  competitors,  as  such 
approaches would restrict competition and market entry. 

IV.  Qualitative royalty apportionment criteria 

With respect to aggregated patent licensing pools and platforms, some respondents explain that there 
may be several criteria to determine royalty distribution among licensors. For example, there may be 
criteria that measure quality in addition to quantity, such as, inter alia, contributions to standards and 
past  licensing  success.  Some  respondents  explain  that  perceived  market  value  is  the  key  criteria. 
Positive litigation track record and active licensing efforts increase the value of a patent portfolio.  

Other  criteria  that  could  be  considered  include  comparable  licenses,  technical  importance  of  the 
claimed subject matter to the product, technical contributions to the standard, technical contributions 
to key features of the standard. It may also be important to consider whether a SEP holder is actively 
licensing/looking  to  license  or  enforce  their  rights  or  whether  they  simply  hold  SEPs  for  other 
strategic reasons. Some respondents note that the age of the portfolio is also an important factor if 
the license agreement is valid several years as is typically the case.  

Some respondents note that person hours spent on a standard is not connected to the value of patents 
and not a proper basis for royalties. Metrics such as forward citation or jurisdictions are generally 
subject to manipulation and do not accurately gauge patent value. Forward citations, contribution to 
the standard, etc. are no significant criteria. 

V.  Comments on the CJEU Huawei v. ZTE negotiation process 

According to some respondents further detailing of the Huawei v ZTE process would not be helpful. 
More detail would increase the problem of hold-out through workarounds. 

Other respondents consider that ambiguities arise with regard to the availability of injunctions when 
the SEP holder has not made a FRAND offer. Such respondents claim that in some cases, courts grant 
injunctive  relief  based  on  an  examination  of  whether  the  implementer’s  courter  offer  is  FRAND, 
without  first  examining  whether  the  SEP  holder's  prior  is  FRAND.  Furthermore,  they  argue  that 
ambiguities remain as to the amount of the security, if the SEP holder and the implementer make 
different offers, each of which is FRAND in its own right. 

Most respondents consider that while all steps should be conducted without undue delay, it would be 
difficult  to  provide  exact  time  frames  for  the  individual  steps.  The  appropriate  amount  of  time 
required to complete each step would depend in the circumstances of each individual case.  

Tables with replies per question 

Q35. In your view, can a SEP holder refuse to licence in the following situations? 

“No” answers only 

An  implementer  asks  for  a  licence,  the  SEP  holder  is  already 
licensing  (or  negotiating  the  licensing  of)  the  application  at 
another  level  of  the  value  chain  but  has  not  provided  “have 
made” rights to that implementer 
An implementer asks for a licence for an application, for which 
the  SEP  holder  has  not  yet  sent  any  letter  inviting  any 
implementer to take a licence 
An implementer asks for a licence for using an optional part of 
the standard, for which the SEP holder has not yet sent any letter 
inviting any implementer to take a licence 

215 

All 

Compa-
nies 

75% 

70% 

Associa-
tions/ 
trade 
union 
83% 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

86% 

78% 

71% 

66% 

86% 

71% 

80% 

67% 

65% 

86% 

63% 

67% 

 
 
 
All 

Compa-
nies 

61% 

59% 

Associa-
tions/ 
trade 
union 
71% 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

57% 

67% 

54% 

43% 

83% 

71% 

56% 

“No” answers only 

An  implementer  asks  for  a  licence,  the  SEP  holder  is  already 
licensing  (or  negotiating  the  licensing  of)  the  application  at 
another level of the value chain and has provided the so called 
“have made” rights to that implementer 
An  implementer  asks  for  a  license  for  a  limited  number  of 
products and the SEP holder prefers to avoid licensing costs by 
providing guarantees that it will not enforce its patents. 
No. of replies* 

50-57  28-34 
Note: “No opinion” answers not taken into account; so the residual to 100% is Yes answers. 

“No” answers only 

An implementer asks for a licence, the SEP holder is already licensing (or negotiating 
the licensing of) the application at another level of the value chain but has not provided 
“have made” rights to that implementer 
An implementer asks for a licence, the SEP holder is already licensing (or negotiating 
the licensing of) the application at another level of the value chain and has provided 
the so called “have made” rights to that implementer 
An implementer asks for a licence for an application, for which the SEP holder has not 
yet sent any letter inviting any implementer to take a licence 
An implementer asks for a licence for using an optional part of the standard, for which 
the SEP holder has not yet sent any letter inviting any implementer to take a licence 
An implementer asks for a license for a limited number of products and the SEP holder 
prefers  to  avoid  licensing  costs  by  providing  guarantees  that  it  will  not  enforce  its 
patents. 
No. of replies* 

6-7 

7-8 

9-10 

Implementers 

SEP 
Holders 

100% 

33% 

97% 

0% 

93% 

93% 

85% 

27% 

20% 

8% 

26-29 

13-16 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. ““No opinion” answers not taken into account; so the residual 
to 100% is Yes answers. 
*range, different number of replies per question 

“No” answers only 

An implementer asks for a licence, the SEP holder is already licensing (or negotiating 
the licensing of) the application at another level of the value chain but has not provided 
“have made” rights to that implementer 
An implementer asks for a licence for an application, for which the SEP holder has not 
yet sent any letter inviting any implementer to take a licence 
An implementer asks for a licence for using an optional part of the standard, for which 
the SEP holder has not yet sent any letter inviting any implementer to take a licence 
An implementer asks for a licence, the SEP holder is already licensing (or negotiating 
the licensing of) the application at another level of the value chain and has provided 
the so called “have made” rights to that implementer 
An implementer asks for a license for a limited number of products and the SEP holder 
prefers  to  avoid  licensing  costs  by  providing  guarantees  that  it  will  not  enforce  its 
patents. 
No. of replies* 

EU 

73% 

65% 

61% 

56% 

non-EU 

75% 

80% 

80% 

69% 

46% 

69% 

28-32 

13-16 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; ““No opinion” answers not taken into account; 
so the residual to 100% is Yes answers. 
*range, different number of replies per question 

“All answers” 

Yes  No  No. 

An  implementer  asks  for  a  licence,  the  SEP  holder  is  already  licensing  (or  negotiating  the 
licensing of) the application at another level of the value chain but has not provided “have made” 
rights to that implementer 
An implementer asks for a licence for an application, for which the SEP holder has not yet sent 
any letter inviting any implementer to take a licence 

25
% 

29
% 

75
% 

71
% 

55 

56 

216 

 
 
“All answers” 

Yes  No  No. 

An implementer asks for a licence for using an optional part of the standard, for which the SEP 
holder has not yet sent any letter inviting any implementer to take a licence 
An  implementer  asks  for  a  licence,  the  SEP  holder  is  already  licensing  (or  negotiating  the 
licensing of) the application at another level of the value chain and has provided the so called 
“have made” rights to that implementer 
An implementer asks for a license for a limited number of products and the SEP holder prefers 
to avoid licensing costs by providing guarantees that it will not enforce its patents. 

33
% 
39
% 

46
% 

67
% 
61
% 

54
% 

55 

57 

50 

Note: “No opinion” answers not taken into account 

“Companies answers” 

Yes  No  No. 

An  implementer  asks  for  a  licence,  the  SEP  holder  is  already  licensing  (or  negotiating  the 
licensing of) the application at another level of the value chain but has not provided “have made” 
rights to that implementer 
An implementer asks for a licence for an application, for which the SEP holder has not yet sent 
any letter inviting any implementer to take a licence 
An implementer asks for a licence for using an optional part of the standard, for which the SEP 
holder has not yet sent any letter inviting any implementer to take a licence 
An  implementer  asks  for  a  licence,  the  SEP  holder  is  already  licensing  (or  negotiating  the 
licensing of) the application at another level of the value chain and has provided the so called 
“have made” rights to that implementer 
An implementer asks for a license for a limited number of products and the SEP holder prefers 
to avoid licensing costs by providing guarantees that it will not enforce its patents. 

30
% 

34
% 
35
% 
41
% 

57
% 

70
% 

66
% 
65
% 
59
% 

43
% 

33 

32 

31 

34 

28 

Note: “No opinion” answers not taken into account 

Q36. How would you assess the following statements for the determination of the level in the value 
chain for licensing of a SEP? 

“Agree and strongly agree” answers only 

All 

Compa-
nies 

Associa-
tions/ 
trade 
union 

Academia/ 
Authorities/
NGO 
/other 

Citizens 

Licencing could take place at every level of the value chain 
Licensing should take place at one level of the value chain only 
The implementers in a value chain should be able to determine 
the level of licensing 
The SEP holder is the only one who should be able to determine 
the level of licensing 
Both SEP holders and implementers should determine the level 
of licensing 
The level of licensing should be determined by the person who 
asks for a licence first. If an implementer asks first, implementers 
determine the level of licensing. If the SEP holder asks first, it 
determines the level of licensing. 
No. of replies* 

60% 
47% 
42% 

51% 
56% 
49% 

71% 
50% 
33% 

56% 
25% 
38% 

28% 

31% 

14% 

33% 

24% 

15% 

0% 

0% 

0% 

0% 

50% 

0% 

90% 
30% 
30% 

22% 

50% 

0% 

58-63  34-37 

6-7 

8-9 

9-10 

Note:  “Other 
*range, different number of replies per question 

specify)”  not 

(please 

included 

in 

the 

table;  “No  opinion”  answers  not 

taken 

into  account 

“Agree and strongly agree” answers only 

Implementers 

Licencing could take place at every level of the value chain 
The implementers in a value chain should be able to determine the level of licensing 
Licensing should take place at one level of the value chain only 
Both SEP holders and implementers should determine the level of licensing 
The SEP holder is the only one who should be able to determine the level of licensing  3% 
0% 
The level of licensing should be determined by the person who asks for a licence first. 
If an implementer asks first, implementers determine the level of licensing. If the SEP 
holder asks first, it determines the level of licensing. 
No. of replies* 

93% 
68% 
36% 
19% 

27-29 

217 

SEP 
Holders 

13% 
0% 
69% 
13% 
63% 
0% 

15-16 

 
 
Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “Other (please specify)” not included in the table; “No opinion” 
answers not taken into account 
*range, different number of replies per question 

“Agree and strongly agree” answers only 

EU 

non-EU 

55% 
Licencing could take place at every level of the value chain 
52% 
Licensing should take place at one level of the value chain only 
The implementers in a value chain should be able to determine the level of licensing 
41% 
The SEP holder is the only one who should be able to determine the level of licensing  27% 
23% 
Both SEP holders and implementers should determine the level of licensing 
0% 
The level of licensing should be determined by the person who asks for a licence first. 
If an implementer asks first, implementers determine the level of licensing. If the SEP 
holder asks first, it determines the level of licensing. 
No. of replies* 

31-33 

55% 
47% 
53% 
33% 
12% 
0% 

17-20 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; “Other (please specify)” not included in the 
table; “No opinion” answers not taken into account 
*range, different number of replies per question 

“All answers” 

Agree  Neutral  Disagree  No. 

Licencing could take place at every level of the value chain 
Licensing should take place at one level of the value chain only 
The  implementers  in  a  value  chain  should  be  able  to  determine  the  level  of 
licensing 
The SEP holder is the only one who should be able to determine the level of 
licensing 
Both SEP holders and implementers should determine the level of licensing 
The  level  of  licensing  should  be  determined  by  the  person  who  asks  for  a 
licence first. If an implementer asks first, implementers determine the level of 
licensing. If the SEP holder asks first, it determines the level of licensing. 
Other (please specify) 

60% 
47% 
42% 

8% 
18% 
7% 

32% 
35% 
51% 

28% 

8% 

63% 

24% 
0% 

10% 
3% 

66% 
97% 

63 
60 
59 

60 

58 
59 

75% 

0% 

25% 

4 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No 
opinion” answers not taken into account 

“Companies answers” 
Licensing should take place at one level of the value chain only 
Licencing could take place at every level of the value chain 
The  implementers  in  a  value  chain  should  be  able  to  determine  the  level  of 
licensing 
The SEP holder is the only one who should be able to determine the level of 
licensing 
Both SEP holders and implementers should determine the level of licensing 
The  level  of  licensing  should  be  determined  by  the  person  who  asks  for  a 
licence first. If an implementer asks first, implementers determine the level of 
licensing. If the SEP holder asks first, it determines the level of licensing. 
Other (please specify) 

Agree  Neutral  Disagree  No. 
36 
56% 
37 
51% 
35 
49% 

17% 
8% 
9% 

28% 
41% 
43% 

31% 

9% 

60% 

15% 
0% 

15% 
6% 

71% 
94% 

35 

34 
34 

50% 

0% 

50% 

2 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

Q37. If licensing were taking place at one level of the value chain only, what could be some guiding 
principles for the determination of that level of licensing? 

“Agree and strongly agree” answers only 

All 

Compa
nies 

Licensing  should  take  place  at  the  level  of  the  product  which 
main function is that of the standardised technology 
Licensing  should  take  place  at  the  most  upstream  level  of  the 
value chain 

218 

Associ
ations/ 
trade 
union 
67% 

Academia/ 
Authorities/ 
NGO/other 

33% 

Citizens 

57% 

67% 

49% 

49% 

38% 

39% 

40% 

13% 

 
 
“Agree and strongly agree” answers only 

All 

Compa
nies 

Licensing  should  take  place  at  the  level  of  the  product  that 
incorporates most functionalities of the standardised technology 
Licensing should take place where the transaction costs are most 
efficient 
Licensing should take place at the end level product of the value 
chain 
Licensing  should  take  place  where  the  SEP  holder  is  able  to 
monitor in which application the licenced technology is used 
Licensing  should  take  place  where  the  licensed  technology 
affects  a  significant  proportion  of 
the  value-inducing 
functionalities of the licensed product 
Licensing should take place at a component (intermediate) level 
of the value chain 
No. of replies* 

Associ
ations/ 
trade 
union 
40% 

Academia/ 
Authorities/ 
NGO/other 

44% 

36% 

33% 

35% 

37% 

14% 

56% 

34% 

33% 

33% 

33% 

30% 

31% 

17% 

44% 

26% 

14% 

25% 

56% 

Citizens 

33% 

17% 

43% 

17% 

50% 

20% 

22% 

20% 

25% 

0% 

54-58  35-36 

4-7 

8-9 

6-7 
into  account 

SEP 
Holders 

6% 

0% 
24% 

0% 
53% 
47% 

76% 

Note:  “Other 
*range, different number of replies per question 

specify)”  not 

(please 

included 

in 

the 

table;  “No  opinion”  answers  not 

taken 

“Agree and strongly agree” answers only 

Implementers 

Licensing should take place at the level of the product which main function is that of 
the standardised technology 
Licensing should take place at the most upstream level of the value chain 
Licensing  should  take  place  at  the  level  of  the  product  that  incorporates  most 
functionalities of the standardised technology 
Licensing should take place at a component (intermediate) level of the value chain 
Licensing should take place where the transaction costs are most efficient 
Licensing  should  take  place  where  the  licensed  technology  affects  a  significant 
proportion of the value-inducing functionalities of the licensed product 
Licensing  should  take  place  where  the  SEP  holder  is  able  to  monitor  in  which 
application the licenced technology is used 
Licensing should take place at the end level product of the value chain 
No. of replies* 

78% 

69% 
42% 

31% 
25% 
17% 

7% 

0% 
24-28 

88% 
16-17 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed,  were  neutral  or  had  no  opinion  on  Q2  and  agreed  with  Q3.  “Other  (please  specify)”    not  included  in  the  table;  “No 
opinion” answers not taken into account 

*range, different number of replies per question 

“Agree and strongly agree” answers only 

Licensing should take place at the level of the product which main function is that of 
the standardised technology 
Licensing should take place at the end level product of the value chain 
Licensing  should  take  place  where  the  SEP  holder  is  able  to  monitor  in  which 
application the licenced technology is used 
Licensing should take place where the transaction costs are most efficient 
Licensing should take place at the most upstream level of the value chain 
Licensing  should  take  place  at  the  level  of  the  product  that  incorporates  most 
functionalities of the standardised technology 
Licensing  should  take  place  where  the  licensed  technology  affects  a  significant 
proportion of the value-inducing functionalities of the licensed product 
Licensing should take place at a component (intermediate) level of the value chain 
No. of replies* 

EU 

47% 

38% 
34% 

33% 
30% 
26% 

23% 

non-EU 

50% 

26% 
28% 

44% 
42% 
53% 

22% 

13% 
30-33 

37% 
18-19 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; “Other (please specify)”  not included in the 
table; “No opinion” answers not taken into account 
*range, different number of replies per question 

219 

 
“All answers” 

Agree  Neutral  Disagree  No. 

Licensing should take place at the level of the product which main function is 
that of the standardised technology 
Licensing should take place at the most upstream level of the value chain 
Licensing should take place at the level of the product that incorporates most 
functionalities of the standardised technology 
Licensing should take place where the transaction costs are most efficient 
Licensing should take place at the end level product of the value chain 
Licensing should take place where the SEP holder is able to monitor in which 
application the licenced technology is used 
Licensing should take place where the licensed technology affects a significant 
proportion of the value-inducing functionalities of the licensed product 
Licensing should take place at a component (intermediate) level of the value 
chain 
Other (please specify) 

49% 

23% 

28% 

38% 
36% 

35% 
34% 
30% 

18% 
23% 

44% 
16% 
21% 

44% 
41% 

21% 
50% 
48% 

26% 

17% 

57% 

20% 

32% 

48% 

80% 

0% 

20% 

57 

55 
56 

57 
58 
56 

54 

56 

5 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

“Companies answers” 

Agree  Neutral  Disagree  No. 

Licensing should take place at the level of the product which main function is 
that of the standardised technology 
Licensing should take place at the most upstream level of the value chain 
Licensing should take place where the transaction costs are most efficient 
Licensing should take place at the end level product of the value chain 
Licensing should take place at the level of the product that incorporates most 
functionalities of the standardised technology 
Licensing should take place where the SEP holder is able to monitor in which 
application the licenced technology is used 
Licensing should take place at a component (intermediate) level of the value 
chain 
Licensing should take place where the licensed technology affects a significant 
proportion of the value-inducing functionalities of the licensed product 
Other (please specify) 

49% 

20% 

31% 

39% 
37% 
33% 
33% 

19% 
49% 
14% 
22% 

42% 
14% 
53% 
44% 

31% 

23% 

46% 

22% 

39% 

39% 

14% 

20% 

66% 

0% 

0% 

100% 

35 

36 
35 
36 
36 

35 

36 

35 

1 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

Q40. How would you assess the following statements with regard to fair and reasonable terms and 
conditions (“FR TC”)?  

“Agree and strongly agree” answers only 

All 

Compa-
nies 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

Associa-
tions/ 
trade 
union 
100% 

The FR TC may depend on the functionalities of the standard that 
are being implemented. 
The FR TC are independent of the level of licensing. 
Implementers  upstream  should  be  able  to  pass  the  cost  of  the 
licence downstream. 
The FR TC may be different for the different applications of the 
standard. 
The  FR  TC  are  determined  based  on  the  added  value  that  the 
patented  technology  brings  to  the  product  implementing  the 
standard. 
The FR TC should be the same irrespective of how the standard 
is used. 
No. of replies* 

75% 

74% 

68% 
67% 

70% 
70% 

67% 
50% 

67% 

70% 
60% 

56% 

56% 

29% 

80% 

48% 

44% 

33% 

60% 

34% 

38% 

43% 

11% 

52-61  27-34 

6-7 

9-10 

70% 

60% 
78% 

50% 

60% 

33% 

9-10 

Note:  “Other 
*range, different number of replies per question 

specify)”  not 

(please 

included 

in 

the 

table;  “No  opinion”  answers  not 

taken 

into  account 

220 

 
 
“Agree and strongly agree” answers only 

Implementers 

The  FR  TC  may  depend  on  the  functionalities  of  the  standard  that  are  being 
implemented. 
The FR TC are independent of the level of licensing. 
The FR TC should be the same irrespective of how the standard is used. 
Implementers upstream should be able to pass the cost of the licence downstream. 
The  FR  TC  are  determined  based  on  the  added  value  that  the  patented  technology 
brings to the product implementing the standard. 
The FR TC may be different for the different applications of the standard. 
No. of replies* 

75% 

74% 
67% 
66% 
37% 

25% 
27-29 

SEP 
Holders 

93% 

75% 
0% 
89% 
60% 

100% 
9-16 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “Other (please specify)” not included in the table; “No opinion” 
answers not taken into account 
*range, different number of replies per question 

“Agree and strongly agree” answers only 

The  FR  TC  may  depend  on  the  functionalities  of  the  standard  that  are  being 
implemented. 
The FR TC are independent of the level of licensing. 
Implementers upstream should be able to pass the cost of the licence downstream. 
The FR TC may be different for the different applications of the standard. 
The  FR  TC  are  determined  based  on  the  added  value  that  the  patented  technology 
brings to the product implementing the standard. 
The FR TC should be the same irrespective of how the standard is used. 
No. of replies* 

EU 

81% 

71% 
67% 
56% 
40% 

31% 
27-32 

non-EU 

67% 

67% 
63% 
58% 
55% 

39% 
16-20 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; “Other (please specify)”  not included in the 
table; “No opinion” answers not taken into account 
*range, different number of replies per question 

“All answers” 

Agree  Neutral  Disagree  No. 

The FR TC may depend on the functionalities of the standard that are being 
implemented. 
The FR TC are independent of the level of licensing. 
Implementers  upstream  should  be  able  to  pass  the  cost  of  the  licence 
downstream. 
The FR TC may be different for the different applications of the standard. 
The  FR  TC  are  determined  based  on  the  added  value  that  the  patented 
technology brings to the product implementing the standard. 
The FR TC should be the same irrespective of how the standard is used. 
Other (please specify) 

75% 

15% 

10% 

68% 
67% 

56% 
48% 

12% 
29% 

10% 
20% 

14% 

34% 
100%  0% 

20% 
4% 

34% 
32% 

53% 
0% 

60 

59 
52 

61 
60 

59 
3 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

“Companies answers” 

Agree  Neutral  Disagree  No. 

The FR TC may depend on the functionalities of the standard that are being 
implemented. 
The FR TC are independent of the level of licensing. 
Implementers  upstream  should  be  able  to  pass  the  cost  of  the  licence 
downstream. 
The FR TC may be different for the different applications of the standard. 
The  FR  TC  are  determined  based  on  the  added  value  that  the  patented 
technology brings to the product implementing the standard. 
The FR TC should be the same irrespective of how the standard is used. 
Other (please specify) 

74% 

18% 

9% 

70% 
70% 

56% 
44% 

12% 
30% 

6% 
21% 

38% 
9% 
100%  0% 

18% 
0% 

38% 
35% 

53% 
0% 

34 

33 
27 

34 
34 

34 
2 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

221 

 
 
Q41.  How  would  you  assess  the  following  statements  for  the  assessment  of  non-discrimination 
(“ND”)? 

Associa-
tions/ 
trade 
union 
100% 

Academia/ 
Authorities/ 
NGO/other 

67% 

“Agree and strongly agree” answers only 

All 

Compa-
nies 

those 

that  use 

the  same 

For the  ND assessment,  it  matters  whether a similarly  situated 
entity is put at a competitive disadvantage 
Similarly  situated  entities  are 
functionalities of a standard in similar or same applications 
Entities at a different level in the value chain may be similarly 
situated if the FR TC are independent of the level of licensing 
Similarly  situated  entities  are  those  that  use  the  standardised 
technology in the same applications 
Similarly situated entities are those that are located at the same 
level in the value chain 
For the ND assessment, it matters whether a licence was taken at 
the same period of time 
Similarly  situated  entities  are 
functionalities of a standard 
No. of replies* 

the  same 

that  use 

those 

76% 

74% 

76% 

74% 

100% 

67% 

50% 

57% 

40% 

38% 

43% 

39% 

29% 

44% 

42% 

36% 

33% 

56% 

41% 

44% 

33% 

40% 

41% 

38% 

33% 

44% 

52-59  30-34 

5-7 

8-10 

Note:  “Other 
*range, different number of replies per question 

specify)”  not 

(please 

included 

in 

the 

table;  “No  opinion”  answers  not 

taken 

“Agree and strongly agree” answers only 

Implementers 

76% 

For  the  ND  assessment,  it  matters  whether  a  similarly  situated  entity  is  put  at  a 
competitive disadvantage 
Similarly situated entities are those that use the same functionalities of a standard in 
similar or same applications 
Entities at a different level in the value chain may be similarly situated if the FR TC 
are independent of the level of licensing 
Similarly situated entities are those that use the standardised technology in the same 
applications 
Similarly situated entities are those that use the same functionalities of a standard 
56% 
Similarly situated entities are those that are located at the same level in the value chain  48% 
16% 
For the ND assessment, it matters whether a licence was taken at the same period of 
time 
No. of replies* 

76% 

65% 

57% 

25-28 

Citizens 

78% 

78% 

44% 

67% 

56% 

38% 

56% 

8-9 
into  account 

SEP 
Holders 

94% 

94% 

27% 

27% 

21% 
33% 
76% 

11-17 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “Other (please specify)” not included in the table; “No opinion” 
answers not taken into account 
*range, different number of replies per question 

“Agree and strongly agree” answers only 

EU 

non-EU 

90% 

For  the  ND  assessment,  it  matters  whether  a  similarly  situated  entity  is  put  at  a 
competitive disadvantage 
Similarly situated entities are those that use the same functionalities of a standard in 
similar or same applications 
Entities at a different level in the value chain may be similarly situated if the FR TC 
are independent of the level of licensing 
Similarly situated entities are those that use the same functionalities of a standard 
For the ND assessment, it matters whether a licence was taken at the same period of 
time 
Similarly situated entities are those that use the standardised technology in the same 
applications 
Similarly situated entities are those that are located at the same level in the value chain  38% 
28-33 
No. of replies* 

45% 
45% 

90% 

46% 

39% 

50% 

50% 

60% 

25% 
35% 

38% 

44% 
15-17 

222 

 
Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; “Other (please specify)” not included in the 
table; “No opinion” answers not taken into account 
*range, different number of replies per question 

“All answers” 

Agree  Neutral  Disagree  No. 

For the ND assessment, it matters whether a similarly situated entity is put at a 
competitive disadvantage 
Similarly  situated  entities  are  those  that  use  the  same  functionalities  of  a 
standard in similar or same applications 
Entities at a different level in the value chain may be similarly situated if the 
FR TC are independent of the level of licensing 
Similarly situated entities are those that use the standardised technology in the 
same applications 
Similarly  situated  entities  are  those  that  are  located  at  the  same  level  in  the 
value chain 
Similarly  situated  entities  are  those  that  use  the  same  functionalities  of  a 
standard 
For  the  ND  assessment,  it  matters  whether  a  licence  was  taken  at  the  same 
period of time 
Other (please specify) 

76% 

13% 

11% 

76% 

22% 

24% 

50% 

19% 

31% 

43% 

29% 

28% 

42% 

23% 

35% 

41% 

23% 

36% 

41% 

38% 

21% 

100%  0% 

0% 

55 

59 

52 

58 

57 

56 

56 

4 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

“Companies answers” 

Agree  Neutral  Disagree  No. 

For the ND assessment, it matters whether a similarly situated entity is put at a 
competitive disadvantage 
Similarly  situated  entities  are  those  that  use  the  same  functionalities  of  a 
standard in similar or same applications 
Entities at a different level in the value chain may be similarly situated if the 
FR TC are independent of the level of licensing 
Similarly situated entities are those that use the standardised technology in the 
same applications 
Similarly  situated  entities  are  those  that  are  located  at  the  same  level  in  the 
value chain 
For  the  ND  assessment,  it  matters  whether  a  licence  was  taken  at  the  same 
period of time 
Similarly  situated  entities  are  those  that  use  the  same  functionalities  of  a 
standard 
Other (please specify) 

74% 

13% 

13% 

74% 

26% 

24% 

57% 

17% 

27% 

39% 

30% 

30% 

36% 

27% 

36% 

44% 

28% 

28% 

38% 

28% 

34% 

100%  0% 

0% 

31 

34 

30 

33 

33 

32 

32 

1 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

Q42. What is the reasonable range of discounts that would not cause discrimination in the context of 
a licensing of a SEP?  

Discounts are “Always are discriminatory” answers only 

All 

Compa-
nies 

Associa-
tions/ 
trade 
union 

Academia/ 
Authorities
/NGO 
/other 

Citizens 

Annual Royalty Caps 
Volume discount 
Early  bird  discount  (taking  a  licence  at  the  beginning  of  a 
licensing programme) 
Early payment discount (making upfront payments of royalties) 
No. of replies* 

38% 
33% 
29% 

36% 
25% 
25% 

29% 
23% 
21-24  11-13 

0% 
0% 
0% 

0% 
1-2 

0% 
0% 
0% 

0% 
1 

67% 
67% 
50% 

50% 
6-8 

Note: “Other (please specify)” not included in the table; “No opinion” answers not taken into account. The residual to 100% shows 
those who choose rage between 1% and 50% 
*range, different number of replies per question 

223 

 
 
Discounts are “Always discriminatory” answers (column %) 
and average reasonable discount (column Avg.) 

Annual Royalty Caps 
Volume discount 
Early bird discount (taking a  licence at the beginning of a licensing 
programme) 
Early payment discount (making upfront payments of royalties) 
No. of replies** 

Implementers 

SEP Holders 

% 

50% 
50% 
43% 

22% 
7-9 

Avg.* 

5% 
6% 
10% 

6% 

% 

0% 
0% 
0% 

0% 
8-10 

Avg.* 

38% 
32% 
33% 

28% 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed,  were  neutral or  had no opinion  on  Q2  and  agreed  with  Q3.  ““Other  (please  specify)”  not  included in the  table;  “No 
opinion”  answers  not  taken  into  account.  The  residual  to  100%  shows  those  who  choose  rage  between  1%  and  50% 
*  Weighted  average 
for  “Always  discriminatory” 
**range, different number of replies per question 

calculated  using 

the  middle  of 

value  of  0% 

ranges, 

Discounts are “Always discriminatory” answers (column %) 
and average reasonable discount (column Avg.) 

Annual Royalty Caps 
Early bird discount (taking a licence at the beginning of a  licensing 
programme) 
Early payment discount (making upfront payments of royalties) 
Volume discount 
No. of replies** 

EU 

% 

27% 
21% 

21% 
15% 
11-14 

non-EU 

Avg.* 

% 

Avg.* 

24% 
23% 

21% 
24% 

50% 
0% 

0% 
50% 
1-2 

23% 
45% 

6% 
23% 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; “Other (please specify)” not included in the 
table;  “No  opinion”  answers  not  taken  into  account.  The  residual  to  100%  shows  those  who  choose  rage  between  1%  and  50% 
*  Weighted  average 
for  “Always  discriminatory” 
**range, different number of replies per question 

calculated  using 

the  middle  of 

value  of  0% 

ranges, 

“All answers” 

Always 
discriminatory 

1  to 
10% 

10  to 
20% 

20  to 
30 % 

30  to 
40% 

40  to 
50 % 

No.  Avg.

Annual Royalty Caps 
Volume discount 
Early bird discount (taking a licence at the 
beginning of a licensing programme) 
Early  payment  discount  (making  upfront 
payments of royalties) 
Other (please specify) 

38% 
30% 
29% 

25% 

50% 

Annual Royalty Caps 
Volume discount 
Early bird discount (taking a licence at the 
beginning of a licensing programme) 
Early  payment  discount  (making  upfront 
payments of royalties) 
Other (please specify) 

36% 
25% 
25% 

23% 

33% 

14% 
13% 
10% 

5% 
9% 
10% 

14% 
26% 
24% 

5% 
4% 
5% 

24% 
17% 
24% 

21 
23 
21 

* 

17% 
18% 
20% 

38% 

0% 

13% 

8% 

17% 

24 

16% 

0% 

0% 

17% 

0% 

33% 

6 

19% 

No.  Avg.

* 

20% 
20% 
22% 

9% 
0% 
0% 

0% 
17% 
8% 

27% 
42% 
42% 

0% 
0% 
8% 

27% 
17% 
17% 

11 
12 
12 

31% 

0% 

23% 

15% 

8% 

13 

16% 

0% 

0% 

0% 

0% 

67% 

3 

30% 

Note: “No opinion” answers not taken into account 
* Weighted average calculated using the middle of ranges, value of 0% for “Always discriminatory” 

“Companies answers” 

Always 
discriminatory 

1  to 
10% 

10  to 
20% 

20  to 
30 % 

30  to 
40% 

40  to 
50 % 

Note: “No opinion” answers not taken into account 
* Weighted average calculated using the middle of ranges, value of 0% for “Always discriminatory” 

Q43. Which of the following aspects of the licence terms and conditions are more likely to impact the 
non-discrimination  part  of  FRAND?  Please  indicate  their  (relative)  impact  in  the  overall  ND 
assessment below. The proposed rating below should describe the relative impact in the overall ND 
assessment.  

224 

 
 
“High” and ”Very high” answers only 

All 

Compa-
nies 

Associa-
tions/ 
trade 
union 

Academia/ 
Authorities
/NGO 
/other 

Citizens 

Royalty rate 

82% 

76% 

60% 

100% 

54% 
54% 

Territorial scope of the licence 
Product  scope  of  the  licence  (narrow  or  broad,  end-product 
and/or modules) 
Payment conditions (term, interest for late payments, discounts)  49% 
45% 
Patent related issues (validity) 
34% 
Term of the license (e.g. a particular time-period) 
33% 
Non-disclosure requirements 
21% 
Legal (applicable law, competent forum/court) 
19% 
Compliance (reporting obligations and auditing conditions) 
47-53  25-30 
No. of replies* 

38% 
44% 
32% 
24% 
10% 
7% 

48% 
52% 

60% 
60% 

60% 
40% 
40% 
40% 
40% 
20% 
5 

71% 
75% 

86% 
57% 
63% 
43% 
13% 
25% 
7-8 

100
% 
56% 
40% 

50% 
40% 
11% 
50% 
50% 
50% 
9-10 

Note: “Other (please specify)” not included in the table; “No opinion” answers not taken into account 
*range, different number of replies per question 

“High” and ”Very high” answers only 

Implementers 

SEP 
Holders 

Royalty rate 
Territorial scope of the licence 
Product scope of the licence (narrow or broad, end-product and/or modules) 
Patent related issues (validity) 
Payment conditions (term, interest for late payments, discounts) 
Non-disclosure requirements 
Term of the license (e.g. a particular time-period) 
Legal (applicable law, competent forum/court) 
Compliance (reporting obligations and auditing conditions) 
No. of replies* 

100% 
72% 
68% 
63% 
56% 
48% 
43% 
32% 
32% 
23-25 

46% 
8% 
15% 
9% 
25% 
0% 
8% 
0% 
0% 
11-13 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “Other (please specify)” not included in the table; “No opinion” 
answers not taken into account 
*range, different number of replies per question 

“High” and ”Very high” answers only 

Royalty rate 
Territorial scope of the licence 
Product scope of the licence (narrow or broad, end-product and/or modules) 
Payment conditions (term, interest for late payments, discounts) 
Patent related issues (validity) 
Term of the license (e.g. a particular time-period) 
Non-disclosure requirements 
Legal (applicable law, competent forum/court) 
Compliance (reporting obligations and auditing conditions) 
No. of replies* 

EU 

73% 
58% 
48% 
46% 
44% 
37% 
27% 
19% 
7% 
25-27 

non-EU 

87% 
47% 
73% 
53% 
50% 
43% 
33% 
7% 
19% 
12-16 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; “Other (please specify)” not included in the 
table; “No opinion” answers not taken into account 
*range, different number of replies per question 

“All answers” 

High 

Some 

Low  or 
no 

No. 

Royalty rate 
Territorial scope of the licence 
Product scope of the licence (narrow or broad, end-product and/or modules) 
Payment conditions (term, interest for late payments, discounts) 
Patent related issues (validity) 
Term of the license (e.g. a particular time-period) 

82% 
54% 
54% 
49% 
45% 
34% 

16% 
30% 
29% 
35% 
23% 
44% 

2% 
16% 
17% 
16% 
32% 
22% 

51 
50 
52 
51 
47 
50 

225 

 
“All answers” 

Non-disclosure requirements 
Legal (applicable law, competent forum/court) 
Compliance (reporting obligations and auditing conditions) 
Other (please specify) 

High 

Some 

Low  or 
no 

No. 

16% 
29% 
25% 

33% 
21% 
19% 
100%  0% 

51% 
50% 
57% 
0% 

51 
52 
53 
4 

Note: High composes of “High” and “Very high”; “Low or no” composes of “Low”, “Very low” and “No impact”; “No opinion” 
answers not taken into account 

“Companies answers” 

High 

Some 

Low  or 
no 

No. 

Royalty rate 
Product scope of the licence (narrow or broad, end-product and/or modules) 
Territorial scope of the licence 
Patent related issues (validity) 
Payment conditions (term, interest for late payments, discounts) 
Term of the license (e.g. a particular time-period) 
Non-disclosure requirements 
Legal (applicable law, competent forum/court) 
Compliance (reporting obligations and auditing conditions) 
Other (please specify) 

21% 
38% 
41% 
32% 
48% 
46% 
17% 
38% 
23% 

76% 
52% 
48% 
44% 
38% 
32% 
24% 
10% 
7% 
100%  0% 

3% 
10% 
10% 
24% 
14% 
21% 
59% 
52% 
70% 
0% 

29 
29 
29 
25 
29 
28 
29 
29 
30 
1 

Note: High composes of “High” and “Very high”; “Low or no” composes of “Low”, “Very low” and “No impact”; “No opinion” 
answers not taken into account 

Q44.  How  important  is  it  to  know  the  reasonable  aggregate  royalty  for  all  SEPs  relevant  to  a 
potentially licensed product? 

All 

70% 
17% 
13% 
63 

Important 
Neutral 
Not important 
No. of replies 

Companies 

Associations/ 
trade union 

61% 
19% 
19% 
36 

86% 
14% 
0% 
7 

Academia/ 
Authorities/ 
NGO/other 

73% 
18% 
9% 
11 

Citizens 

89% 
11% 
0% 
9 

Note:  Important  composes  of  “Important”  and  “Very  important”;  “Not  important”  composes  of  “Not  so  important”  and  “Not 
important” 

Important 
Neutral 
Not important 
No. of replies 

Implementers 

SEP 
Holders 

100% 
0% 
0% 
29 

20% 
40% 
40% 
15 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. Important composes of “Important” and “Very important”; 
“Not important” composes of “Not so important” and “Not important” 

Important 
Neutral 
Not important 
No. of replies 

EU 

67% 
19% 
14% 
36 

non-EU 

67% 
17% 
17% 
18 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; Important composes of “Important” and “Very 
important”; “Not important” composes of “Not so important” and “Not important” 

Q45. How  important  is it  to  have a fair process for  the determination  of a reasonable aggregate 
royalty for all SEPs relevant to a licensed product? 
226 

 
 
 
 
 
 
All 

69% 
17% 
14% 
64 

Important 
Neutral 
Not important 
No. of replies 

Companies 

Associations/ 
trade union 

61% 
22% 
17% 
36 

71% 
29% 
0% 
7 

Academia/ 
Authorities/ 
NGO/other 

73% 
9% 
18% 
11 

Citizens 

90% 
0% 
10% 
10 

Note:  Important  composes  of  “Important”  and  “Very  important”;  “Not  important”  composes  of  “Not  so  important”  and  “Not 
important” 

Important 
Neutral 
Not important 
No. of replies 

Implementers 

SEP 
Holders 

93% 
3% 
3% 
29 

25% 
38% 
38% 
16 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. Important composes of “Important” and “Very  important”; 
“Not important” composes of “Not so important” and “Not important” 

Important 
Neutral 
Not important 
No. of replies 

EU 

67% 
22% 
11% 
36 

non-EU 

61% 
17% 
22% 
18 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; Important composes of “Important” and “Very 
important”; “Not important” composes of “Not so important” and “Not important” 

Q46. The aggregate royalty may be apportioned among the various SEPs or SEP portfolios based 
on  an  estimate  of  the  declared  SEP  that  are  actually  essential  (“true  SEPs”).  What  could  be  an 
appropriate additional criterion for the apportionment of the aggregate royalty among the various 
SEPs or SEP portfolios? 

All 

Compa-
nies 

Associations
/trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

Number  of  “true”  SEPs  belonging  to  sections  of  the 
standard identified as of significant value 
Number  of  jurisdictions  in  which  “true”  SEPs  are 
protected 
Number of significantly different claims 
Number  of  sections  of  the  standard  covered  by  “true” 
SEPs 
Man hours spent in contributing in the development of the 
standard at the SDO 
Forward citations360 
Other, please specify 
No. of replies 

65% 

62% 

71% 

47% 

38% 

43% 

27% 
18% 

27% 
19% 

29% 
14% 

6% 

8% 

0% 

5% 
35% 
62 

3% 
35% 
37 

0% 
29% 
7 

Note: multiple answers possible 

44% 

56% 

33% 
22% 

11% 

22% 
44% 
9 

Number  of  “true”  SEPs  belonging  to  sections  of  the  standard  identified  as  of 
significant value 

89% 

Implementers 

89% 

78% 

22% 
11% 

0% 

0% 
33% 
9 

SEP 
Holders 

40% 

360  A  citation  is  a  reference  to  a  previous  work  (prior  art)  that  is  considered  relevant  to  a  current  patent  application. 
Forward citations are patents that cite a specific patent. 

227 

 
 
 
 
 
 
 
                                                 
Implementers 

SEP 
Holders 

Number of jurisdictions in which “true” SEPs are protected 
Number of significantly different claims 
Number of sections of the standard covered by “true” SEPs 
Man hours spent in contributing in the development of the standard at the SDO 
Forward citations 
Other, please specify 
No. of replies 

52% 
33% 
22% 
4% 
4% 
15% 
27 

40% 
20% 
20% 
0% 
7% 
53% 
15 

Note: Implementer: those who agreed with Q2 and disagreed, were neutral or had no opinion on Q3; Holder: those who disagreed, 
were neutral or had no opinion on Q2 and agreed with Q3; multiple answers possible. 

Number  of  “true”  SEPs  belonging  to  sections  of  the  standard  identified  as  of 
significant value 
Number of jurisdictions in which “true” SEPs are protected 
Number of significantly different claims 
Number of sections of the standard covered by “true” SEPs 
Man hours spent in contributing in the development of the standard at the SDO 
Forward citations 
Other, please specify 
No. of replies 

EU 

62% 

44% 
32% 
21% 
9% 
6% 
32% 
34 

non-EU 

58% 

37% 
21% 
16% 
5% 
5% 
42% 
19 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; multiple answers possible. 

Q47361. If there were an obligation to complete the “steps” provided in the Judgment of the Court of 
Justice of  the European  Union  (“CJEU”) of  16  July 2015, Huawei v. ZTE362 within  certain time 
limits, which period would be reasonable? Please note that we ask for average reasonable time limits 
with due account taken of the fact that the analysis would have to be conducted on a case-by-case 
basis363. 

“Fixed time limits are not desirable” answers only 

All 

Compa
nies 

Associ
ations/ 
trade 
union 

Academia/ 
Authoritie
s/NGO 
/other 

The  implementer  expresses  its  willingness  to  conclude  a 
licensing agreement on FRAND terms 
The SEP holder presents to the implementer a specific, written 
offer for a licence on FRAND terms 
The  implementer  responds  to  that  offer  (potentially  with  a 
counter offer) 
If applicable, the SEP holder rejects the counter offer 
If applicable, the implementer provides appropriate security 
If applicable, parties may agree on arbitration 
If applicable, the SEP holder requests an injunction 
No. of replies* 

46% 

52% 

86% 

33% 

44% 

45% 

86% 

44% 

45% 

50% 

86% 

33% 

42% 
41% 
45% 
42% 
47% 
42% 
44% 
43% 
57-66  33-42 

86% 
86% 
86% 
100% 
7 

44% 
33% 
33% 
44% 
9 

Citiz
ens 

0% 

0% 

0% 

0% 
0% 
0% 
0% 
8-10 

361 Please note that there was an error in encoding this question into the EUSurvey system. The answers “3 to 5 months 
after the prior step”, “5 to 7 months after the prior step” and ““more than 7 months after the prior step” appeared in two 
columns each instead of one. That is e.g. there was a separate column allowing for answering “3 to 5 months” followed 
by column “after the prior step”. For the purpose of numerical analysis, these two columns were added together. 
362 Judgment of the Court of Justice of 16 July 2015, Huawei Technologies Co. Ltd v ZTE Corp. and ZTE Deutschland 
GmbH, C-170/13, ECLI:EU:C:2015:477, https://e-justice.europa.eu/ecli/ECLI:EU:C:2015:477. 
363 The reasonable amount of time needed for the implementer to express its willingness to obtain a license may vary 
depending on a number of factors, such as the number of patents at issue, the complexity of the technology, the level of 
knowledge  the implementer may  have about the technology and other.: The implementer expresses its  willingness to 
conclude a licensing agreement on FRAND terms. 

228 

 
 
 
 
                                                 
Note:  “Other 
*range, different number of replies per question 

specify)”  not 

(please 

included 

in 

the 

table;  “No  opinion”  answers  not 

taken 

into  account.  

Implementers 

Fixed  time 
limits  are 
not 
desirable 

Months after the prior step  Other  No. Avg. 

1 to 3   3 to 5   5 to 7  > 7  

months
* 

0% 

0% 

0% 

14% 

64% 

15% 

67% 

19% 

11% 

27  1.0 

The implementer expresses its willingness to conclude 
a licensing agreement on FRAND terms 
The SEP holder presents to the implementer a specific, 
written offer for a licence on FRAND terms 
The  implementer  responds  to  that  offer  (potentially 
with a counter offer) 
If applicable, the SEP holder rejects the counter offer  57% 
57% 
If  applicable,  the  implementer  provides  appropriate 
security 
If applicable, parties may agree on arbitration 
If applicable, the SEP holder requests an injunction 
Note: Implementer: those who agreed with Q2 and disagreed, were neutral or had no opinion on Q3;“No opinion” answers not taken 
into account 
* Weighted average calculated using the middle of ranges, for the “Fixed time limits are not desirable” value of 0, for the last open 
range value of 8 assumed; “Other” column not taken into account for average calculation. 

0% 
28  1.5 
11%  28  1.6 

7% 
7% 
10%  7% 

30  1.8 
30  2.1 

17% 
23% 

18% 
11% 

64% 
64% 

13% 
3% 

0% 
0% 

7% 
0% 

7% 
7% 

4% 
7% 

28  1.2 

28  1.4 

68% 

11% 

4% 

4% 

4% 

4% 

7% 

7% 

4% 

SEP Holders 

1 to 3   3 to 5   5 to 7  > 7  

time 
are 

Fixed 
limits 
not 
desirable 

Months after the prior step  Other  No. Avg. 

months
* 

0% 

0% 

6% 

44% 

38% 

50% 

31% 

13% 

13%  16  1.1 

The implementer expresses its willingness to conclude 
a licensing agreement on FRAND terms 
The SEP holder presents to the implementer a specific, 
written offer for a licence on FRAND terms 
The  implementer  responds  to  that  offer  (potentially 
with a counter offer) 
If applicable, the SEP holder rejects the counter offer  33% 
39% 
If  applicable,  the  implementer  provides  appropriate 
security 
If applicable, parties may agree on arbitration 
If applicable, the SEP holder requests an injunction 
Note: Holder: those who disagreed, were neutral or had no opinion on Q2 and agreed with Q3; “No opinion” answers not taken into 
account 
* Weighted average calculated using the middle of ranges, for the “Fixed time limits are not desirable” value of 0, for the last open 
range value of 8 assumed; “Other” column not taken into account for average calculation. 

15%  10%  5% 
20%  10%  5% 

18  2.1 
18  2.1 

20  3.2 
20  2.9 

13%  16  1.6 

17% 
22% 

30% 
15% 

33% 
22% 

30% 
40% 

10% 
10% 

6% 
6% 

6% 
6% 

6% 
6% 

16  1.2 

13% 

38% 

31% 

0% 

0% 

6% 

6% 

0% 

“Fixed time limits are not desirable” answers (column %) 
and average reasonable period in months (column Avg.) 

The  implementer  expresses  its  willingness  to  conclude  a  licensing 
agreement on FRAND terms 
The SEP holder presents to the implementer a specific, written offer 
for a licence on FRAND terms 
The  implementer  responds  to  that  offer  (potentially  with  a  counter 
offer) 
If applicable, the SEP holder rejects the counter offer 
If applicable, the implementer provides appropriate security 
If applicable, parties may agree on arbitration 
If applicable, the SEP holder requests an injunction 
No. of replies** 

EU 

% 

47% 

46% 

48% 

43% 
43% 
52% 
54% 
32-35 

non-EU 

Avg.* 

% 

Avg.* 

1.4 

1.9 

1.6 

1.9 
2.3 
1.8 
1.8 

65% 

58% 

58% 

58% 
57% 
48% 
43% 
17-23 

0.7 

1.6 

1.3 

1.5 
1.9 
2.5 
3.0 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; “Other (please specify)”  not included in the 
table;  “No  opinion”  answers  not  taken  into  account.  The  residual  to  100%  shows  those  who  choose  rage  between  1%  and  50% 
* Weighted average calculated using the middle of ranges, for the “Fixed time limits are not desirable” value of 0, for the last open 
range 
calculation. 
8 
**range, different number of replies per question 

assumed; 

“Other” 

average 

account 

column 

value 

taken 

into 

not 

for 

of 

229 

 
“All answers” 

1 to 3   3 to 5   5 to 7  > 7  

time 
are 

Fixed 
limits 
not 
desirable 

Months after the prior step  Other  No. Avg. 

months
* 

9% 

2% 

0% 

24% 

44% 

30% 

46% 

14% 

57  1.3 

The implementer expresses its willingness to conclude 
a licensing agreement on FRAND terms 
The SEP holder presents to the implementer a specific, 
written offer for a licence on FRAND terms 
The  implementer  responds  to  that  offer  (potentially 
with a counter offer) 
If applicable, the SEP holder rejects the counter offer  41% 
42% 
If  applicable,  the  implementer  provides  appropriate 
security 
If applicable, parties may agree on arbitration 
If applicable, the SEP holder requests an injunction 
Note: “No opinion” answers not taken into account 
* Weighted average calculated using the middle of ranges, for the “Fixed time limits are not desirable” value of 0, for the last open 
range value of 8 assumed; “Other” column not taken into account for average calculation. 

9% 
64  2.5 
14%  11%  12%  66  2.6 

64  2.1 
64  2.3 

10%  60  1.8 

19% 
22% 

25% 
12% 

25% 
17% 

42% 
44% 

11% 
8% 

6% 
9% 

6% 
6% 

3% 
3% 

62  1.8 

13% 

23% 

45% 

8% 

6% 

5% 

8% 

8% 

5% 

8% 

5% 

“Companies answers” 

1 to 3   3 to 5   5 to 7  > 7  

time 
are 

Fixed 
limits 
not 
desirable 

Months after the prior step  Other  No. Avg. 

months
* 

9% 

3% 

0% 

18% 

52% 

18% 

45% 

18% 

33  1.4 

The implementer expresses its willingness to conclude 
a licensing agreement on FRAND terms 
The SEP holder presents to the implementer a specific, 
written offer for a licence on FRAND terms 
The  implementer  responds  to  that  offer  (potentially 
with a counter offer) 
If applicable, the SEP holder rejects the counter offer  42% 
45% 
If  applicable,  the  implementer  provides  appropriate 
security 
If applicable, parties may agree on arbitration 
If applicable, the SEP holder requests an injunction 
Note: “No opinion” answers not taken into account 
* Weighted average calculated using the middle of ranges, for the “Fixed time limits are not desirable” value of 0, for the last open 
range value of 8 assumed; “Other” column not taken into account for average calculation. 

38  2.4 
8% 
12%  14%  10%  42  2.9 

8% 
3% 
8% 
15%  10%  3% 

38  2.3 
40  2.7 

21% 
20% 

21% 
17% 

18% 
8% 

47% 
43% 

11% 
5% 

11%  3% 

11%  8% 

11%  6% 

38  2.2 

36  1.9 

16% 

11% 

17% 

50% 

3% 

6% 

Q48364.  Do  you  consider  that  the  scope  of  the  obligations  imposed  on  both  the  SEP  holder  and 
implementers by CJEU Huawei v. ZTE is clear or needs to be clarified with regard to the following 
aspects?: The initial offer of the SEP holder must be FRAND 

“Unclear” answers only 

The initial offer of the SEP holder must be FRAND 
The amount of the security should be fair and reasonable 
The counter offer of the implementer must be FRAND 
A  SEP  holder  cannot  request  an  injunction  before  making  a 
FRAND  offer,  even  if  the  implementer  has  not  expressed  its 
willingness to take a licence 
No. of replies* 

Compa
nies 

Associa-
tions/ 
trade 
union 

Academia/ 
Authorities
/NGO 
/other 

Citizens 

39% 
42% 
35% 
31% 

71% 
57% 
57% 
40% 

20% 
0% 
0% 
33% 

63% 
38% 
63% 
25% 

All 

43% 
36% 
36% 
31% 

51-56  29-31 

5-7 

9-10 

8 

Note: “Other (please specify)” not included in the table; “No opinion” answers not taken into account 
*range, different number of replies per question 

364 Please note that there was an error in encoding this question into the EUSurvey system. It was not possible to select 
answer “Not clear”. The tables below present thus only those who chose “Somewhat unclear” responses.  

230 

 
 
                                                 
“Unclear” answers only 

Implementer  Holder 

The initial offer of the SEP holder must be FRAND 
The counter offer of the implementer must be FRAND 
The amount of the security should be fair and reasonable 
A SEP holder cannot request an injunction before making a FRAND offer, even if the 
implementer has not expressed its willingness to take a licence 
No. of replies* 

78% 
67% 
63% 
48% 

23-27 

13% 
7% 
7% 
27% 

15 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “Other (please specify)” not included in the table; “No opinion” 
answers not taken into account 
*range, different number of replies per question 

“Unclear” answers only 

The initial offer of the SEP holder must be FRAND 
The counter offer of the implementer must be FRAND 
The amount of the security should be fair and reasonable 
A SEP holder cannot request an injunction before making a FRAND offer, even if the 
implementer has not expressed its willingness to take a licence 
No. of replies* 

EU 

42% 
36% 
36% 
39% 

non-EU 

33% 
20% 
36% 
17% 

31-33 

12-15 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; “Other (please specify)” not included in the 
table; “No opinion” answers not taken into account 
*range, different number of replies per question 

“All answers” 

Unclear  Neutral  Clear  No. 

The initial offer of the SEP holder must be FRAND 
The amount of the security should be fair and reasonable 
The counter offer of the implementer must be FRAND 
A SEP holder cannot request an injunction before making a FRAND offer, even 
if the implementer has not expressed its willingness to take a licence 

43% 
36% 
36% 
31% 

16% 
33% 
18% 
24% 

41% 
31% 
46% 
45% 

56 
55 
56 
51 

Note: Unclear composes of “Not clear” and “Somewhat unclear”; Clear composes of “Clear” and “Somewhat clear”; “No opinion” 
answers not taken into account 

“Companies answers” 

Unclear  Neutral  Clear  No. 

The amount of the security should be fair and reasonable 
The initial offer of the SEP holder must be FRAND 
The counter offer of the implementer must be FRAND 
A SEP holder cannot request an injunction before making a FRAND offer, even 
if the implementer has not expressed its willingness to take a licence 

42% 
39% 
35% 
31% 

35% 
19% 
23% 
21% 

23% 
42% 
42% 
48% 

31 
31 
31 
29 

Note: Unclear composes of “Not clear” and “Somewhat unclear”; Clear composes of “Clear” and “Somewhat clear”; “No opinion” 
answers not taken into account 

Q49. Which of the behaviours of an implementer listed below could indicate “willingness” to take a 
licence, and to what extent is that behaviour relevant? 

“Somewhat relevant” answers only 

Submits a FRAND counter-offer 
Agrees in writing to be willing to take a licence on FRAND terms 
and  conditions,  while  reserving 
to  challenge 
the  right 
essentiality, validity, and infringement in Court 
Provides a security at a fair and reasonable amount 
When  reference  materials  provided  by  SEP  holder  are  not 
sufficient, such as not identifying the SEPs or not including claim 
charts,  promptly  requests  the  SEP  holders  to  provide  such 
materials 
Agrees on arbitration of the FRAND terms and conditions 

231 

All 

Compa-
nies 

Associa-
tions/ 
trade 
union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

93% 
88% 

94% 
91% 

86% 
86% 

100% 
100% 

75% 
70% 

77% 
63% 

86% 
67% 

91% 
89% 

88% 
67% 

38% 
78% 

51% 

50% 

29% 

80% 

38% 

 
 
“Somewhat relevant” answers only 

Informs  the  relevant  SDO  that  it  uses  the  standard,  version, 
section and product category 
If  it  disagrees  with  the  scope  of  the  licence  (in  particular  the 
validity  and  essentiality  of  the  patents),  it  files  relevant  court 
proceedings in a timely manner 
No. of replies* 

All 

Compa-
nies 

Associa-
tions/ 
trade 
union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

33% 

23% 

14% 

67% 

20% 

19% 

14% 

33% 

44% 

14% 

Note:  “Other 
*range, different number of replies per question 

specify)”  not 

(please 

included 

in 

the 

table;  “No  opinion”  answers  not 

taken 

55-59  30-33 

6-7 

9-11 

7-9 
into  account 

“Somewhat relevant” answers only 

Implementers 

SEP 
Holders 

Agrees  in  writing  to  be  willing  to  take  a  licence  on  FRAND  terms  and  conditions, 
while reserving the right to challenge essentiality, validity, and infringement in Court 
Submits a FRAND counter-offer 
Provides a security at a fair and reasonable amount 
When  reference  materials  provided  by  SEP  holder  are  not  sufficient,  such  as  not 
identifying the SEPs or not including claim charts, promptly requests the SEP holders 
to provide such materials 
Agrees on arbitration of the FRAND terms and conditions 
Informs  the  relevant  SDO  that  it  uses  the  standard,  version,  section  and  product 
category 
If it disagrees with the scope of the licence (in particular the validity and essentiality 
of the patents), it files relevant court proceedings in a timely manner 
No. of replies* 

100% 

92% 
73% 
73% 

27% 
27% 

15% 

71% 

94% 
88% 
63% 

69% 
29% 

25% 

26-27 

14-16 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “Other (please specify)” not included in the table; “No opinion” 
answers not taken into account 
*range, different number of replies per question 

“Somewhat relevant” answers only 

Agrees  in  writing  to  be  willing  to  take  a  licence  on  FRAND  terms  and  conditions, 
while reserving the right to challenge essentiality, validity, and infringement in Court 
Submits a FRAND counter-offer 
Provides a security at a fair and reasonable amount 
When  reference  materials  provided  by  SEP  holder  are  not  sufficient,  such  as  not 
identifying the SEPs or not including claim charts, promptly requests the SEP holders 
to provide such materials 
Agrees on arbitration of the FRAND terms and conditions 
Informs  the  relevant  SDO  that  it  uses  the  standard,  version,  section  and  product 
category 
If it disagrees with the scope of the licence (in particular the validity and essentiality 
of the patents), it files relevant court proceedings in a timely manner 
No. of replies* 

EU 

93% 

94% 
84% 
61% 

45% 
33% 

13% 

non-EU 

89% 

95% 
76% 
79% 

67% 
25% 

33% 

28-32 

16-19 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; “Other (please specify)” not included in the 
table; “No opinion” answers not taken into account 
*range, different number of replies per question 

“All answers” 

Submits a FRAND counter-offer 
Agrees  in  writing  to  be  willing  to  take  a  licence  on  FRAND  terms  and 
conditions,  while reserving the right to challenge  essentiality, validity, and 
infringement in Court 
Provides a security at a fair and reasonable amount 

Somewhat 
relevant 

Not 
relevant 

Unrela-
ted 

No. 

93% 
88% 

7% 
12% 

0% 
0% 

59 
58 

75% 

21% 

4% 

57 

232 

 
“All answers” 

When reference materials provided by SEP holder are not sufficient, such as 
not identifying the SEPs or not including claim charts, promptly requests the 
SEP holders to provide such materials 
Agrees on arbitration of the FRAND terms and conditions 
Informs  the  relevant  SDO  that  it  uses  the  standard,  version,  section  and 
product category 
If  it  disagrees  with  the  scope  of  the  licence  (in  particular  the  validity  and 
essentiality  of  the  patents),  it  files  relevant  court  proceedings  in  a  timely 
manner 
Other (please specify) 

Somewhat 
relevant 

Not 
relevant 

Unrela-
ted 

No. 

70% 

23% 

7% 

56 

51% 
33% 

20% 

39% 
35% 

11% 
33% 

57 
55 

60% 

20% 

55 

0% 
Note Not relevant composes of “Rather not relevant” and “Not relevant”; “No opinion” answers not taken into account 

100% 

0% 

4 

“Companies answers” 

Somewhat 
relevant 

Not 
relevant 

Unrela-
ted 

No. 

Submits a FRAND counter-offer 
Agrees  in  writing  to  be  willing  to  take  a  licence  on  FRAND  terms  and 
conditions,  while reserving the right to challenge  essentiality, validity, and 
infringement in Court 
Provides a security at a fair and reasonable amount 
When reference materials provided by SEP holder are not sufficient, such as 
not identifying the SEPs or not including claim charts, promptly requests the 
SEP holders to provide such materials 
Agrees on arbitration of the FRAND terms and conditions 
Informs  the  relevant  SDO  that  it  uses  the  standard,  version,  section  and 
product category 
If  it  disagrees  with  the  scope  of  the  licence  (in  particular  the  validity  and 
essentiality  of  the  patents),  it  files  relevant  court  proceedings  in  a  timely 
manner 
Other (please specify) 

94% 
91% 

77% 
63% 

50% 
23% 

19% 

6% 
9% 

19% 
31% 

0% 
0% 

3% 
6% 

41% 
33% 

9% 
43% 

33 
32 

31 
32 

32 
30 

59% 

22% 

32 

0% 
Note Not relevant composes of “Rather not relevant” and “Not relevant”; “No opinion” answers not taken into account 

100% 

0% 

1 

Q50. Which of the behaviours of a SEP holder listed below could indicate “willingness” to grant a 
licence on FRAND terms and conditions, and to what extent is that behaviour relevant?  

“Very and somewhat relevant” answers only 

All 

Compa-
nies 

Associa-
tions/ 
trade 
union 

Academia/ 
Authorities
/NGO 
/other 

Citizens 

Provides a FRAND offer that (i) sets a time limit allowing for a 
reasonable period of time for consideration and (ii) explains how 
the royalty is calculated or (iii) alternatively, demonstrates that 
the licence offer is on FRAND terms and conditions. 
Provides  a  list  of  the  SEPs  (patent  numbers,  the  names  of  the 
standards at issue, the geographical scope of the patents) together 
with a high level claim chart to indicate the correlation between 
products  that  are  actually  manufactured  and  patent  claims, 
specifying the way in which the SEPs have been infringed 
Provides  a  list  of  the  SEPs  (patent  numbers,  the  names  of  the 
standards at issue, the geographical scope of the patents) together 
with information to which section of the standard they refer to, 
specifying the way in which the SEPs have been infringed 
Provides its standard FRAND terms and conditions (not subject 
to non-disclosure requirements) 
Provides a list of the SEP (patent numbers) with certificate from 
their  essentiality, 
third  party  confirming 
an 
specifying the way in which the SEPs have been infringed 
Agrees on arbitration of the FRAND terms and conditions 

independent 

233 

97% 

94% 

100% 

100% 

85% 

80% 

86% 

89% 

100
% 

100
% 

83% 

80% 

86% 

90% 

88% 

76% 

74% 

43% 

89% 

68% 

63% 

71% 

78% 

100
% 
75% 

55% 

57% 

29% 

75% 

50% 

 
 
“Very and somewhat relevant” answers only 

All 

Compa-
nies 

Associa-
tions/ 
trade 
union 

Academia/ 
Authorities
/NGO 
/other 

Citizens 

No. of replies* 

Note:  “Other 
*range, different number of replies per question 

specify)”  not 

(please 

included 

in 

the 

table;  “No  opinion”  answers  not 

taken 

58-60  34-35 

7 

8-10 

8 
into  account 

“Very and somewhat relevant” answers only 

Implementers 

SEP 
Holders 

Provides a FRAND offer that (i) sets a time limit allowing for a reasonable period of 
time  for  consideration  and  (ii)  explains  how  the  royalty  is  calculated  or  (iii) 
alternatively, demonstrates that the licence offer is on FRAND terms and conditions. 
Provides a list of the SEPs (patent numbers, the names of the standards at issue, the 
geographical scope of the patents) together with a high level claim chart to indicate 
the  correlation  between  products  that  are  actually  manufactured  and  patent  claims, 
specifying the way in which the SEPs have been infringed 
Provides a list of the SEPs (patent numbers, the names of the standards at issue, the 
geographical scope of the patents) together with information to which section of the 
standard they refer to, specifying the way in which the SEPs have been infringed 
Provides a list of the SEP (patent numbers) with certificate from an independent third 
party confirming their essentiality, specifying the way in which the SEPs have been 
infringed 
Provides  its  standard  FRAND  terms  and  conditions  (not  subject  to  non-disclosure 
requirements) 
Agrees on arbitration of the FRAND terms and conditions 
No. of replies* 

100% 

94% 

96% 

63% 

93% 

63% 

93% 

25% 

85% 

41% 
27 

56% 

63% 
16 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “Other (please specify)” not included in the table; “No opinion” 
answers not taken into account 
*range, different number of replies per question 

“Very and somewhat relevant” answers only 

Provides a FRAND offer that (i) sets a time limit allowing for a reasonable period of 
time  for  consideration  and  (ii)  explains  how  the  royalty  is  calculated  or  (iii) 
alternatively, demonstrates that the licence offer is on FRAND terms and conditions. 
Provides a list of the SEPs (patent numbers, the names of the standards at issue, the 
geographical scope of the patents) together with information to which section of the 
standard they refer to, specifying the way in which the SEPs have been infringed 
Provides a list of the SEPs (patent numbers, the names of the standards at issue, the 
geographical scope of the patents) together with a high level claim chart to indicate 
the  correlation  between  products  that  are  actually  manufactured  and  patent  claims, 
specifying the way in which the SEPs have been infringed 
Provides  its  standard  FRAND  terms  and  conditions  (not  subject  to  non-disclosure 
requirements) 
Provides a list of the SEP (patent numbers) with certificate from an independent third 
party confirming their essentiality, specifying the way in which the SEPs have been 
infringed 
Agrees on arbitration of the FRAND terms and conditions 
No. of replies* 

EU 

94% 

non-EU 

100% 

85% 

78% 

85% 

78% 

70% 

61% 

53% 
32-34 

78% 

78% 

61% 
17-18 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; “Other (please specify)” not included in the 
table; “No opinion” answers not taken into account 
*range, different number of replies per question 

“All answers” 

Provides a FRAND offer that (i) sets a time limit allowing for a reasonable 
period of time for consideration and (ii) explains how the royalty is calculated 
or (iii) alternatively, demonstrates that the licence offer is on FRAND terms 
and conditions. 

234 

Relevant  Not 

relevant 

Unrela-
ted 

No. 

97% 

3% 

0% 

59 

 
“All answers” 

Provides a  list of the SEPs (patent  numbers, the  names of the standards at 
issue, the geographical scope of the patents) together with a high level claim 
chart  to  indicate  the  correlation  between  products  that  are  actually 
manufactured and patent claims, specifying the way in which the SEPs have 
been infringed 
Provides a  list of the  SEPs (patent  numbers, the  names of the  standards at 
issue,  the  geographical  scope  of  the  patents)  together  with  information  to 
which section of the standard they refer to, specifying the way in which the 
SEPs have been infringed 
Provides  its  standard  FRAND  terms  and  conditions  (not  subject  to  non-
disclosure requirements) 
Provides  a  list  of  the  SEP  (patent  numbers)  with  certificate  from  an 
independent third party confirming their essentiality, specifying the way in 
which the SEPs have been infringed 
Agrees on arbitration of the FRAND terms and conditions 
Other (please specify) 

Relevant  Not 

relevant 

Unrela-
ted 

No. 

85% 

14% 

2% 

59 

83% 

15% 

2% 

60 

76% 

68% 

20% 

32% 

3% 

0% 

55% 
100% 

31% 
0% 

14% 
0% 

59 

59 

58 
6 

Note Relevant composes of “Very relevant” and “Somewhat relevant”; Not relevant composes of “Rather not relevant” and “Not 
relevant”;  
“No opinion” answers not taken into account 

“Companies answers” 

Provides a FRAND offer that (i) sets a time limit allowing for a reasonable 
period of time for consideration and (ii) explains how the royalty is calculated 
or (iii) alternatively, demonstrates that the licence offer is on FRAND terms 
and conditions. 
Provides a list of the SEPs (patent  numbers, the  names of the standards at 
issue, the geographical scope of the patents) together with a high level claim 
chart  to  indicate  the  correlation  between  products  that  are  actually 
manufactured and patent claims, specifying the way in which the SEPs have 
been infringed 
Provides a list of the SEPs (patent  numbers, the  names of the standards at 
issue,  the  geographical  scope  of  the  patents)  together  with  information  to 
which section of the standard they refer to, specifying the way in which the 
SEPs have been infringed 
Provides  its  standard  FRAND  terms  and  conditions  (not  subject  to  non-
disclosure requirements) 
Provides  a  list  of  the  SEP  (patent  numbers)  with  certificate  from  an 
independent third party confirming their essentiality, specifying the way in 
which the SEPs have been infringed 
Agrees on arbitration of the FRAND terms and conditions 
Other (please specify) 

Relevant  Not 

relevant 

Unrela-
ted 

No. 

94% 

6% 

0% 

34 

80% 

17% 

3% 

35 

80% 

17% 

3% 

35 

74% 

63% 

23% 

37% 

3% 

0% 

57% 
100% 

29% 
0% 

14% 
0% 

35 

35 

35 
1 

Note Relevant composes of “Very relevant” and “Somewhat relevant”; Not relevant composes of “Rather not relevant” and “Not 
relevant”;  
“No opinion” answers not taken into account 

Questions on enforcement 

Quantitative summary 

Respondents  estimated  that  court  costs  could  range  from  approximately  EUR  2.1  million  for 
essentiality, EUR 6.6 million for injunction and EUR 7.1 million for FRAND disputes. 

Arbitration  (53%  of  all  answers)  was  deemed  more  useful  than  mediation  (35%)  for  FRAND 
assessment, especially by SEP Holders and academia/authorities/NGOs. 

235 

 
 
Two thirds of respondents were of the opinion that efficient SEP licencing would foster innovation 
by implementers, increase employment and allow for keeping high level of competence in the EU as 
well as foster transition to green economy. 

Tables with replies per question 

Q51. What is the average cost for you of a dispute (advice and litigation costs) in court, excluding 
the value of the SEPs licenses and any damages? 

Average* 
EUR millions 

an 

to 

Related 
Injunction 
Related to FRAND 
Related to Essentiality 
No. of replies** 

All 

6.6 

7.1 
2.1 
11-26 

Companies 

Associations/ 
trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

6.4 

7.8 
1.3 
5-12 

0.8 

7.8 

0-9 

1.5 

0.8 

1-3 

9.9 

7.9 
2.9 
2-5 

Note: “Other (please specify)” not included in the table and calculations. 
*  Weighted  average  calculated  using  the  middle  of  ranges,  for  the  last  open  range  value  of  EUR  30  million  assumed. 
**range, different number of replies per question 

Implementers 

Related 
Injunction 

to 

an 

Related to FRAND 

Related 
Essentiality 

to 

0% 
25% 
0% 
13% 
25% 
0% 

0% 
20% 
60% 
20% 
0% 
0% 

22% 
Up to 500,000 euro 
From 500,000 euro to 1,000,000 Euro 
11% 
From 1,000,000 euro to 2,000,000 Euro  33% 
From 2,000,000 euro to 3,000,000 Euro  11% 
From 3,000,000 euro to 6,000,000 Euro  0% 
From  6,000,000  euro  to  10,000,000 
Euro 
From 10,000,000 to 20,000,000 Euro 
Above 20,000,000 Euro 
Other please specify 
No. of replies 
Average (EUR millions)* 
Implementer: 

0% 
11% 
0% 
9 
5.1 

11% 

0% 
13% 
25% 
8 
7.2 
Note: 
those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3  
* Weighted average calculated using the middle of ranges, for the last open range value of EUR 30 million assumed, “Other (please 
specify)” not included in average calculations 

0% 
0% 
0% 
5 
1.6 

SEP Holders 

Related 
Injunction 

to 

an 

Related to FRAND 

Related 
Essentiality 

to 

0% 
Up to 500,000 euro 
From 500,000 euro to 1,000,000 Euro 
20% 
From 1,000,000 euro to 2,000,000 Euro  20% 
From 2,000,000 euro to 3,000,000 Euro  20% 
From 3,000,000 euro to 6,000,000 Euro  0% 
0% 
From  6,000,000  euro  to  10,000,000 
Euro 
From 10,000,000 to 20,000,000 Euro 
Above 20,000,000 Euro 
Other please specify 
No. of replies 
Average (EUR millions)* 

0% 
40% 
0% 
5 
13 

6% 
13% 
13% 
6% 
13% 
6% 

19% 
6% 
19% 
16 
7.6 

0% 
25% 
25% 
0% 
0% 
25% 

0% 
0% 
25% 
4 
3.4 

Note:  Holder: 
those  who  disagreed,  were  neutral  or  had  no  opinion  on  Q2  and  agreed  with  Q3 
* Weighted average calculated using the middle of ranges, for the last open range value of EUR 30 million assumed, “Other (please 
specify)” not included in average calculations 

Average* (EUR millions) 

Related to an Injunction 

EU 

4.1 

non-EU 

10.8 

236 

 
 
 
 
Average* (EUR millions) 

Related to FRAND 
Related to Essentiality 
No. of replies** 

EU 

6.4 
1.3 
6-19 

non-EU 

9.4 

0-5 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. “Other (please specify)” not included in the table 
and calculations. 
*  Weighted  average  calculated  using  the  middle  of  ranges,  for  the  last  open  range  value  of  EUR  30  million  assumed. 
**range, different number of replies per question 

“All answers” 

Related 
Injunction 

to 

an 

Related to FRAND 

Related 
Essentiality 

to 

17% 
Up to 500,000 euro 
From 500,000 euro to 1,000,000 Euro 
22% 
From 1,000,000 euro to 2,000,000 Euro  22% 
From 2,000,000 euro to 3,000,000 Euro  11% 
From 3,000,000 euro to 6,000,000 Euro  0% 
6% 
From  6,000,000  euro  to  10,000,000 
Euro 
From 10,000,000 to 20,000,000 Euro 
Above 20,000,000 Euro 
Other please specify 
No. of replies 
Average (EUR millions)* 

0% 
17% 
6% 
18 
6.6 

8% 
15% 
8% 
8% 
15% 
4% 

12% 
8% 
23% 
26 
7.1 

9% 
18% 
36% 
18% 
0% 
9% 

0% 
0% 
9% 
11 
2.1 

* Weighted average calculated using the middle of ranges, for the last open range value of EUR 30 million assumed, “Other (please 
specify)” not included in average calculations 

“Companies answers” 

Related 
Injunction 

to 

an 

Related to FRAND 

Related 
Essentiality 

to 

17% 
Up to 500,000 euro 
From 500,000 euro to 1,000,000 Euro 
25% 
From 1,000,000 euro to 2,000,000 Euro  17% 
From 2,000,000 euro to 3,000,000 Euro  17% 
From 3,000,000 euro to 6,000,000 Euro  0% 
0% 
From  6,000,000  euro  to  10,000,000 
Euro 
From 10,000,000 to 20,000,000 Euro 
Above 20,000,000 Euro 
Other please specify 
No. of replies 
Average (EUR millions)* 

0% 
17% 
8% 
12 
6.4 

8% 
0% 
8% 
8% 
25% 
0% 

8% 
8% 
33% 
12 
7.8 

20% 
20% 
40% 
20% 
0% 
0% 

0% 
0% 
0% 
5 
1.3 

* Weighted average calculated using the middle of ranges, for the last open range value of EUR 30 million assumed, “Other (please 
specify)” not included in average calculations 

Summary of comments 

Most respondents replied that the costs vary depending on the complexity of the specific case (e.g. 
the number of patents at issue, the number of jurisdictions where enforcement actions are taking place 
etc.), but in general SEP litigation costs are high. One respondent stated that if it is a global FRAND 
“war” costs can exceed 75 million dollars. Furthermore, most respondents believe that it is hard (if 
not impossible) to determine a response to this question, as companies typically do not maintain data 
based  on  the  proposed  categorizations  (separating  costs  related  to  injunctions  vs.  FRAND  vs. 
essentiality). 

In general, some respondents have acknowledged that the costs are higher in the UK and US than in 
Europe. 

Q52. What is the average cost of the dispute (advice and litigation costs) in arbitration, excluding 
the value of the SEPs licenses and any damages? 

237 

 
 
 
Average* 
EUR millions 

All 

Companies 

Association
s/trade 
union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

11% 
Up to 500,000 euro 
From 500,000 euro to 1,000,000 Euro 
17% 
From 1,000,000 euro to 2,000,000 Euro  22% 
From 2,000,000 euro to 3,000,000 Euro  17% 
From 3,000,000 euro to 6,000,000 Euro  6% 
6% 
From  6,000,000  euro  to  10,000,000 
Euro 
From 10,000,000 to 20,000,000 Euro 
Above 20,000,000 Euro please specify 
No. of replies 
Average (EUR millions)* 

22% 
0% 
18 
4.9 

18% 
27% 
9% 
27% 
0% 
0% 

18% 
0% 
11 
3.8 

0 

0% 
0% 
50% 
0% 
50% 
0% 

0% 
0% 
2 
3.0 

0% 
0% 
40% 
0% 
0% 
20% 

40% 
0% 
5 
8.2 

* Weighted average calculated using the middle of ranges, for the last open range value of EUR 30 million assumed 

Up to 500,000 euro 
From 500,000 euro to 1,000,000 Euro 
From 1,000,000 euro to 2,000,000 Euro 
From 2,000,000 euro to 3,000,000 Euro 
From 3,000,000 euro to 6,000,000 Euro 
From 6,000,000 euro to 10,000,000 Euro 
From 10,000,000 to 20,000,000 Euro 
Above 20,000,000 Euro please specify 
No. of replies 
Average (EUR millions)* 

Implementer
s 

SEP 
Holders 

0% 
20% 
40% 
40% 
0% 
0% 
0% 
0% 
5 
1.8 

0% 
13% 
25% 
13% 
13% 
0% 
38% 
0% 
8 
7.0 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3.  
* Weighted average calculated using the middle of ranges, for the last open range value of EUR 30 million assumed 

Up to 500,000 euro 
From 500,000 euro to 1,000,000 Euro 
From 1,000,000 euro to 2,000,000 Euro 
From 2,000,000 euro to 3,000,000 Euro 
From 3,000,000 euro to 6,000,000 Euro 
From 6,000,000 euro to 10,000,000 Euro 
From 10,000,000 to 20,000,000 Euro 
Above 20,000,000 Euro please specify 
No. of replies 
Average (EUR millions)* 

EU 

20% 
20% 
10% 
30% 
10% 
0% 
10% 
0% 
10 
3.1 

non-EU 

0% 
33% 
33% 
0% 
0% 
0% 
33% 
0% 
3 
5.8 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
respondent.  
the 
identification 
* Weighted average calculated using the middle of ranges, for the last open range value of EUR 30 million assumed 

headquarters 

location 

based 

made 

have 

been 

the 

on 

of 

Summary of comments 

Most respondents replied that the costs vary depending on the case. Some respondents explain that 
arbitration is not necessarily cheaper than court proceedings. Other respondents argue that when the 
parties agree to arbitration, they narrow the scope of what is actually in dispute. This reduces the cost 
and the time.  

One respondent  took  the opportunity to  comment  that arbitration or mediation is  not  an effective 
resolution  mechanism in SEP disputes. First,  arbitration lacks the formal scaffolding of rules  that 
apply in court, allowing for a wide range of effectively ad hoc judgments. Second, arbitrations do 
not generate transcripts or publicly available opinions, so therefore provide little guidance for future 
disputes. 

238 

 
 
 
 
 
 
 
 
 
 
 
 
Q53. How would you assess the use of mediation for FRAND assessments? 

Not useful 
Neutral 
Useful 
Other, please specify 
No. of replies 

All 

16% 
38% 
35% 
11% 
55 

Companies 

Associations/ 
trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

21% 
35% 
32% 
12% 
34 

0% 
50% 
33% 
17% 
6 

0% 
44% 
56% 
0% 
9 

33% 
33% 
17% 
17% 
6 

Note: “No opinion” answers not taken into account 

Not useful 
Neutral 
Useful 
Other, please specify 
No. of replies 

Implementers 

13% 
50% 
17% 
21% 
24 

SEP 
Holders 
27% 
27% 
47% 
0% 
15 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3.  

Not useful 
Neutral 
Useful 
Other, please specify 
No. of replies 

EU 

13% 
39% 
42% 
6% 
31 

non-EU 

17% 
39% 
28% 
17% 
18 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent.  

Summary of comments 

Mediation can help to limit the number of issues for later adjudication if the parties cannot resolve 
the dispute consensually and can be seen as a sign of good faith in negotiations. Many respondents 
find that mediation can be a useful tool only in a situation where both parties are acting in good faith 
and  are  willing  to  conclude  a  FRAND  licence,  and  where  only  FRAND  terms  are  subject  of  the 
mediation process and no other or few other issues are in dispute. 

Some  respondents  underline  that  mediation  can  be  useful  if  it  is  conducted  by  an  experienced 
mediator who would be able to identify each party’s strengths and weaknesses or in cases whether 
one or both parties do not have the required expertise to assess licensing conditions appropriately. To 
make mediation more effective, some respondents consider providing the mediator with a more active 
role (e.g., the possibility to review and assess comparable licenses) or potentially attaching certain 
effects to the outcome of the mediation on the further negotiations or litigation between the parties. 
However, it has been also held that the non-binding nature of mediation might affect the effectiveness 
of this procedure, as well as the fact that due to the complexity of SEP disputes, mediation can be a 
process with a low likelihood of a conclusive outcome. Transparency, predictability and creditability 
of mediation might be lower than the court's decisions that can deal with SEPs. 

Almost all respondents agree that the use of mediation should be voluntary and not imposed upon the 
parties. Moreover, a respondent finds that a party that chooses not to participate in ADR should not 
be considered ‘unwilling’ on that basis.  

A  few  respondents  with  mediation  experience  in  FRAND  cases  report  that  none  of  them  was 
successful or led to a resolution of the dispute. In their view, larger entities tend to prefer litigation 

239 

 
 
 
 
 
in their negotiation process. In general, mediation is perceived  as useful that helps to clarify each 
party’s position because mediation allows parties to put aside some negotiation posturing.  

Some respondents argue that ADR would only prolong the negotiations. 

Q54. How would you assess the use of arbitration for FRAND assessments? 

Not useful 
Neutral 
Useful 
Other, please specify 
No. of replies 

All 

14% 
33% 
53% 
0% 
43 

Companies 

Associations/ 
trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

18% 
39% 
43% 
0% 
28 

25% 
25% 
50% 
0% 
4 

0% 
13% 
88% 
0% 
8 

0% 
33% 
67% 
0% 
3 

Note: “No opinion” answers not taken into account 

Not useful 
Neutral 
Useful 
Other, please specify 
No. of replies 

Implementers 

SEP 
Holders 

31% 
38% 
31% 
0% 
16 

8% 
15% 
77% 
0% 
13 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3.  

Not useful 
Neutral 
Useful 
Other, please specify 
No. of replies 

EU 

9% 
32% 
59% 
0% 
22 

non-EU 

22% 
33% 
44% 
0% 
18 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent.  

Summary of comments 

For almost all respondents, arbitration (or for some respondents ADR in general) may be appropriate 
albeit only in situations where both parties are voluntarily interested in solving the dispute or limit 
the contested issues between them and are able to agree on an appropriate process. It is clear for all 
respondents that arbitration should not be mandated, some respondents find that the decision to enter 
into arbitration or not should not be used as an indication of willingness or reasonableness because 
parties should always have the option to resolve a dispute in the competent court. It has been stressed 
that there is no one-size-fits-all approach appropriate in all circumstances. Some respondents point 
to the fact that arbitration is also not necessarily faster or less costly than litigation. Some respondents 
even see limited value in arbitration as it can be used to create further delay in negotiations, while 
portraying to be “willing”. It may for example be used for hold-out purposes. 

Some respondents observe that since arbitration requires both parties to agree to it, it is unfortunately 
rarely used to settle FRAND disputes as it is often difficult to agree to the terms under which it will 
be conducted. Also, respondents find that due to the complexity of SEP disputes it is important that 
the arbitrators and institutes appointed have experience in dealing with these types of disputes, as 
well as handling technical issues. 

240 

 
 
 
 
 
Arbitration  is  also  seen  as  unfit  to  contributing  to  a  wider  understanding  of  FRAND,  including 
because  the  proceedings  are  confidential.  Arbitration  may  not  compel  discovery  of  third  parties. 
Arbitrators are faced with the absence of clear rules, which will result in unsatisfactory decisions that 
are not subject to appeal. 

Other  respondents  find  that  the  ‘portfolio  component’  of  SEP  negotiation  renders  arbitration 
particularly helpful as proceedings can be shaped in a way to address these disputes at once, thus 
avoiding parallel litigation. Arbitration would also allow the parties to resolve FRAND value without 
having to deal with issues such as infringement, validity, or essentiality of individual patents.  

However, respondents report that lack of transparency and no right to appellate review would affect 
confidence  in  the  usefulness  of  arbitration.  Moreover,  arbitration  might  advantage  large  market 
players as they have the financial and knowledge resources. Some respondents even suggest that it is 
almost impossible to find good arbitrators in patent matters. One respondent argued that arbitrating 
SEP  licensing  disputes  requires  a  high  level  of  expertise  in  a  variety  of  fields,  including  patent 
technology, patent law, and commercial (non-SEP) licensing. 

Q55. What would be a credible independent arbitration body for making FRAND assessments? 

the 

International  Court  of  Arbitration  of 

WIPO Arbitration and Mediation Center 
(the future) Patent Mediation and Arbitration Centre of 
the Unified Patent Court 
The 
International Chamber of Commerce (“ICC”) 
An  independent  EU  body  designated  to  conduct  this 
function 
The  London  Court  of 
(“LCIA”) 
An ad hoc arbitration from a list of impartial arbitrators 
endorsed by a public authority 
Other (please specify) 
No. of replies 

International  Arbitration 

Note: multiple answers possible 

All 

Compa-
nies 

Associations
/trade union 

Academia/ 
Authorities
/NGO 
/other 

Citizens 

57% 
45% 

54% 
46% 

33% 
33% 

43% 

46% 

33% 

39% 

46% 

0% 

27% 

25% 

33% 

11% 

8% 

0% 

23% 
44 

17% 
24 

33% 
3 

67% 
44% 

56% 

22% 

33% 

0% 

33% 
9 

63% 
50% 

25% 

50% 

25% 

38% 

25% 
8 

Implementers 

SEP 
Holders 

WIPO Arbitration and Mediation Center 
An independent EU body designated to conduct this function 
(the future) Patent Mediation and Arbitration Centre of the Unified Patent Court 
The  International  Court  of  Arbitration  of  the  International  Chamber  of  Commerce 
(“ICC”) 
An ad hoc arbitration from a list of impartial arbitrators endorsed by a public authority  25% 
19% 
The London Court of International Arbitration (“LCIA”) 
25% 
Other (please specify) 
16 
No. of replies 

69% 
56% 
44% 
31% 

43% 
21% 
43% 
64% 

7% 
29% 
14% 
14 

Note: Implementer: those who agreed with Q2 and disagreed, were neutral or had no opinion on Q3; Holder: those who disagreed, 
were neutral or had no opinion on Q2 and agreed with Q3; multiple answers possible 

WIPO Arbitration and Mediation Center 
(the future) Patent Mediation and Arbitration Centre of the Unified Patent Court 

EU 

63% 
54% 

non-EU 

42% 
25% 

241 

 
 
 
 
 
EU 

non-EU 

The  International  Court  of  Arbitration  of  the  International  Chamber  of  Commerce 
(“ICC”) 
An independent EU body designated to conduct this function 
The London Court of International Arbitration (“LCIA”) 
An ad hoc arbitration from a list of impartial arbitrators endorsed by a public authority  4% 
8% 
Other (please specify) 
24 
No. of replies 

46% 
21% 

50% 

42% 

17% 
42% 
8% 
50% 
12 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; multiple answers possible 

Summary of comments 

The majority of respondents find that any existing arbitration body agreed to by both parties should 
provide a credible FRAND assessment. A credible independent arbitration body for making FRAND 
assessments should have substantial experience handling large, complex, international disputes. In 
general,  to  maintain  equity  in  the  process,  arbitration  bodies  that  are  independent  and  non-
governmental will generally be preferable to bodies that are affiliated with national or multi-national 
governmental  bodies.  Costs  should  be  affordable  to  SMEs.  Some  respondents  caution  against 
recommending  or  designating  any  particular  arbitration  body  as  one  that  must  be  used  for  SEP 
licensing disputes. Parties should be able to voluntarily choose arbitration bodies based on their needs 
and common agreement.  

For most respondents  ICC and LCIA meet  the important  qualifications. The  ICC and  LCIA have 
extensive experience in dealing with large, complex, commercial disputes. As such, they presently 
stand as  the most credible bodies (in the above list) for FRAND disputes, which are  functionally 
commercial in nature. Depending on the parties and issues, these potentially could include WIPO, 
and others, such as JAMS or ICDR. Some respondents show preference for WIPO as it is specialized 
in IP and technology disputes. The Singapore International Arbitration Centre (“SIAC”), the Hong 
Kong International Arbitration Centre (“HKIAC”), and the International Arbitration Center in Tokyo 
(“IACT”) have also been mentioned. The qualities of the arbitrators are highly critical for addressing 
SEP licensing disputes through arbitration.  

One respondent indicated that the WIPO Arbitration and Mediation Centre would offer a platform 
specifically  tailored  for  FRAND  disputes  giving  parties  leeway  to  shape  the  procedure  and  even 
avails  a  database  of  more  than  2000  neutral  experts  for  parties  to  choose  from.  Regarding 
incentivising  arbitration,  there  would  be  a  government-led  initiative  in  the  US  i.e.  Protecting 
American  Innovation  and  Development  Bill  of  2021,  seeking  to  formalise  an  approach  where  a 
refusal to arbitrate could be regarded as unwillingness. 

One respondent argues that members of SDOs, either in disputes between themselves or in disputes 
with third parties like implementers, should be required to resort to ADR mechanisms prior to any 
court litigation. For example, a “board of experts” could be established at the SDO level. Some SDOs 
have introduced an obligation to use arbitration in their IPR policies. The Geneva based DVB (Digital 
Video Broadcasting Group) has had such a policy in place for close to 30 years. To date it has never 
been used.  

Other  respondents  do  not  consider  SDOs  as  a  suitable  body  to  resolve  this  kind  of  commercial 
disputes.  Not  all  parties  to  a  licensing  negotiation  are  members  of  SDOs.  Furthermore,  access  to 
courts is a fundamental right (Article 47 EU Charter) and needs to remain available.  

Some respondents argue that expert boards may be better positioned to evaluate a FRAND value for 
a licence than courts since finding a FRAND value for a licence is an economic rather than a legal 

242 

 
 
matter. Such expert panels can quickly and effectively provide a reasoned assessment without being 
bound by requests for evidence.  

Other respondents note that ad hoc arbitration is unrealistic given the already existing difficulty of 
parties  agreeing  the  terms  of  arbitration  under  the  rules  of  a  recognized  arbitration  institute. 
Nevertheless,  a  public  list  of  impartial  arbitrators  with  experience  in  FRAND  disputes  would  be 
useful and could be used for selecting arbitrators by existing arbitration institutes or the parties to the 
proceedings. 

Q56. What would be appropriate procedural rules for arbitration of FRAND disputes? 

All 

Compa-
nies 

Associations
/trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

ICC  Rules  of  Arbitration  of  the  International  Court  of 
Arbitration 
The rules of the WIPO Arbitration and Mediation Center 
The rules agreed by the parties ad hoc 
The FRAND ADR case management guidelines proposed 
by the Munich IP Dispute Resolution Forum 
United Nations Commission on International Trade Law 
(“UNCITRAL”) Arbitration Rules 
Other (please specify) 
No. of replies 

47% 

48% 

50% 

47% 
37% 
21% 

48% 
40% 
24% 

25% 
50% 
0% 

16% 

12% 

0% 

33% 
43 

32% 
25 

25% 
4 

Note: multiple answers possible 

38% 

50% 
25% 
25% 

25% 

50% 
8 

50% 

50% 
33% 
17% 

33% 

17% 
6 

Implementers 

SEP 
Holders 

The rules agreed by the parties ad hoc 
The rules of the WIPO Arbitration and Mediation Center 
ICC Rules of Arbitration of the International Court of Arbitration 
The FRAND ADR case management guidelines proposed by the Munich IP Dispute 
Resolution Forum 
United Nations Commission on International Trade Law (“UNCITRAL”) Arbitration 
Rules 
Other (please specify) 
No. of replies 

63% 
47% 
37% 
21% 

16% 

32% 
19 

33% 
25% 
58% 
8% 

0% 

25% 
12 

Note: Implementer: those who agreed with Q2 and disagreed, were neutral or had no opinion on Q3; Holder: those who disagreed, 
were neutral or had no opinion on Q2 and agreed with Q3; multiple answers possible 

The rules of the WIPO Arbitration and Mediation Center 
ICC Rules of Arbitration of the International Court of Arbitration 
The rules agreed by the parties ad hoc 
The FRAND ADR case management guidelines proposed by the Munich IP Dispute 
Resolution Forum 
United Nations Commission on International Trade Law (“UNCITRAL”) Arbitration 
Rules 
Other (please specify) 
No. of replies 

EU 

50% 
46% 
42% 
25% 

8% 

21% 
24 

non-EU 

38% 
46% 
31% 
15% 

23% 

62% 
13 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; multiple answers possible 

Summary of comments 

Many respondents suggested ICC or LCIA (even though it was not included in the list) as preferred 
rules in this type of context (and WIPO, if WIPO is used). Some respondents even suggested that the 
Commission should make guidelines for these types of litigations. Also, one respondent highlighted 

243 

 
 
 
 
 
that  as  SEPs  are  more  widely  used  within  vertical  markets  new  arbitration  bodies  with  particular 
sector expertise and appropriate procedural rules may come into being. Another respondent replied 
that if the Commission decides to have independent expert boards they should be hosted by existing 
institutions (like WIPO, EUIPO etc.) and the experts appointed in such cases should preferably be 
licensing experts and economists. 

Other respondents mean that the biggest freedom possible should be allowed for the parties. When 
both parties agree to make use of arbitration, they should remain free to agree between themselves 
on the most appropriate arbitration body and also related procedural rules for their purpose. Still, it 
would be important for those rules not to shortcut validity or essentiality assessments. 

Most  respondents  deem  it  crucial  that  whatever  arbitration  rules  are  used  (WIPO,  ICC,  LCIA, 
UNCITRAL etc.), the procedures established by the tribunal for the specific FRAND dispute at hand 
allow for detailed consideration of the merits of the IP at issue, provide sufficient opportunity for 
discovery, and allow each party a reasonable opportunity to present the arguments and evidence it 
deems relevant to the tribunal’s assessment. 

Q57. How could arbitration be incentivised for making a FRAND assessment?  

“Agree and strongly agree” answers only 

All 

Compa-
nies 

Associa-
tions/ 
trade 
union 

Academia/ 
Authorities
/NGO 
/other 

Citizens 

Create a list of trusted arbitrators 
Consider  agreement  to  arbitrate  and  to  accept  outcome  of 
arbitrator’s determination of royalty rate as an indication that the 
party is “willing” to license 
Consider  agreement  to  arbitrate  and  to  accept  outcome  of 
arbitrator’s determination of royalty rate as an indication that the 
party is “willing” to license but explicitly providing for a review 
of any such FRAND assessment, if a court later finds some of 
the patents non-essential or invalid. 
SDOs to introduce such an obligation to use arbitration in their 
IPR policies 
No. of replies* 

48% 
44% 

46% 
38% 

33% 
17% 

44% 
67% 

71% 
63% 

27% 

21% 

17% 

75% 

13% 

18% 

17% 

14% 

20% 

25% 

50-55  28-30 

6-7 

8-10 

Note:  “Other 
*range, different number of replies per question 

specify)”  not 

(please 

included 

in 

the 

table;  “No  opinion”  answers  not 

taken 

“Agree and strongly agree” answers only 

Implementers 

Create a list of trusted arbitrators 
Consider agreement to arbitrate and to accept outcome of arbitrator’s determination of 
royalty rate as an indication that the party is “willing” to license 
Consider agreement to arbitrate and to accept outcome of arbitrator’s determination of 
royalty  rate  as  an  indication  that  the  party  is  “willing”  to  license  but  explicitly 
providing for a review of any such FRAND assessment, if a court later finds some of 
the patents non-essential or invalid. 
SDOs to introduce such an obligation to use arbitration in their IPR policies 
No. of replies* 

25% 
18% 

14% 

13% 
20-23 

7% 
14-16 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “Other (please specify)” not included in the table; “No opinion” 
answers not taken into account 
*range, different number of replies per question 

“Agree and strongly agree” answers only 

Create a list of trusted arbitrators 
Consider agreement to arbitrate and to accept outcome of arbitrator’s determination of 
royalty rate as an indication that the party is “willing” to license 

EU 

50% 
29% 

non-EU 

35% 
63% 

244 

7-8 
into  account 

SEP 
Holders 

81% 
50% 

13% 

 
 
“Agree and strongly agree” answers only 

Consider agreement to arbitrate and to accept outcome of arbitrator’s determination of 
royalty  rate  as  an  indication  that  the  party  is  “willing”  to  license  but  explicitly 
providing for a review of any such FRAND assessment, if a court later finds some of 
the patents non-essential or invalid. 
SDOs to introduce such an obligation to use arbitration in their IPR policies 
No. of replies* 

EU 

25% 

non-EU 

40% 

10% 
26-30 

29% 
15-17 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent. “Other (please specify)” not included in the 
table; “No opinion” answers not taken into account 
*range, different number of replies per question 

“All answers” 

Agree  Neutral  Disagree  No. 

Create a list of trusted arbitrators 
Consider  agreement  to  arbitrate  and  to  accept  outcome  of  arbitrator’s 
determination  of  royalty  rate  as  an  indication  that  the  party  is  “willing”  to 
license 
Consider  agreement  to  arbitrate  and  to  accept  outcome  of  arbitrator’s 
determination  of  royalty  rate  as  an  indication  that  the  party  is  “willing”  to 
license but explicitly providing for a review of any such FRAND assessment, 
if a court later finds some of the patents non-essential or invalid. 
SDOs to introduce such an obligation to use arbitration in their IPR policies 
Other (please specify) 

18% 
100%  0% 
Note: Agree composes of “Agree” and “Strongly agree”; “No opinion” answers not taken into account 

20% 

48% 
44% 

20% 
21% 

32% 
35% 

50 
52 

27% 

18% 

55% 

51 

62% 
0% 

55 
4 

“Companies answers” 

Agree  Neutral  Disagree  No. 

Create a list of trusted arbitrators 
Consider  agreement  to  arbitrate  and  to  accept  outcome  of  arbitrator’s 
determination  of  royalty  rate  as  an  indication  that  the  party  is  “willing”  to 
license 
Consider  agreement  to  arbitrate  and  to  accept  outcome  of  arbitrator’s 
determination  of  royalty  rate  as  an  indication  that  the  party  is  “willing”  to 
license but explicitly providing for a review of any such FRAND assessment, 
if a court later finds some of the patents non-essential or invalid. 
SDOs to introduce such an obligation to use arbitration in their IPR policies 
Other (please specify) 

46% 
38% 

21% 
21% 

32% 
41% 

28 
29 

21% 

10% 

69% 

29 

17% 

20% 

63% 

30 
0 

Note: Agree composes of “Agree” and “Strongly agree”; “No opinion” answers not taken into account 

Summary of comments 

Some respondents find that creating incentives for parties to resolve differences in arbitration could 
have  positive  effects.  If  the  methodology  of  FRAND  assessment  is  publicly  available  it  may 
incentivise  arbitration.  Moreover,  arbitration  that  is  known  to  be  swift,  neutral,  transparent, 
reasonably priced and of high quality would incentivise its use and speed up licensing agreements. 
Arbitration can be effective to achieve global SEP licensing resolution. Some respondents find that 
not only incentivising arbitration may be appropriate but that also an offer or refusal to arbitrate could 
be taken into account in assessing willingness to conclude a license. However, this would apply if 
the agreement to arbitrate is reasonable and complete and if there is an agreement to take a license at 
the terms decided by such arbitration. Some respondents observed that otherwise arbitration might 
lead to delay in negotiations. 

However, other respondents  reject  the idea of  mandating arbitration. ADR should be incentivised 
with caution, avoiding penalising a refusal to agree to arbitration as an indication of unwillingness or 
unreasonableness,  since  parties  should  retain  the  right  to  seek  redress  in  courts.  Moreover,  the 
willingness  to  enter  a  license  agreement  must  be  explicitly  declared.  Mandatory  arbitration  may 
circumvent built-in safeguards against a potential licensee having to license non-essential, invalid or 
non-infringed patents, in circumstances where very few litigated patents meet all these criteria. Some 

245 

 
 
 
 
respondents  indicate  that  mandatory  arbitration  may  affect  the  fundamental  right  of  access  to 
justice/court and the national jurisdictions to rule over national, public rights associated with each 
patent. They emphasise that parties should be able to choose voluntarily arbitration and arbitration 
bodies based on their needs and common agreement, and prescription of any particular process may 
be inappropriate.  

Some  respondents  are  against  incentivising  arbitration  or  ADR  in  general  as  well  as  against 
recommending  or  designating  any  particular  arbitration  body  as  one  that  must  be  used  for  SEP 
licensing disputes. It is argued that it may be contributing to reducing transparency and predictability 
of outcomes. 

Some respondents argue that an arbitration award that is subject to review based on future invalidity 
or non-infringement would be appropriate only in portfolios involving few patents and even then, if 
the arbitrators are obligated to presume that all of the patents are proven valid and infringed in making 
their award. Otherwise, a reassessment of the award would negate the arbitration at significant cost.  

Q58. What transparency requirements should be attached to arbitration on FRAND assessments? 

“Agree and strongly agree” answers only 

All 

Compa-
nies 

Associa-
tions/ 
trade 
union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

The arbitral tribunal shall disclose the methodology used for the 
calculation of a FRAND rate 
Information  on  specific  licensing  rates  but  no  third-party 
confidential information or other party confidential information 
shall be disclosed 
Information on the name of the parties and patent registration and 
application numbers 
No. of replies* 

86% 

77% 

100% 

89% 

66% 

56% 

86% 

78% 

100
% 
75% 

58% 

52% 

71% 

56% 

75% 

55-56  31-32 

7-8 

9 

Note:  “Other 
*range, different number of replies per question 

specify)”  not 

(please 

included 

in 

the 

table;  “No  opinion”  answers  not 

taken 

“Agree and strongly agree” answers only 

Implementers 

The  arbitral  tribunal  shall  disclose  the  methodology  used  for  the  calculation  of  a 
FRAND rate 
Information on specific licensing rates but no third-party confidential information or 
other party confidential information shall be disclosed 
Information on the name of the parties and patent registration and application numbers  75% 
24-25 
No. of replies* 

100% 

92% 

8 
into  account 

SEP 
Holders 

73% 

29% 

21% 
14-15 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “Other (please specify)” not included in the table; “No opinion” 
answers not taken into account 
*range, different number of replies per question 

“Agree and strongly agree” answers only 

EU 

non-EU 

The  arbitral  tribunal  shall  disclose  the  methodology  used  for  the  calculation  of  a 
FRAND rate 
Information on specific licensing rates but no third-party confidential information or 
other party confidential information shall be disclosed 
Information on the name of the parties and patent registration and application numbers  50% 
30-31 
No. of replies* 

83% 

65% 

83% 

65% 

65% 
17-18 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; “Other (please specify)” not included in the 
table; “No opinion” answers not taken into account 
*range, different number of replies per question 

246 

 
 
“All answers” 

Agree  Neutral  Disagree  No. 

The arbitral tribunal shall disclose the methodology used for the calculation of 
a FRAND rate 
Information  on  specific  licensing  rates  but  no  third  party  confidential 
information or other party confidential information shall be disclosed 
Information on the name of the parties and patent registration and application 
numbers 
Other (please specify) 

86% 

5% 

9% 

66% 

2% 

32% 

58% 

15% 

27% 

86% 

0% 

14% 

56 

56 

55 

7 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

“Companies answers” 

Agree  Neutral  Disagree  No. 

The arbitral tribunal shall disclose the methodology used for the calculation of 
a FRAND rate 
Information  on  specific  licensing  rates  but  no  third  party  confidential 
information or other party confidential information shall be disclosed 
Information on the name of the parties and patent registration and application 
numbers 
Other (please specify) 

77% 

10% 

13% 

56% 

3% 

41% 

52% 

23% 

26% 

100%  0% 

0% 

31 

32 

31 

1 

Note: Agree composes of “Agree” and “Strongly agree”; Disagree composes of “Disagree” and “Strongly disagree”; “No opinion” 
answers not taken into account 

Summary of comments 

Some respondents find that it is in public interest to disclose all the details of FRAND arbitration and 
publish  awards  related  to  SEPs,  especially  regarding  royalty  rates.  Every  decision  increases  the 
transparency of the SEP landscape and provides benchmarks for potential licensees to assess whether 
a given licence offer is FRAND. The new framework for SEPs should ensure that data on essentiality, 
validity, and FRAND-ness of licences continue to enter the public domain also when disputes are 
adjudicated by arbitrators. 

The  majority  of  respondents  find  that  transparency  in  an  arbitration  body’s  approach  and 
methodology  would  be  important  to  contribute  to  a  broader  understanding  of  FRAND  terms  and 
could aid in comparability exercises. SEP licensing information should be transparent, but at the same 
time, confidentiality is an important advantage of arbitration which should be preserved to strike a 
balance.   

Some  respondents  indicate,  however,  that  disclosure  of  specific  licensing  rates  is  unlikely  to  be 
helpful  without  confidential  information,  as  various  confidential  factors  will  likely  be  taken  into 
account in determining the rates; thereby limiting the usefulness of this disclosure to those without 
access  to  the  confidential  information  (such  as  commercial  information  of  sensitive  nature).  Any 
obligation to disclose rates would make arbitration less attractive and thereby discourage arbitration 
as a method to resolve FRAND disputes. Disclosure of royalty rates or lump sum royalty payments 
may not be sufficient as those can be incorrectly interpreted if relevant aspects of the decision are not 
also considered in analysing the resulting award. 

There  should  not  be  transparency  requirements  on  arbitration  unless  arbitration  is  mandatory.  If 
arbitration  is  mandatory,  then  transparency  obligations  modelled  on  those  of  courts  (i.e.,  general 
public  disclosure  with  an  opportunity  to  protect  confidential  information)  may  be  appropriate. 
However, mandatory application of arbitration rules undermines the broadly accepted public legal 
system. 

247 

 
 
Q59. Should it be possible to request authorities to “report” on imports of unlicensed products, if 
some  conditions  are  fulfilled?365  This  does  not  concern  detentions  of  imports  under  the  regular 
intellectual property rights’ enforcement procedures by customs.  

Yes 
No 
Depends 
explain) 
No. of replies 

(please 

All 

31% 
53% 
16% 

49 

Companies 

Associations/ 
trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

27% 
57% 
17% 

30 

14% 
71% 
14% 

7 

43% 
43% 
14% 

7 

60% 
20% 
20% 

5 

Note: “No opinion” answers not taken into account 

Yes 
No 
Depends (please explain) 
No. of replies 

Implementers 

SEP 
Holders 

8% 
88% 
4% 
24 

53% 
13% 
33% 
15 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3.  

Yes 
No 
Depends (please explain) 
No. of replies 

EU 

24% 
55% 
21% 
29 

non-EU 

33% 
60% 
7% 
15 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent.  

Summary of comments 

Some respondents  find this  solution somewhat  useful, as they would provide an indication of the 
scope of the ongoing infringement. In theory this could, with the right framework and procedures, 
help identify imports of unlicensed products. Such a measure could be a useful complement to the 
licensors’  own  efforts  in  screening  the  market  for  unlicensed  products  and  would  be  helpful  in 
ensuring a level playing field for good-faith implementers. Some note that if licensing takes place at 
end-product level, it should be ensured that the import of unlicensed components is not reported.  

The majority of respondents find that authorities should not be entrusted with reporting on imports 
of  unlicensed  products.  Such  information  can  already  be  obtained  through  a  court  proceeding 
adjudicating  the  merits  with  appropriate  safeguards  in  place.  The  European  Commission  should 
promote the protection of intellectual property, the licensing thereof and a global level-playing-field 
for (European) implementers who have taken licenses. However, a list of unlicensed products being 
imported into the European Union would require a detailed legal and technical analysis to determine 
whether  a  product  is  “unlicensed”  or  counterfeit.  The  verification  by  authorities  that  unlicensed 
products  are  being  imported  may  be  more  difficult  than  proving  counterfeit  products.  It  is 
questionable  whether  public  authorities,  such  as  custom  offices,  are  in  a  position  to  determine 
whether a given product implements a particular SEP, and whether this SEP is in fact essential and 
valid.  It  also  would  require  significant  administrative  effort  not  only  by  authorities  but  also  by 

365 Such conditions could for example be a proof that a SEP holder asked an implementer to take a licence, provided the 
necessary information on the SEPs concerned and its FRAND terms and conditions and the implementer did not respond. 
248 

 
 
 
 
                                                 
importers that would ultimately negate any potential benefit of such an endeavour. It is also unclear 
why such reporting would be reserved to SEPs as opposed to other patents. 

Other respondents caution that it would not be clear how this would work or how it would not be 
open  to  abuse  for  obtaining  commercially  sensitive  information  on  imports.  It  would  be  further 
unclear who would determine if a license offer is FRAND compliant and how the FRAND terms and 
conditions  would  be  judged.  Further,  since  product  distribution  information  is  generally 
commercially available, the proposed report may not meaningfully provide additional information to 
SEP holders or improve SEP licensing. The only conceivable purpose of such reports could be to 
stop such imports, i.e. to effectively enforce an injunction. That should only ever be possible in the 
context of legitimately enforcing an injunction issued by a court. Additionally, there would be no 
justification for treating SEPs differently from non-SEPs in this respect. 

Some  respondents  also  warn  that  such  reporting  should  not  include  the  right  to  seize  goods.  To 
minimize the risk of a company being unfairly targeted by such reporting and to encourage a more 
balanced playing field, maybe the “reports” could also be shared in some way with the unlicensed 
implementer (if it desires to receive such information) to demonstrate that others are licensed. 

Respondents  note  that  Regulation  No  608/2013  concerning  customs  enforcement  of  intellectual 
property  rights  currently  entitles  customs  authorities  to  detain  unlicensed  products.  It  is  therefore 
unclear what this proposal envisages in addition to current EU rules. Although border seizures follow 
specific rules that take into consideration both the implementer’s and SEP holder’s interests, it has 
been observed that border detentions would de facto be injunctions enforced by customs authorities, 
and as such highly problematic when enforced in relation to SEPs for which a FRAND commitment 
has been provided.  

It is unclear to what extent a report might encourage good licensing behaviour. Another possibility 
could be to create a parallel route for enforcement through an administrative measure such as an EU-
wide customs embargo, based on an administrative finding of essentiality or a national court finding 
of infringement. 

Q60. Would a positive list of licensed implementers be important? 

All 

43% 
19% 
38% 
58 

Companies 

Associations/ 
trade union 

46% 
20% 
34% 
35 

0% 
33% 
67% 
6 

Academia/ 
Authorities/ 
NGO/other 

56% 
11% 
33% 
9 

Citizens 

50% 
13% 
38% 
8 

Important 
Neutral 
Not important 
No. of replies 

Note:  Important  composes  of  “Very  important”  and  “Important”;  Not  important  composes  of  “Not  so  important”  and  “Not 
important”; 

Important 
Neutral 
Not important 
No. of replies 

Implementers 

SEP 
Holders 

35% 
15% 
50% 
26 

36% 
29% 
36% 
14 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3.  

Important 
Neutral 

249 

EU 

41% 
19% 

non-EU 

44% 
22% 

 
 
 
 
 
Not important 
No. of replies 

EU 

41% 
32 

non-EU 

33% 
18 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent.  

Summary of comments 

Some respondents support the idea of a positive list. Such a list would enable to select only those 
suppliers  having  a  license,  thus  reducing  the  exposure  to  patent-related  risk.  It  may  also  identify 
competitors  that  are  not  licensed,  incentivize  other  implementers  to  take  a  license  as  it  would  be 
public that they are unlicensed, helping to ensure that no company is at a relative disadvantage. Such 
a list would enhance the reputation of the listed companies for respecting IP rights and making clear 
to  more  reluctant  potential  licensees  that  they  cannot  resist  licensing  on  the  basis  that  their 
competitors are not licensed. It would also help authorities to observe if implementers are holding 
out. 

It was also mentioned that such a list would enable SMEs and start-ups to determine whether or not 
taking a license would be a competitive advantage or disadvantage. Such list would help to determine 
which portfolios should be regarded as established and needed in the industry. 

Some respondents  take a more cautious  approach, arguing that a list  would help  licensing parties 
determine a risk of double dipping. It is also observed that such lists are often provided by patent 
pools,  unless  both  parties  agreed  otherwise.  In  the  context  of  a  patent  pool,  it  would  be  easy  to 
generate such a list of licensed implementers because the licensing point is identical. In that case, 
having a list of licensed implementers can help SEP holders and good-faith implementers to monitor 
the licensing situation to ensure a levelled playing field in the market. For bilateral licenses, on the 
other hand, it would be more difficult as licensees tend to not want to disclose their license status. 
This may be so because having such a list would incentivize more SEP holders to initiate license 
discussions with them.  

Some respondent’s question the basis of a positive list. It is unclear whether the positive list should 
be prepared by the SEP holder or the implementer and what the aim of such list should be. And even 
if these problems were resolved, question arise, whether this list would be constituted voluntarily or 
mandatory. The other question is  whether such a list  would be compatible with  the NDAs put  in 
place. 

Some  respondents  note  that  there  is  also  a  question  about  the  information  needed  to  properly 
understand  such  a  list  (e.g.,  licensed  product  scope,  licensed  patent  scope,  licensed  geographical 
scope, current or expired license, etc.). They also explain that in theory this may be helpful, however 
in practise difficult to keep up to date and costly to maintain. The focus should be on reducing the 
complexity and barriers to licensing encourage the use of SEPs. 

Some note that it could be useful if such a list was created for "licensed products", instead of "licensed 
implementers".  

Q61. If infringement of SEP is confirmed, the court may (i) order an injunction for the future and (ii) 
grant damages for the past. The injunction for the future would in principle lead the infringer to take 
a licence, if it wants to continue to sell its products. In that context, should the court be empowered 
(under certain conditions – see following question) to order the parties to submit any disagreement 
on the FRAND terms and conditions to arbitration.  

250 

 
 
 
Yes 
No 
Depends 
explain) 
No. of replies 

(please 

All 

17% 
68% 
15% 

53 

Companies 

Associations/ 
trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

18% 
74% 
9% 

34 

0% 
100% 
0% 

6 

25% 
38% 
38% 

8 

20% 
40% 
40% 

5 

Note: “No opinion” answers not taken into account 

Yes 
No 
Depends (please explain) 
No. of replies 

Implementers 

SEP 
Holders 

16% 
72% 
12% 
25 

14% 
71% 
14% 
14 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “No opinion” answers not taken into account 

Yes 
No 
Depends (please explain) 
No. of replies 

EU 

13% 
77% 
10% 
30 

non-EU 

22% 
61% 
17% 
18 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; “No opinion” answers not taken into account 

Summary of comments 

The majority of respondents find that courts should not be able to order the parties to submit any 
disagreement on the FRAND terms and conditions to arbitration under any conditions. Arbitration 
should  remain  voluntarily  and  only  upon  a  mutual  agreement  of  the  parties  concerned.  When  an 
injunction  is  obtained,  arbitration  or  negotiation  under  the  threat  of  enforcement  of  an  injunction 
raises issues of fairness. 

Courts should not be able to order the parties to submit disagreements on FRAND terms to arbitration, 
as that would effectively preclude access to the court. Parties remain free to resolve their dispute by 
the  court.  However,  if  either  party  does  not  accept  arbitration  of  FRAND  terms  during  licensing 
negotiations, such may be an indication of bad faith with corresponding consequences under Huawei 
v ZTE. 

It  has  also  been  argued  that  the  question  of  "empowering  the  court  to  submit  a  disagreement  to 
arbitration"  is  well  beyond  the  remit  of  the  European  Commission's  competencies.  For  some 
respondents,  arbitration  can  be  useful  when  both  parties  are  acting  in  good  faith  with  a  view  to 
conclude  a license  agreement and only  a specific, limited set  of open items  remain.  Some  find it 
confusing why arbitration would be a useful tool in a situation where a court is already adjudicating 
a case. Furthermore, this idea raises many potential issues (legal basis, right of access to courts, what 
arbitration rules, confidentiality to name just a few) and does not seem to solve a specific problem. 
Furthermore, ADR is not useful when parties disagree on virtually all terms and conditions. Finally, 
the  process  whereby  both  courts  and  arbitration  panels  have  to  work  on  the  same  case,  would 
substantially increase the cost of a FRAND adjudication. 

Generally,  if  the  court  is  issuing  an  injunction,  such  an  implementer  has  already  been  deemed 
unwilling,  which  also  presupposes  that  the  SEP-holder’s  offer  was  FRAND.  Thus,  a  further 
arbitration  would  be  a  waste  of  resources.  It  was  observed  that  referring  to  arbitration  at  least  to 

251 

 
 
 
 
determine FRAND royalties would be an unreasonable burden for the SEP holder, and further hold-
out tactics.  

It has been argued on the other hand that the possibility for national courts to refer disputes regarding 
FRAND-terms  to  arbitration  could  alleviate  this  problem  and  help  to  overcome  the  reluctance  of 
some national courts to review/set FRAND-terms themselves. 

Some respondents propose that the court should not be obliged to refer the parties to arbitration but 
should be able to refer them to a state mediation body staffed with independent experts. This body 
should not be allowed to make a binding decision on the dispute but should be required to issue a 
vote in favour of an agreement that is justified in the same way as an expert opinion. Then there is a 
good chance that the parties will agree to it. If they do not agree, the vote can be used like an expert 
opinion  in  the  proceedings  to  be  continued.  This  would  be  similar  to  the  procedure  before  the 
arbitration boards at the German Patent and Trademark Office for employee inventor compensation 
and for copyright compensation under the German Collecting Societies Act. 

Q62 Under what conditions should the court be able to order the parties to submit any disagreement 
on the FRAND terms and conditions to arbitration? 

Summary of comments 

Respondents argue that Huawei v ZTE provides clarity on when injunctions are available to SEP 
holders against unwilling licensees. It has also been referred to the CJEU decision in Phoenix Contact 
v  Harting  on  the  availability  of  preliminary  injunctions  under  EU  law.  Issues  with  the  TRIPs 
Agreement EU Charter of fundamental Rights have been raised. Extra procedural layers do not make 
an efficient SEP licensing ecosystem. A SEP holder has a right to access the courts. The parties can, 
during court proceedings, agree to mediation, arbitration, or to conclude a commercial agreement. 

As with the previous question almost all respondents indicate that neither party in litigation should 
be forced into arbitration. Some of the respondents reiterate the lack of clarity of the exact problem 
that such a dual procedure would solve and how the many legal challenges attached to this exercise 
could  be  addressed.  Such  a  measure  would  deprive  the  judicial  system  of  its  function  and,  in 
particular, would deprive the parties of the availability of remedies. It is not desirable to make private 
justice compulsory; it must remain optional and at the choice of the parties. 

Respondents that find a referral to arbitration not per se excluded observe the following: A competent 
court should be able to take such an action if there is reasonable doubt about FRAND-ness and a lack 
of clarity about the license agreement offered by the SEP holder. Obviously, arbitration needs to be 
done under NDA. The decision made in arbitration should also be legally binding on the parties to 
truly end the dispute. The first condition should be that the court has determined that the patent in 
question is a true SEP and that it is valid. The second condition should be that parties at least have 
undertaken reasonably efforts to reach an agreement about a FRAND license, but that a certain gap 
remained which could have not been solved in the litigation process. 

It has been also held that once a SEP holder has obtained an injunction, its bargaining power increases 
significantly, and neutral arbitrators could be a means to focus on the value of the SEPs rather than 
determining royalties based on the enhanced bargaining power from the injunction. 

Some respondents point out that some countries already have the discretion or even an obligation to 
offer or order mediation at certain points in the litigation process. Given the consensual nature of 
mediation  and  associated  costs,  inviting  the  parties  to  consider  mediation  may  be  viewed  as  the 
preferred approach. However, what is key is that any court facilitated mediation takes place under 

252 

 
 
the guidance of a neutral expert FRAND mediator, in order to maximize the prospect for a conclusive 
outcome or an effective narrowing of the issues. 

Q63. If a SEP holder refuses to make a FRAND offer (for whatever reason), should the implementer 
be empowered to request a court to rule on the legality of the refusal? 

Yes 
No 
Depends 
explain) 
No. of replies 

(please 

All 

75% 
14% 
11% 

57 

Companies 

Associations/ 
trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

63% 
22% 
16% 

32 

86% 
14% 
0% 

7 

100% 
0% 
0% 

9 

89% 
0% 
11% 

9 

Note: “No opinion” answers not taken into account 

Yes 
No 
Depends (please explain) 
No. of replies 

Implementers 

SEP 
Holders 

96% 
4% 
0% 
28 

33% 
40% 
27% 
15 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “No opinion” answers not taken into account 

Yes 
No 
Depends (please explain) 
No. of replies 

EU 

75% 
22% 
3% 
32 

non-EU 

69% 
6% 
25% 
16 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; “No opinion” answers not taken into account 

Summary of comments 

Many respondents confirm the possibility pointing out that this would be the current law.  

Some  respondents  observe  that  FRAND  commitment  requires  SEP  holders  to  make  a  FRAND 
licence offer to any willing licensee, regardless of its position in the supply chain or any other feature 
of a licensee. It is argued that the rules of most SSOs do not include any qualification of potential 
licensees or an explicit (or implicit) limitation to the catalogue of parties that can benefit from the 
FRAND  commitment.  At  the  contractual  level,  the  FRAND  commitment  raises  the  legitimate 
expectation on part of third parties that a SEP holder will in fact grant licences on FRAND terms. At 
the  competition  law  level,  refusal  to  license  SEPs  may  violate  Articles  101  and  102  TFEU  (see 
Huawei vs. ZTE, para. 54). 

Other respondents hold that the fundamental right of access to justice in the EU does not imply that 
there is a positive obligation to offer a license to all implementers. Courts should be empowered to 
rule  on  cases  where  a  SEP  holder  refuses  to  offer  a  licence  and  determine  if  the  SEP  owners’ 
behaviour is in line with its FRAND commitment. Courts should have the discretion and latitude to 
determine whether a refusal to offer a licence is legitimate. A user  of the standard should also be 
empowered  to  ask  the  court  for  a  ruling  that  the  SEP  holder  must  agree  to  a  specific  licensing 
agreement as found to be FRAND by the court. But it also been stated that where a patent holder is 
not asserting its SEPs against a party, there is no harm from the refusal to make a FRAND offer to 
that party. 

253 

 
 
 
 
 
Some respondents argue that the new framework for SEPs should expressively confirm that the SEP 
implementer  has  the  right  to  request  a  court  to  rule  on  the  legality  of  the  refusal  and  grant  a 
compulsory licence. 

One respondent cites § 315 of the German Civil Code. Under this mechanism, a willing licensee may 
leave the actual license terms to be set by SEP holder and – unless the willing licensee agrees to the 
SEP holder’s suggestion – the terms would be finally determined by a court. This mechanism requires 
the consent of both parties but minimizes the dispute in comparison to “full” infringement litigation 
with a FRAND defence. It focuses the dispute on finding FRAND license terms, and it avoids the 
risk  of  an  injunction.  However,  each  party,  on  its  own,  should  be  able  to  file  an  action  for 
determination of FRAND license terms before a court. 

Q64. Would you agree that efficient SEP licensing would also foster innovations by implementers, 
including start-ups and SMEs? 

Yes 
No 
There is no direct link 
Other (please specify) 
No. of replies 

All 

66% 
5% 
15% 
15% 
61 

Companies 

Associations/ 
trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

61% 
8% 
11% 
19% 
36 

29% 
0% 
43% 
29% 
7 

89% 
0% 
11% 
0% 
9 

89% 
0% 
11% 
0% 
9 

Note: “No opinion” answers not taken into account 

Yes 
No 
There is no direct link 
Other (please specify) 
No. of replies 

Implementers 

SEP 
Holders 

70% 
4% 
7% 
19% 
27 

56% 
0% 
25% 
19% 
16 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “No opinion” answers not taken into account 

Yes 
No 
There is no direct link 
Other (please specify) 
No. of replies 

SME 

60% 
0% 
30% 
10% 
20 

Large 

63% 
9% 
6% 
22% 
32 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “No opinion” answers not taken into account 

Yes 
No 
There is no direct link 
Other (please specify) 
No. of replies 

EU 

70% 
3% 
15% 
12% 
33 

non-EU 

47% 
11% 
16% 
26% 
19 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; “No opinion” answers not taken into account 

Summary of comments 

Some respondents find that efficient licensing benefits SEP holders, both small and large, because it 
allows them to obtain a timely and fair compensation for contributing their inventions to the standard, 

254 

 
 
 
 
 
 
which in turn enables them to keep investing in R&D to develop new advanced technologies that will 
underpin  future  standards.  They  also  believe  that  efficient  licensing  also  helps  implementers,  by 
allowing  them  to  obtain  the  benefit  of  a  FRAND  agreement,  allowing  it  to  efficiently  allocate 
resources towards developing products and services that take advantages of the advanced features 
enabled by the standard. 

Some respondents clarify that "efficient" SEP licensing means license negotiations conducted in good 
faith, neither hold-up nor hold-out. Efficient licensing can also benefit from transparency regarding 
the essentiality of SEPs, the overall SEP landscape of the standard, and the respective shares of SEP 
holders. A framework for fair negotiation should be established, with which judicial enforcement can 
be avoided. For efficiency, standard licensing programs established close in time to the adoption of 
the standard and early formation of patent pools can also be beneficial.  

Many respondents also find that if the term ‘efficient SEP licensing’ means ‘efficient SEP licensing 
on FRAND terms’ at the single appropriate level in the value chain where the license is broad enough 
to encompass all actions throughout the value chain, it can help market uptake of a standard. It will 
provide assurance to market entrants that their investments will not be undermined by excessive and 
unfair  SEP  practices,  FRAND–  if  properly  applied  and  followed  –  can  incentivise  investment, 
innovation,  and  market  development,  especially  for  SMEs  or  start-ups.  However,  current  lack  of 
transparency  for  the  total  licensing  costs  for  a  particular  product  is  one  of  the  main  obstacles  in 
particular for start-ups and SMEs, to develop smart products. 

Some respondents demand more detailed rules on non-discrimination to improve the level playing 
field. Otherwise, SEP holders might seek to charge higher royalties from SMEs that happen to make 
more profit or are more prominent in the market, which would in effect penalise market success.  

A respondent explains that some of the various aspects which may create efficiencies are: (1) Any 
entity asking for a FRAND SEP license should get a FRAND offer. (2) Licensing upstream in the 
supply chain is usually more efficient than licensing downstream. (3) SEP holders who seek to create 
SEP licensing revenue should at an early stage publish their standard TCs including the FRAND rate. 
(4) Patent pools may facilitate efficient licensing, provided their rate is FRAND and published and 
the pool reaches a critical mass with respect to covered licensors and covered patents. (5) FRAND 
rates should be moderate to foster dissemination of the standard in many industries and applications. 
(6)  Essentiality  checks  conducted  by  an  independent  trusted  entity  can  enhance  transparency  and 
facilitate negotiations. (7) If set-up appropriately, licensing negotiation groups may facilitate efficient 
FRAND licensing. 

One respondent observes that European SMEs are not pursued for SEP licensing. In emerging IoT, 
SMEs are far more likely to develop software that needs no SEP licensing than make hardware like 
IoT modules that are mostly made in China and might be the target for SEP licensing.  

Q65. Would you agree that efficient SEP licensing would increase employment and keep a high level 
of competence in the EU? 

Yes 
No 
There is no direct link 
Other (please specify) 
No. of replies 

All 

65% 
3% 
17% 
15% 
60 

Companies 

Associations/ 
trade union 

Academia/ 
Authorities/ 
NGO/other 

62% 
6% 
15% 
18% 
34 

29% 
0% 
43% 
29% 
7 

255 

70% 
0% 
20% 
10% 
10 

Citizens 

100% 
0% 
0% 
0% 
9 

 
 
 
Note: “No opinion” answers not taken into account 

Yes 

No 
There is no direct link 
Other (please specify) 
No. of replies 

Implementers 

SEP 
Holders 

63% 

4% 
15% 
19% 
27 

56% 

0% 
25% 
19% 
16 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “No opinion” answers not taken into account 

Yes 
No 
There is no direct link 
Other (please specify) 
No. of replies 

EU 

58% 
3% 
24% 
15% 
33 

non-EU 

61% 
6% 
11% 
22% 
18 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; “No opinion” answers not taken into account 

Summary of comments 

The majority of respondents find that efficient licensing is essential for licensors and licensees to 
foster innovation. Innovation supports the introduction of entire classes of new products.  

Some respondents note that efficient SEP licensing promises to save transactions costs which, in turn, 
can be reinvested in research and development of new technologies, standardisation activities, as well 
as new applications and products using these standardised technologies. Efficient SEP licensing is a 
key  part  of  the  innovation  cycle  and  plays  an  important  role  in  stimulating  new  investments  and 
employment. 

Some respondents argue that cellular standards play a significant role for innovation and the creation 
of employment. If companies that contribute their best technology to a standard for the use by all are 
not  adequately  compensated  for  such  contributions  on  reasonable  terms,  then  the  system  is  not 
commercially viable. Whilst it is true that innovation occurs both in the standardisation context as 
well as in the implementation of the standards, fundamental research in the cellular industry very 
often takes place in the former. A robust IP and legal system that rewards invention and stops the bad 
faith behaviour has been mostly by implementers holding-out and forcing litigation would no doubt 
increase employment and maintain or increase the high levels of competence in the EU. 

Other respondents argue that a FRAND framework that ensures fair licensing and eliminates holdup 
would increase employment and keep a high level of competence in innovation in the EU. A narrow 
definition  of  efficiency  over  fairness  will  serve  the  narrow  interests  of  a  limited  number  of  SEP 
licensors that focus on monetizing cellular SEPs over the interests of a much broader constituency of 
companies that are interested in using standards to fuel innovation. 

Some respondents note that efficient SEP licensing is necessity for ensuring that the EU maintains 
its  leadership  in  manufacturing  after  its  transition  into  the  IoT.  The  SEP  licensing  framework  is 
outdated and sways in the direction of SEP holders. Transparency is a necessity for ensuring efficient 
licensing. The number of European SEP holders is decreasing year by year. More than every third 
5G declaration nowadays comes from a Chinese company. European manufacturing will suffer by 
facing foreign companies that are vertically integrated and can get cheaper access to IPR. European 
manufacturing industries dependent on the policies of foreign patent holders. 

256 

 
 
 
It has been underlined that he global app ecosystem, worth more than €1.5 trillion, is responsible for 
more than one million European jobs, and serves as a key driver of the €7 trillion IoT revolution. An 
efficient SEP licensing framework keeps SMEs and start-ups in business, and therefore, increases 
employment and keeps high levels of competence in the EU.  

Some respondents point to the fact the given the current shortage of microchips in many industries 
demonstrates, it is important to have manufacturing facilities located within the EU rather than being 
highly dependent from components manufactured in other regions. Therefore, it is important to build 
a robust, reliable FRAND licensing framework for SEPs in the EU in which users of the standard as 
licensees  can  trust  that  they  are  not  put  at  a  competitive  disadvantage  versus  SEP  users  in  other 
regions of the world. 

A  respondent  notes  that  most  SEP-related  disputes,  although  hidden  behind  the  argument  of 
“inefficiency,”  concern  the  distribution  of  rents  between  SEP  holders  and  implementers.  Shifting 
rents from SEP holders to implementers, or the other way around, is not going to expand the economy 
or increase the number of jobs.  

Finally, some respondents consider that it is unclear what the concept of “efficient” SEP licensing 
refers to. Without this notion being defined and specified, it is impossible to agree or disagree. 

Q66. Would efficient SEP licensing foster the EU’s transition to the green economy enabling projects 
related to, for example, smart manufacturing, smart grids and energy and smart mobility? 

Yes 
No 
There is no direct link 
Other (please specify) 
No. of replies 

All 

66% 
5% 
17% 
12% 
58 

Companies 

Associations/ 
trade union 

Academia/ 
Authorities/ 
NGO/other 

Citizens 

62% 
6% 
18% 
15% 
34 

29% 
0% 
43% 
29% 
7 

88% 
0% 
13% 
0% 
8 

89% 
11% 
0% 
0% 
9 

Note: “No opinion” answers not taken into account 

Yes 
No 
There is no direct link 
Other (please specify) 
No. of replies 

Implementers 

SEP 
Holders 

64% 
4% 
12% 
20% 
25 

60% 
0% 
27% 
13% 
15 

Note:  Implementers:  those  who  agreed  with  Q2  and  disagreed,  were  neutral  or  had  no  opinion  on  Q3;  SEP  Holders:  those  who 
disagreed, were neutral or had no opinion on Q2 and agreed with Q3. “No opinion” answers not taken into account 

Yes 
No 
There is no direct link 
Other (please specify) 
No. of replies 

EU 

64% 
3% 
21% 
12% 
33 

non-EU 

56% 
6% 
19% 
19% 
16 

Note: EU – respondents from EU except citizens; non-EU – respondents from non-EU countries except citizens. Corrections to self-
identification have been made based on the headquarters location of the respondent; “No opinion” answers not taken into account 

Summary of comments 

Many respondents confirm that a well-functioning, ‘efficient SEP licensing on FRAND terms’ at the 
appropriate level in the value chain is necessary to ensure broad adoption and interoperability of the 

257 

 
 
 
 
 
technologies that will drive the EU’s transition to the green economy, including smart manufacturing, 
smart grids and energy, and smart mobility. Fair licensing would empower a much larger group of 
companies to enter new fields, launch new products, and spur widespread innovation that will help 
power the transition to a green economy. Likewise, it has been held that disputes arise especially in 
the context of licensing SEPs relating to mobile communication standards, in particular 5G, which 
are  essential for smart  manufacturing, smart  grids, energy  and smart  mobility.  A predicable legal 
framework would clearly boost innovation based on such standards and thus foster EUs transition to 
a green economy. 

An  efficient  SEP  licensing  regime  will  encourage  SMEs  to  use  open  standards  such  as  those 
generated by ETSI. Use of these open standards will ensure interoperability between applications 
within  vertical  markets  such  as  Mobility,  Energy  and  Manufacturing.  This  interoperability  will 
encourage data sharing and analysis within and between markets, driving innovation, leading to more 
efficient use of limited energy resources. The current dysfunctional licensing system is benefitting a 
few SEP holders at the expense of the majority of implementers. 

Other respondents note that the transition to the green economy is a vast topic that contains many 
different  projects  which  require  collaboration.  The  collaborative  model  of  open  standardization, 
based on FRAND licensing, can play a role in the vast effort that the transition requires. For example, 
energy efficiency is central in the development of the future ICT standards (for instance see the ITU-
T  Focus  Group  on  "Environmental  Efficiency  for  Artificial  Intelligence  and  other  Emerging 
Technologies" (FG-AI4EE)). 

Such  respondents  find  that  efficient  licensing  is  ensuring  the  availability  of  remedies  that 
disincentivize  hold-out  behaviour.  And  ensuring  that  innovators  are  properly  rewarded  for  their 
inventions, participation in standardisation bodies, enabling future investments in new technologies, 
better versions of standards and new standards. Without the ability to recoup these investments, there 
is no incentive to innovate and to further invest in the necessary technologies needed to facilitate the 
transition to green economy enabling projects. Access to efficient licensing solutions ensures wide 
uptake of standardised technologies and R&D in new smart and greener applications and products. 
New standardised technologies are often more energy efficient. 

258