COMMISSION STAFF WORKING DOCUMENT Subsidiarity Grid 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) 123 final  COMMISSION STAFF WORKING DOCUMENT Subsidiarity Grid 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) 124 final} - {SWD(2023) 125 final}  
 
 
Subsidiarity Grid 

1.  Can the Union act? What is the legal basis and competence of the Unions’ intended action? 

1.1 Which article(s) of the Treaty are used to support the legislative proposal or policy initiative? 

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 regulate1. 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  confirmed2 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. Dutch3,  French4 and  German5 6 courts  have  been 
considering FRAND-related issues in national litigation based 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 potential for inconsistent rulings. This will 
be a significant improvement in these courts’ abilities to handle SEP disputes.  

1.2 Is the Union competence represented by this Treaty article exclusive, shared or supporting in 
nature? 

In the case of internal market legislation, the Union’s competence is shared (Article 4 TFEU). 

Court of Appeal of The Hague, judgment of 2 July 2019, Philips v Wiko, Case number : 

[1] Judgment of the Court of Justice of 12 December 2006, Germany v Parliament and Council, Case 

1 
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: and competition case-law. 
2 
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. 
3 
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. 
4 
W-B7D-CPCIX; TJ Paris, 3.3, judgment of 7 December 2021, Xiaomi v Philips and ETSI, RG 20/12558.  
5 
Haier, KZR 36/17, and German Federal Court of Justice, judgment of 24 November 2020, FRAND-Einwand II, 
KZR 35/17  
6 
a preliminary ruling from the Landgericht Düsseldorf, Removal from the Register, Case C-182/21, 
ECLI:EU:C:2021:575 

German Federal Court of Justice (‘Bundesgerichtshof – BGH’), judgement of 5 May 2020, Sisvel v. 

Paris Court, order of the pre-trial judge of 6 February 2020, TCT v Philips, RG 19/02085 – Portalis 352J-

Order of the President of the Court of 24 June 2021, Nokia Technologies Oy v Daimler AG, Request for 

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2.  Subsidiarity Principle: Why should the EU act? 

2.1 Does the proposal fulfil the procedural requirements of Protocol No. 27: 

-  Has there been a wide consultation before proposing the act? 
- 

Is  there  a  detailed  statement  with  qualitative  and,  where  possible,  quantitative  indicators 
allowing an appraisal of whether the action can best be achieved at Union level? 

This  proposal  and  the  accompanying  impact  assessment  are  supported  by  a  wide  consultation  of 
stakeholders.  The  Commission  collected  the  views  of  all  relevant  stakeholder  groups,  in  particular 
SEP owners, SEP implementers, business, and industry associations, as well as licensing experts and 
academia.  The  different  stakeholder  groups  have  provided  useful  information  and  insights  to  help 
prepare the impact assessment. 

The  Commission  conducted  many  studies  and  presented  a  series  of  webinars8,  and  established  a 
group of experts on the licensing and valuation of SEPs9. 

- 

- 

- 

- 

The Commission published the Call for Evidence on 14 February 2022 which was open until 09 
May 2022. During the Call, 97 replies and 49 position papers were submitted.  

A  public  consultation  took  place  between 14  February  2022 and  09 May  2022,  in  response  to 
which 74 replies were submitted10.  

A targeted survey for start-ups and SMEs was published on 28 October 2022 and was closed on 
20  November  2022.  At  the  request  of  a  few  stakeholders  the  survey  was  re-opened  on  25 
November  2022  without  a  closing  date  to  enable  stakeholders  continued  participation  as 
Internet of Things (‘IoT’) markets develop11. 39 replies were received by the end of 2022. 

Discussions  with  Member  States  representatives  took  place  in  the  context  of  the  Commission 
Expert Group on IP Policy and relevant Council working parties. 

The  explanatory  memorandum  and  the  impact  assessment  (chapter  3)  contain  a  section  on  the 
principle of subsidiarity – see question 2.2 below for more detail. 

2.2 Does  the  explanatory  memorandum  (and  any 

impact  assessment)  accompanying  the 
Commission’s  proposal  contain  an  adequate  justification  regarding  the  conformity  with  the 
principle of subsidiarity? 

Both  the  explanatory  memorandum  and  the  impact  assessment  have  examined  the  subsidiarity 
principle. 

2.3 Based  on  the  answers  to  the  questions  below,  can  the  objectives  of  the  proposed  action  be 

achieved sufficiently by the Member States acting alone (necessity for 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 

7 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12016E/PRO/02&from=EN  
8 https://single-market-economy.ec.europa.eu/events/webinar-series-standard-essential-patents-2020-12-02_en  
9 https://ec.europa.eu/docsroom/documents/45217  
10  https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13109-Intellectual-property-new-framework-
for-standard-essential-patents_en  
11 https://ec.europa.eu/eusurvey/runner/SEP_SME2022  

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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. 

(a)  Are  there  significant/appreciable  transnational/cross-border  aspects  to  the  problems  being 

tackled? Have these been quantified? 

Licensing  of  SEPs  is  a  transnational  issue  because  standards  are  for  the  most  part  developed  and 
used globally.  For example,  4G, 5G, Wi-Fi, HEVC (codecs)  and DVD (just to name  a few  standards) 
ensure  interoperability  of  products  not  only  in  the  EU  but  also  worldwide.  These  products  include 
smartphones, tablets, TVs, computers, smart meters, cars, etc.  As a result, SEP portfolios also have a 
global  reach  and  SEP  licensing  is  typically  based  on  global  royalty  rates  and  terms,  but  takes  into 
account  certain  geographic  factors  that  may  be  important  for  specific  licensees  or  licensors  (for 
example,  if  a  licensee  sells  products  in  very  limited  jurisdictions).  The  impact  assessment  has 
quatified  the  number  of  litigations  per  country  and  analysed  case-law  determining  global  FRAND 
royalties. 

(b)  Would national action or the absence of the EU level action conflict with core objectives of 

the Treaty12 or significantly damage the interests of other Member States? 

The  absence  of  EU  level  action  is  likely  to  lead  to  disruptions  in  the  uptake  of  critical,  digital  and 
environmental technologies essential for the achievement of the aims of the EU. 

SEP  licensing  based  on  increased  transparency,  predictability  and  efficiency  would  improve  the 
competitiveness of EU businesses, including start-ups and SMEs. Efficient SEP licensing13 may also: (i) 
facilitate  the  development  of  critical  technologies14  and  the  uptake  of  digital  technologies;  and  (ii) 
foster the EU’s transition to the green economy. For example, many standards are important for the 
success  of  projects  in  areas  such  as:  smart manufacturing;  smart  grids  and energy;  smart  mobility; 
smart cities; and smart agriculture – all of which are cutting-edge digital technologies that improve 
sustainability,  for  example  by  fighting  climate  change.  Also,  start-ups  and  SMEs  contributing 
standard-based  innovations  to  the  EU  economy  benefit  from  a  more  predictable  and  efficient  SEP 
licensing system, reducing the financial risks associated with using standards.   

Accordingly, the initiative will promote growth and sustainable development within the internal EU 
market, enhance environmental protections through more standard-based innovative technologies, 
and generally uphold and promote the values and interests of the EU globally.  

(c)  To  what  extent  do  Member  States  have  the  ability  or  possibility  to  enact  appropriate 

measures? 

European standardisation is harmonised with Regulation (EU) No 1025/2012. Member States are not 
permitted  to  enact  measures  in  this  area.  Despite  patent  law  and  enforcement  being  subject  to 
Member States competence, SEPs are subject to competition law limitations (encumbered with the 
obligation  to  licence  on  FRAND  terms  and  conditions),  and  the  CJEU  has  established  guidelines  to 
balance  the  interests  of  SEP  owners  and  those  of  implementers  in  that  respect15.  A  common, 
harmonised  approach  needs  to  be  employed  to  ensure  that  SEP  licensing  is  handled  efficiently  to 
allow  access  to  all  implementers,  including  SMEs,  under  reasonable  terms  throughout  the  EU  and 
that  SEP  owners  can  obtain  a  fair  return  on  their  R&D  expenditure  when  standards  are  used  in 
products in the EU. Even though Member States courts are competent to enforce SEPs, they are not 
in a position to promote these goals EU-wide. 

12 https://europa.eu/european-union/about-eu/eu-in-brief_en  
13 ‘A modern framework for standardisation’, pp. 18-19, Section 1.3. 
14 Such as advanced manufacturing technology, mobility, connectivity and robotics. 
15 Judgment of 16 July 2015 in Case C-170/13 – “Huawei – ZTE” 

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(d)  How  does  the  problem  and  its  causes  (e.g.  negative  externalities,  spill-over  effects)  vary 

across the national, regional and local levels of the EU? 

Even though SEP disputes are cross-border issues (due to the global nature of SEP licensing),  most 
EU-related  SEP  disputes  are  brought  before  the  courts  in  Germany  (80%),  followed  by  the 
Netherlands,  France  and  Italy.  Germany  is  a  preferred  litigation  venue  because  it  is  the  largest 
market in Europe .  

(e)  Is the problem widespread across the EU or limited to a few Member States? 

Products  incorporating  standards  protected  by  SEPs  are  marketed  in  all  Member  States  and  the 
problems are not specific to one Member State or another. 

(f)  Are Member States overstretched in achieving the objectives of the planned measure? 

No. The proposal is based on an in-depth assessment of different policy options and their respective 
impacts, and Member States are not well-positioned to address the relevant issues EU-wide. 

(g)  How  do  the  views/preferred  courses  of  action  of  national,  regional  and  local  authorities 

differ across the EU? 

Since only 2 public authorities participated in the public consultation and 2 public authorities provide 
an  informal  response,  it  is  not  possible  to  report  extensively  on  the  different  positions  of  national 
regional and local authorities. 

2.4 Based  on  the  answer  to  the  questions  below,  can  the  objectives  of  the  proposed  action  be 
better achieved at Union level by reason of scale or effects of that action (EU added value)? 

Action at EU level is expected to save costs for stakeholders, both SEP owners 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 owners and implementers would not have to incur 
the same costs in each Member State which would be the case with national solutions, especially in a 
situation where most standards are regional or global. 

(a)  Are there clear benefits from EU level action?  

The benefits are a more consistent and predictable approach to SEP licensing across the EU, helping 
create more of a level playing field for businesses and enhanced use of standards for the benefit of 
EU consumers. 

(b)  Are there economies of scale? Can the objectives be met more efficiently at EU level (larger 

benefits per unit cost)? Will the functioning of the internal market be improved? 

There are economies of scale for businesses, since they will face the same SEP rules all over the EU. 

(c)  What  are  the  benefits  in  replacing  different  national  policies  and  rules  with  a  more 

homogenous policy approach? 

The EU-wide SEP register creates transparency with regard to whether and which patents need to be 
licensed. Technical negotiations between SEP owners and implementers will be limited and licences 
may  be  negotiated  more  efficiently.  Availability  of  an  EU-wide  FRAND  determination  (conciliation) 
procedure  assists  parties  in  resolving  disputes  across  multiple  Member  States  and  provides  much-
needed  clarity  with  regard  to  SEP  aggregate  royalty  rates.  In  particular,  the  conciliation  procedure 

4 

 
 
will  enable  the  parties  to  arrive  at  a  FRAND  determination  faster  and  cheaper  compared  to  using 
national  litigation.  Further,  there  would  be  potential  savings  on  patent  maintenance  fees  on  non-
essential patents that the over-declaring companies will be forced to abandon. 

(d)  Do  the  benefits  of  EU-level  action outweigh  the  loss of  competence  of  the  Member  States 
and  the  local and  regional  authorities  (beyond  the  costs  and  benefits of  acting  at  national, 
regional and local levels)? 

The initiative may in certain circumstances limit the ability of SEP owners to assert their patent rights 
before courts. For example, SEP owners will need to register their SEP and request a FRAND royalty 
determination  before  they  go  to  court.  Such  limitations  are  proportionate  to  the  objective  sought 
and  do  not  go  beyond  what  is  necessary  to  achieve  the  objective.  The  benefits  of  the  inititive 
outweigh possible losses as it increases transparency and certainty with regard to FRAND royalty for 
all stakeholders. 

(e)  Will there be improved legal clarity for those having to implement the legislation? 

One  of  the  key  objectives  is  to  improve  transparency,  predictability  and  legal  certainty.  Under  the 
current  situation  there  is  no  information  of  which  patents  are  SEPs,  who  owns  the,  what  is  the 
FRAND royalty and how to negotiate FRAND terms and conditions. The industry lacks predictability 
which has a negative impact on investment in innovation. 

3.  Proportionality: How the EU should act 

3.1  Does  the  explanatory  memorandum  (and  any  impact  assessment)  accompanying  the 
Commission’s proposal contain an adequate justification regarding the proportionality of the 
proposal  and  a  statement  allowing  appraisal  of  the  compliance  of  the  proposal  with  the 
principle of proportionality? 

Both the explanatory momerandum and the impact assessment look at the proportionality.  

The initiative is limited to what is necessary to achieve transparency with regard to SEPs and pricing 
and provide stakeholders with tools to negotiated SEP licensing agreements. Action at EU level will 
be  efficient  and  save  costs  for  stakeholders,  in  particular  SEP  owners,  and  for Member  States.  For 
example, there could be one register, instead of many registers, one essentiality check for the whole 
EU,  one  methodology  for  the  conduct  of  such  checks,  and  a  streamlined  and  transparent  FRAND 
determination process. SEP owners and implementers will not have to repeat the same costs in each 
EU Member state that has chosen to introduce SEP specific rules. 

3.2 Based  on  the  answers  to  the  questions  below  and  information  available  from  any  impact 
assessment,  the  explanatory  memorandum  or  other  sources,  is  the  proposed  action  an 
appropriate way to achieve the intended objectives? 

The proposed action is the appropriate way to achieve the intended objectives. Based on an expert 
group report and a series of webinars, the Commission has pre-selected and analysed those industry 
proposals  that  have  the  potential  to  achieve  the  objectives.  The  impact  assessment  has  further 
streamlined and refined the best options. 

(a)  Is the initiative limited to those aspects that Member States cannot achieve satisfactorily on 

their own, and where the Union can do better? 

The initiative is limited to what is necessary to achieve transparency and provide stakeholders with 
tools to negotiate SEP licensing agreements. 

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(b)  Is  the  form  of  Union  action  (choice  of  instrument)  justified,  as  simple  as  possible,  and 
coherent with the satisfactory achievement of, and ensuring compliance with the objectives 
pursued  (e.g.  choice  between  regulation,  (framework)  directive,  recommendation,  or 
alternative regulatory methods such as co-legislation, etc.)? 

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. 

(c)  Does the Union action leave as much scope for national decision as possible while achieving 
satisfactorily the objectives set? (e.g. is it possible to limit the European action to minimum 
standards or use a less stringent policy instrument of approach?) 

The  initiative  is  aimed  at  creating  transparency  to  promote  effective  SEP  licensing  and    provide  a 
single place for the parties to resolve their disputes.  But parties may still bring their disputes before 
national courts, as needed. 

(d)  Does  the 

initiative  create  financial  or  administrative  cost  for  the  Union,  national 
governments,  regional or local authorities, economic operators or citizens? Are these costs 
commensurate with the objective to be achieved? 

The  initiative  creates  administrative  cost  for  economic  operators,  SEP  owners  and  implementers. 
Those costs do not exceed what is necessary to achieve a quality register and an alternative dispute 
resolution mechanism. In fact, action at EU level will be efficient and save costs for stakeholders, in 
particular SEP owners, and for Member States. For example, there could be one register, instead of 
many registers, one essentiality check for the whole EU, one methodology for the conduct of such 
checks, and a streamlines and transparent FRAND determination process.  

(e)  While  respecting  the  Union  law,  have  special  circumstances  applying  in  individual  Member 

States been taken into account? 

The Commission is not aware of any special circumstances. 

6