CRA’s Dr. Benno Buehler and Kilian Mueller show that several concerns over the European Commission’s proposal for a regulation on standard essential patents are not empirically supported.
The authors first assess whether SEP owners would move their R&D investments out of the EU because of claimed difficulties in capitalizing on investments in standardized technologies should the new SEP regulation come into effect. To this end, they examine whether jurisdictions favorable to SEP owners, as approximated by the number of SEP injunctions awarded, have attracted more investments in standardized technologies, as measured by the number of cellular SEPs developed.
The threat of SEP injunctions can be used to force manufacturers to accept higher royalty rates. Germany stands out as the jurisdiction where the most injunctions have been awarded (91, accounting for more than 65% of the 139 SEP injunctions from 2001 to 2023 recorded in a novel dataset based on Darts-IP and additional research). This supports the notion that Germany is a particularly favorable jurisdiction for SEP owners.
Figure 1: Number of SEP injunctions granted each year (2001 to 2023) 
Source: CRA based on Darts-ip; research.
A detailed analysis of cellular patents shows that only a very small share has been invented in Germany (3% of the cellular patent families), suggesting that SEP owners have not shifted investments to Germany, despite the favorable climate for enforcing their patents. By contrast, 30% of the families were invented in China, 19% in the USA, and 15% in South Korea, where SEP injunctions are only rarely issued.
Figure 2: Number of cellular patent families by country of invention and year (2005 to 2023)
Source: CRA based on PatBase.
The authors then go on to explain that a reduction in injunction risk due to the proposed SEP regulation will likely stimulate investments by manufacturers in the EU. While critics of the regulation often cite incentives to invest in R&D in standardised technologies, investments into the development of products involving standards typically by far outweigh R&D in standardised technologies. Manufacturers with a regional focus in the EU are particularly exposed to the threat of SEP injunctions issued by EU courts, as a larger share of their products involving standards would be enjoined from the market. SEP owners therefore have greater leverage against them, implying that EU manufacturers are currently disadvantaged against foreign manufacturers with limited activities in the EU.
Finally, the authors find that the proposed regulation would mitigate the risk of manufacturers being coerced into accepting inflated SEP royalty rates under the threat of SEP injunctions – even if SEP litigation were shifted outside the EU as a consequence of the regulation. First, in most non-EU jurisdictions, SEP injunctions are only exceptionally granted under much stricter conditions than in Germany. Second, even if some litigation is moved outside EU borders, EU manufacturers are less vulnerable against SEP injunctions issued in jurisdictions where their activities are limited.
