The withdrawal of the EU SEP Regulation proposal on 31 July 2025 left the FRAND licensing landscape in Europe without the harmonised framework that stakeholders had anticipated for several years. Implementers and standard-essential patent holders must now navigate a patchwork of national courts, bilateral negotiations, and existing CJEU case law, without the procedural certainties that the draft regulation was intended to supply. In 2026, strategic clarity on FRAND terms, litigation positioning, and cross-border enforcement has become more pressing than ever.
The Regulatory Void: What the Withdrawn Proposal Would Have Done
The European Commission's proposal for an EU SEP Regulation aimed to introduce a pan-European essentiality check mechanism, a FRAND determination process administered by a designated competence centre, and transparency obligations on SEP holders before licensing negotiations could escalate to litigation. The proposal had attracted intense lobbying from technology developers, mobile device manufacturers, automotive groups, and research institutions alike, reflecting the breadth of industries touched by connectivity standards such as 5G, Wi-Fi 6, and future 6G specifications.
When the Commission withdrew the proposal on 31 July 2025, it cited insufficient progress in the legislative process and the need to reassess the proportionality of the regulatory burden. The practical consequence was immediate: licensing parties lost the prospect of a neutral, EU-level forum for determining whether a patent is genuinely essential to a standard, and what royalty rate would qualify as fair, reasonable, and non-discriminatory.
The situation has since taken an additional procedural dimension. In November 2025, the European Parliament resolved to challenge the Commission's withdrawal before the Court of Justice of the European Union. That action remains unresolved as of the time of writing. If the CJEU were to find that the Commission acted improperly in withdrawing a proposal that had already been substantially advanced in the legislative procedure, it could compel the Commission to re-engage with the file. However, the legal basis for such a challenge is itself contested, and practitioners should not assume any particular outcome.
For companies with ongoing licensing negotiations or active IP litigation strategies, this uncertainty is not merely academic. An eventual return of the regulatory file – whether through a CJEU ruling, political agreement, or a resubmitted proposal under a future Commission work programme – could alter the balance of negotiating positions that are being struck today.
The CJEU as the De Facto Policy Maker on IP Standards
In the absence of harmonised secondary legislation, the burden of shaping EU SEP doctrine has fallen almost entirely on the CJEU and on the national courts of key member states. The Court's Grand Chamber ruling in C-590/23 Pelham II, handed down on 14 April 2026, is significant in this context not because it addressed SEPs directly – it concerned the pastiche exception under Article 5(3)(k) of the InfoSoc Directive – but because it reinforced a broader methodological point: the CJEU is willing to apply close, purposive scrutiny to IP exceptions and limitations, and it expects national courts to follow that methodology consistently. The analytical approach articulated in Pelham II (discussed in further detail in our separate analysis of the pastiche ruling) is instructive for any practitioner working at the intersection of EU IP law and fundamental rights balancing, including the competition-law dimensions of FRAND disputes.
On the SEP side specifically, the line of authority running from Huawei v ZTE (C-170/13) remains the foundational framework for how a SEP holder may seek an injunction without falling foul of Article 102 TFEU. That judgment established a structured dialogue obligation: the SEP holder must notify the implementer, the implementer must respond diligently, and royalty offers must be made and counter-offered on the basis of industry-standard comparables. No subsequent regulation has displaced or modified this framework, which means it continues to govern negotiations and litigation in all EU member states.
The unresolved question in 2026 is how national courts diverge in applying the Huawei v ZTEprinciples, particularly on the standard of "willingness" required of an implementer. Courts in Germany, the Netherlands, and the United Kingdom (now outside the EU but still highly relevant for European enforcement strategy) have each developed their own procedural glosses. Without a harmonised regulation to anchor national judges, this divergence is likely to deepen rather than converge.
FRAND Strategy in a Fragmented Enforcement Environment
For SEP holders, the withdrawal of the regulation removes what many had expected to be a new tool for obtaining reliable essentiality determinations before investing in litigation. The absence of an official essentiality check means that declared essentiality continues to differ materially from adjudicated essentiality, a gap that implementers regularly exploit in negotiations. Holders of large SEP portfolios will need to maintain robust internal claim-mapping documentation and be prepared to defend essentiality at the national court level in multiple jurisdictions simultaneously.
For implementers – particularly those in the automotive, IoT, and industrial automation sectors who have less historical exposure to cellular patent licensing than smartphone manufacturers – the risk profile is more acute. Without a centralised FRAND determination mechanism, they face the prospect of parallel injunction proceedings in Germany or the Netherlands, potentially ahead of any determination of what a fair royalty would actually be. The asymmetry of litigation costs and the speed of German Landgericht proceedings in particular can create settlement pressure that is disconnected from the substantive merits of a royalty dispute.
Key strategic considerations for both categories of party include the following:
- Portfolio transparency: In the absence of mandatory disclosure rules, voluntarily publishing detailed claim charts can signal good faith and pre-empt competition-law abuse arguments.
- Comparable licence data: Documenting the full universe of comparable licences – including any licences agreed under the shadow of the proposed regulation's transparency database – will be essential evidence in any FRAND determination.
- Jurisdiction selection: Choosing where to initiate or respond to proceedings requires careful assessment of national court timelines, the availability of interim measures, and the receptiveness of local courts to global FRAND rate-setting arguments.
- Anti-suit injunction risk: Implementers who rush to a friendly forum may provoke anti-suit or anti-anti-suit injunctions in another member state, compounding complexity and cost.
- Competition-law defences: Both the European Commission and national competition authorities retain jurisdiction over abusive SEP licensing conduct under Article 102 TFEU. This avenue remains available regardless of the regulatory withdrawal.
If your organisation is actively managing SEP licences or preparing for potential IP litigation in Europe, Ferraz & Whitmore's team can assist with strategic mapping of your exposure. Please contact us at info@ferrazwhitmore.com or visit our contacts page to discuss your situation in confidence.
Cross-Border Implications and Interaction with Other IP Regimes
The fragmentation of EU SEP enforcement does not occur in isolation from other developments in European IP law. Several overlapping regimes create both complexity and opportunity for parties managing international IP portfolios.
The Unified Patent Court, which became operational in 2023 and now handles European patents with unitary effect across participating member states, has begun to receive SEP cases. Its centralised procedure offers a single forum for injunctive relief and revocation across a broad territorial footprint, which could substantially alter the jurisdictional calculus for both holders and implementers. However, the UPC's FRAND jurisprudence is still nascent, and the court's approach to the Huawei v ZTE framework has yet to be definitively settled through appellate decisions.
Separately, developments in intellectual property strategy are being shaped by the interplay between SEP licensing and other IP rights. Design registration, trade mark portfolios, and – increasingly – rights arising from text and data mining of standard-setting documentation are all part of the ecosystem that sophisticated technology companies manage alongside their patent positions. The growing body of EU guidance from bodies such as the European Commission, as well as financial regulatory perspectives from institutions including ESMA and the EBA on the treatment of IP-related assets, adds further layers to the compliance picture for listed or regulated entities.
Copyright infringement claims have also occasionally been asserted as a collateral issue in standard-setting disputes, particularly where technical specifications are themselves copyrightable. While the primary legal battleground for SEPs remains patent law, IP counsel should be alert to these ancillary angles, particularly following Pelham II's clarification of the boundaries of permissible use under the InfoSoc Directive.
For companies with cross-border exposure – whether in licensing inbound technology for European production, or out-licensing SEPs to implementers across multiple member states – the combination of UPC uncertainty, national court divergence, and the unresolved Parliament challenge to the withdrawn regulation creates a period of elevated legal risk. Proactive strategy now, rather than reactive litigation later, is generally the more cost-effective path.
The Parliament's Challenge and Its Strategic Significance
The European Parliament's November 2025 decision to challenge the Commission's withdrawal before the CJEU is, in procedural terms, unprecedented in the context of a legislative proposal of this type. The legal basis being invoked relates to institutional balance and the Parliament's prerogatives in the co-decision procedure. Regardless of how the CJEU ultimately rules, the action sends a clear political signal: there is substantial legislative will within the EU institutions to address the SEP problem through binding rules, and the withdrawal should not be read as a settled policy position.
For commercial parties, this signal matters in two ways. First, licensing agreements concluded in 2026 may need to include adaptation clauses that address the possibility of a revived regulatory framework imposing new transparency or essentiality-checking obligations. Second, public positions taken by companies in standard-setting bodies or before national courts may eventually be weighed against the standards that any future regulation introduces, creating reputational and legal risks for parties who take maximalist positions in the current vacuum.
The CJEU's docket does not move quickly, and a ruling on the Parliament's challenge – even if the action is admissible – is unlikely before 2027 at the earliest. In the interim, the Commission's approach to other IP harmonisation files, such as potential revisions to the patent licensing rules under EUR-Lex references related to competition and innovation policy, will be watched closely as an indicator of the direction of travel.
Recommendations for 2026 and Beyond
Companies and investors operating in sectors touched by standardised technology should treat the current period as one requiring active legal risk management rather than passive observation. The following steps merit consideration:
- Audit your SEP exposure: Whether you hold declared SEPs or operate as an implementer, a current-state review of your licensing position, litigation risk, and portfolio documentation is a sound starting point.
- Scenario-plan for regulatory revival: Model how your licensing terms and litigation strategy would need to adapt if a new SEP regulation were to be introduced within a two-to-four year horizon, particularly one incorporating essentiality checks or mandatory FRAND determination.
- Engage with standard-setting bodies: Active participation in ETSI, IEEE, and other standard-setting organisations provides early visibility into evolving disclosure and licensing policies that may be incorporated into future EU rules.
- Prepare for UPC proceedings: As the Unified Patent Court develops its FRAND jurisprudence, parties should follow emerging decisions closely and factor UPC strategy into any new licensing or enforcement plan.
- Monitor the Parliament challenge: Procedural developments in the CJEU action brought by the European Parliament should be tracked as a leading indicator of whether the regulatory file will be reopened.
The interaction between litigation and arbitration strategy and substantive SEP rights is particularly nuanced in the current environment. Our team advises clients on both the procedural dimensions of cross-border enforcement and the substantive FRAND positioning that underpins durable licensing outcomes.
Ferraz & Whitmore regularly assists technology companies, investment funds with IP-intensive portfolio companies, and multinational groups navigating SEP licensing and enforcement in Europe. To explore how the current regulatory landscape affects your specific situation, please reach out at info@ferrazwhitmore.com or visit our contacts page.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.