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Abstract The European Commission’s proposed Draft Regulation on Standard Essential Patents (SEPs) aims to overhaul the landscape of SEP licensing, addressing transparency deficits and fair, reasonable, and non-discriminatory (FRAND) terms amidst the burgeoning Internet of Things (IoT) market. Emphasizing concerns over hold-up risks, the Draft Regulation introduces mandatory essentiality checks and structured FRAND determinations to mitigate opportunistic behaviours among SEP holders. However, the practical implementation of these measures poses challenges, including the accuracy of essentiality assessments and the potential for increased transaction costs. Moreover, the Draft Regulation fails to consider the financial dimension of technological innovation, namely the potential of SEPs to function as valuable financial assets. By undermining the economic value of SEPs in terms of enforcement and monetisation, there is a risk of watering down their potential to serve as valuable financial collateral and therefore to help innovators access debt financing.
Borgogno et al. (Wed,) studied this question.