Standard Essential Patent litigation has intensified dramatically as each new generation of telecommunications standards—from 3G to 4G LTE and now 5G—brings increasingly sophisticated cellular capabilities and, with them, a corresponding explosion in patent complexity. As mobile devices have become ubiquitous in daily life, SEP holders face the dual challenge of protecting substantial R&D investments while navigating FRAND licensing obligations. When negotiations reach an impasse, litigation becomes a necessary strategic tool. In this era of global smartphone proliferation, SEP holders increasingly leverage litigation in key defendant markets to establish negotiating positions and secure fair compensation. This article demystifies the dynamics of SEP license negotiations and the escalation strategies that shape modern telecommunications patent disputes.
To the uninitiated, standard essential patents (SEPs) and FRAND (Fair, Reasonable, and Non-Discriminatory) sound rather esoteric and difficult to relate to. Consider a simple example: for your smartphone to connect to any cellular network worldwide, it must operate according to specific technical standards like 4G or 5G set by the standard-setting bodies. If one company holds patents on technologies essential to making these standards work, every phone manufacturer must obtain a license from them—there is no alternative. FRAND obligations exist to balance the patent holder's legitimate rights with the need to ensure the standard remains accessible. The tension is between protection afforded under patent laws and the obligation to license in a FRAND manner.
One can grasp the core idea that acting in a FRAND-compliant manner is necessary when one holds an SEP or a portfolio of them. However, beyond that, the question becomes: how does one determine if an SEP holder is acting in a FRAND manner—and which forum is best suited to oversee this: the patent court or a competition tribunal? From the SEP holder's perspective, are they going to be hampered by competition issues (a natural course of recourse for implementers) from ever enforcing their patents? After all, the SEP holder needs to be allowed to recoup the heavy investments in developing these cutting-edge technologies.
This article seeks to demystify the current reality on how these ideas - Standard Essential Patents and FRAND - are put into practice in the telecommunication cellular world.
Meaning of essentiality and origin for FRAND
ETSI (the European Telecommunications Standards Institute) along with several other regional standards-setting bodies, hosts 3GPP (the 3rd Generation Partnership Project), which develops the technical specifications for 3G, 4G LTE, and 5G mobile technologies.
A cellular patent is essential under ETSI guidelines where it is not possible on technical grounds, considering normal technical practice at the time of standardization, to implement the standard without infringing that patent.
When patent holders contribute such technologies during the standard-setting process, ETSI's IPR policy requires them to commit upfront to licensing these SEPs on FRAND terms.
What happens when a patent is proven to be essential to a 4G or 5G standard?
This naturally means that any compliant phone will necessarily practice the patent - since the patent is essential to an aspect of that standard. However, this may be an overly generalized statement because not all technologies specified in a standard are strictly necessary for basic network connectivity—some provide enhanced functionality or optional features.
FRAND Commitments
FRAND commitments arise as a requirement under ETSI's IPR Policy. A holder of a patent that is, or is likely to become, essential to an ETSI standard must undertake to be prepared to grant irrevocable licenses on Fair, Reasonable, and Non-Discriminatory terms. This obligation arises from the patent holder's participation in ETSI's standardization work.
FRAND in practice
FRAND considerations are considered differently depending on what the request is by the SEP holder in that jurisdiction - whether:
Where the SEP holder seeks an injunction, courts assess whether the SEP holder has acted as a willing licensor (avoiding hold-up) or the implementer as an unwilling licensee (holding out)—often called the 'FRAND dance,' the steps laid out in Huawei v ZTE. This process determines if the implementer's unwillingness warrants an injunction, allowing the SEP holder to leverage its position until the implementer yields. Global SEP litigation in key jurisdictions aims to pressure unwilling implementers/licensees into good-faith FRAND negotiations, ultimately culminating in a license agreement.
In a jurisdiction where the SEP holder is requesting for global rate setting by the court such as in the UK, and more recently in the UPC, then the FRAND question may be what comparable licenses have been granted by the licensor – to enable the court to set the FRAND rate.
Competition issue
In the context of SEP licensing, anti-competitive challenges by implementers are typically used as tactical distractions, with the main focus in most jurisdictions remaining on patent infringement and on whether the putative licensee is an unwilling one as assessed by the patent forum. Outside China, where authorities have shown a clear readiness to open antitrust investigations and impose substantial penalties in SEP matters, these complaints are generally manageable and function primarily as negotiating tools rather than as vehicles for meaningful standalone antitrust relief. In practice, beyond China, such challenges usually operate as tactical pressure that is resolved through settlement rather than through market structural change type competition-law remedies.
Litigation landscape
About seeking injunction in key markets to gain leverage, besides the established countries such as the EU, the UK, China, "hot" jurisdictions for SEP include Brazil and Colombia. Southeast Asia is also showing promise. They are selected for market size and promise shown by these courts to grant injunctions.
The authors believe that an overly prescriptive model through legislative intervention would not be helpful from an SEP holder’s perspective. There is a lot of existing persuasive jurisprudence that can be transplanted to a hitherto untried jurisdictions' pre-existing patent litigation frameworks, which emerging jurisdictions can readily adopt.
Authors:
Kin Wah CHOW
Evi Triana
Daniel Markho Santoso
