Day 1, Panel 5: SEPs and FRAND
December 4, 2025
B-CLE Recording (CLE: $100) | Agenda | Event Resources | Speaker Biographies
Download Panel Transcript Here
Speakers
Jane Bu, Via Licensing Alliance
Kai Rüting, Vossius
Yang Ye, VeriSilicon
Panel Summary
Raj Jagdev opened by framing 2025 as an exceptionally active year for SEP FRAND litigation globally, with the spotlight firmly on Europe and China rather than the United States. Yang Ye provided a high-level overview of China’s rapidly expanding role in global FRAND disputes, noting that Chinese courts are no longer limited to local SEP fights but are increasingly asserting jurisdiction over global FRAND rate setting — as illustrated by the Chongqing court’s first instance judgment setting a global FRAND rate in OPPO v. Nokia, after which both parties settled globally — signaling that Chinese court rulings carry real commercial weight. Yang highlighted that China’s Supreme People’s Court has now issued the country’s first anti-anti-suit injunction in Huawei v. Netgear, establishing that procedural fairness and good faith negotiation conduct are central to Chinese FRAND adjudication, and that the State Administration for Market Regulation issued SEP guidelines in 2024 requiring meaningful information exchange including claim charts and rate bases. Kai Rüting then shifted to the European perspective, explaining that both Germany and the UPC approach SEP FRAND disputes primarily through an enforcement lens rather than a rate-setting lens, applying the CJEU’s Huawei v. ZTE five-step framework with particular emphasis on the willingness requirement — noting that no German court has found a willing licensee in recent years and that Munich courts have raised the bar by requiring implementers to place a worldwide deposit according to the patentee’s terms before any FRAND determination will be made. He also described the UPC’s two notable 2025 decisions — Oppo v. Panasonic and Huawei v. Netgear — both of which rejected FRAND defenses and emphasized party conduct, and flagged a trend toward active royalty determination at the UPC, with a rate-setting case already filed in the Paris local division.
The panel then turned to the dramatic jurisdictional conflict triggered by the UK’s interim license declaration regime and its collision with German and UPC enforcement actions. Jagdev explained that the UK’s interim license declaration — most visibly in the Lenovo v. Ericsson case — represents a court declaring that a willing licensee and licensor would enter a license pending final FRAND determination, and that Lord Justice Birss has equated this to the Huawei v. ZTE payment on account requirement. Rüting described the resulting head-on conflict in the InterDigital v. Amazon case, where Amazon sought a FRAND determination in the UK, InterDigital obtained an anti-interim license injunction from German and UPC courts, and the UK responded with an anti-anti-suit injunction — creating two directly conflicting court orders that have left judges uncertain about how to proceed without risking contempt of court. Jane Bu offered a pragmatic industry perspective, arguing that the proliferation of global court venues for FRAND rate setting — however imperfect the resulting rates may be — serves a valuable function by providing a credible threat that forces parties to actually negotiate and reach commercial agreements, much as the Unwired Planet decision a decade ago provided a framework that shaped licensing negotiations globally regardless of whether the specific rate was economically precise. The panel closed with discussion of the Automotive Licensing Negotiation Group approved by DG Comp in 2025, the ongoing Tesla v. Avanti/InterDigital pool rate challenge heading to the UK Supreme Court in April 2026, and growing scrutiny of patent pool administrator conduct in both China and Europe — with Jane Bu predicting that court adjudication of patent pool rates is ultimately unavoidable given the scale of the gap between licensor and licensee rate expectations.
Key Learning Points:
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China Has Emerged as a Credible and Commercially Significant Global FRAND Rate-Setting Forum: Chinese courts are no longer passive recipients of local SEP disputes but are actively asserting jurisdiction over global FRAND rates, issuing anti-anti-suit injunctions, scrutinizing foreign patent pools affecting Chinese industry, and signaling through regulatory guidelines from SAMR and CNIPA that good faith conduct and transparency are prerequisites for favorable treatment — making China a forum that both SEP holders and implementers must now factor into any global enforcement or licensing strategy (Yang Ye; Raj Jagdev).
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The UK Interim License Declaration Regime Has Created a Direct Jurisdictional Conflict with Germany and the UPC That Remains Legally Unresolved: The UK’s innovation of interim license declarations as a mechanism for managing FRAND disputes pending final rate determination has collided directly with German and UPC anti-suit injunction practice in the InterDigital v. Amazon case — producing conflicting court orders between London, Munich, and the UPC that no court has yet resolved, raising profound questions about comity, the character of interim licenses, and how global FRAND litigation will be managed across multiple simultaneously active jurisdictions (Kai Rüting; Raj Jagdev).
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Supply Chain SSPPU and Licensing Level Remain the Most Practically Consequential Unresolved Issues for In-House Counsel and Patent Pools: The question of whether SEP licensing should occur at the component/SSPPU level or the end-device level has enormous commercial consequences for supply chain participants — as illustrated by Yang Ye’s description of component suppliers facing indemnification obligations tied to high-value end products they did not manufacture — and Jane Bu argued that the more fundamental question is not which pricing methodology to use but who in the supply chain is obligated to take a license, requiring upstream contract parties to align on SEP indemnification scope at the time of contracting rather than when a dispute arises (Yang Ye; Jane Bu; Raj Jagdev).
Program Transcript
Key Terms: Standard Essential Patent (SEP), FRAND Obligation, Fair Reasonable Non-Discriminatory, FRAND Rate Setting, Global FRAND Rate, Willing Licensor, Willing Licensee, Good Faith Negotiation, Holdout Behavior, Negotiation Conduct, FRAND Determination, FRAND Defense, Bilateral License, Consensual License, FRAND Framework, OPPO v. Nokia, Huawei v. Conversant, Huawei v. Netgear, ACT v. OPPO, TCL v. AXA Advance, Chongqing Court, Supreme People’s Court, Chinese Global FRAND Rate, China Anti-Suit Injunction (ASI), China Anti-Anti-Suit Injunction (AASI), SAMR SEP Guidelines 2024, CNIPA Patent Pool Guidelines, China Pool Scrutiny, China Regulatory Guidelines, Good Faith Conduct Standard, Huawei v. ZTE CJEU Decision, Five-Step ZTE Framework, Notice Requirement, Willingness Declaration, FRAND Offer Requirement, FRAND Counteroffer, Deposit Requirement, Willingness Standard, Munich Court of Appeal, Munich First Instance, Conduct Standard, UPC FRAND Jurisdiction, Oppo v. Panasonic UPC, Huawei v. Netgear UPC, Party Conduct Emphasis, UK Interim License Declaration, UK Global FRAND Rate Setting, Unwired Planet Decision, Panasonic Interim License, Xiaomi Interim License, Lenovo v. Ericsson, Lord Justice Birss, Payment on Account Analogy, Mr. Justice Mellor, Warner Brothers Nokia, UK Court of Appeal, UK Comity Consideration, UK Anti-Anti-Suit Injunction, UK Supreme Court April 2026, Tesla v. Avanti InterDigital, InterDigital v. Amazon, Anti-Interim License Injunction, Anti-Anti-Suit Injunction (AASI), Conflicting Court Orders, Contempt of Court Risk, Judicial Comity, Cross-Border Conflict, UK Germany Conflict, UPC UK Tension, BSH Judgment, Extra-Territorial Reach, Concurrent Jurisdiction, Forum Selection Strategy, Multi-Forum Litigation, Anti-Suit Injunction (ASI), Anti-Anti-Suit Injunction (AASI), Anti-Interim License Injunction, Ex Parte ASI, ASI FRAND Context, ASI Competition Law Challenge, ASI EU Competition Rules, Injunction Gap, Interim License Character, Actual License vs. Declaration, Patent Pool Rate, Patent Pool Administrator Conduct, Access Advance Pool, Via-LA Pool, Pool Rate Challenge, Pool Scrutiny, Consensual Pool Rate, Bilateral vs. Pool Rate, Pool Transparency, Pool Non-Discrimination, Double Dip Issue, Pool Market Orientation, Pool Antitrust Analysis, Pool Administrator Behavior, Automotive Licensing Negotiation Group (ALNG), German Federal Cartel Office, DG Comp Approval, EU Commission Approval, Auto Sector SEP, Car Manufacturer Licensing, German Auto Industry Lobbying, Collective Holdout Concern, Licensee Alliance, Licensee Cartel Characterization, SEP Regulation Automotive Provisions, ALNG Transparency Requirements, ALNG Safeguards, Smallest Saleable Patent Practicing Unit (SSPPU), Supply Chain Licensing Level, End Device Licensing, Component Level License, Supply Chain Indemnification, Indemnification Risk, Supplier Licensing Obligation, OEM Manufacturer, SEP Claim at Component Level, High Value End Product, Downstream Licensing, Upstream Contract Negotiation, Supply Chain IP Allocation, Contract SEP Clause, Negotiation Breakdown, Licensor Licensee Gap, Commercial Rate Agreement, Market Feedback, Industry Rate Benchmark, Licensing Efficiency, Deal Once Philosophy, Bilateral Negotiation, Rate Framework Value, ASP Based Rate, BOM Impact, Licensing Program Design, Negotiation Conduct Record, Settlement Pressure Tool, EU Competition Law, German Antitrust Office, DG Comp Guidelines, US Antitrust Law, Licensee Cartel Risk, Collective Holdout, Competition Lens FRAND, Contractual Lens FRAND, Antitrust FRAND Approach, US Deputy Assistant Attorney General, Dina Kallay Statement, Illegal Price Fixing, Licensing Negotiation Group Approval, PMAC Arbitration Institution, ICC SEP Rules, WPO SEP Rules, Arbitration SEP Dispute, Mediation SEP Dispute, Hybrid Litigation ADR Model, Draft Arbitration Rules, Award Transparency, Arbitration Award Publication, UPC ADR Mechanism, EU SEP Regulation, European Parliament Challenge, European Commission SEP Regulation, CJEU Challenge, Supply Chain Licensing Provisions, Germany SEP Regulation Advocacy, SEP Regulation Pool Provisions, SEP Regulation Status, SEP Regulation Future, Unwired Planet, OPPO v. Nokia, Huawei v. ZTE, Huawei v. Conversant, InterDigital v. Amazon, Tesla v. Avanti, TCL v. Access Advance, Vestal v. Access Advance, ACT v. OPPO, TCL v. AXA Advance, Huawei v. Netgear UPC, Oppo v. Panasonic UPC
[RAJ JAGDEV]
So welcome back, everyone for our first session after lunch, which is always a tough one, but luckily it was cold outside, so you won’t be too sleepy. So starting with you know, looking at these large-scale litigations looking at SEP and FRAND issues, I wanted to introduce to you Raj Jagdev from Powell Gilbert. He’s a partner out of the London office. Raj and Berkeley Law have been doing a lot of work together over the last two years on UPC work, and then how the UPC and the SEP world collide.
So I’m, I’m pleased that you would, would fly over here once again, to, to lead. So thank you. Any excuse is a good excuse.
Thank you. Thanks, everyone. So we have a great panel here today.
And SEP FRAND litigation is a fantastic panel to have after lunch. It is incredibly exciting and bound to keep you all awake. Um, so we have, to my right here, Yang Ye from Verisilicon, and Kai Rissing from Vossius, and Jane Bu from ViaLA. So some scene setting.
2025 has been a very active year in the SEP FRAND space with a lot of activity in the AV SEP world in particular. Um, the spotlight’s very much been outside the US on Europe, and also uh, a bit on China as well. The UK, of course, has been innovating. Sorry, is this better?
Yeah, there we are. I’ll, I’ll go from the top. So 2025 has been a very active year for SEP FRAND litigation in particular in Europe with a spotlight on the UK and the UPC. The UK courts have been innovating with interim license declarations, and the UPC has taken an increasingly important role in SEP FRAND disputes.
Also further east China has been innovating in the SEP FRAND space as well, with the Chinese courts now willing to engage in global FRAND disputes and also on pool rate setting exercises as well. And so in this panel, we’re gonna split it in half.
We’re gonna start off with a bit of an update on developments in non-US SEP FRAND Uh, litigation, starting with China, and then we’ll move on to Europe. And then we’ll talk about strategy and the implications of that on both SEP holder and implement strategies. So with that said, I’m going to hand over to Yang to talk about developments in China.
[YANG YE]
Thank you, Raj. Good afternoon, everyone. It’s great to be here. So, at the very beginning, let me say that I know in this room, many of you have already worked on these SEP FRAND matters every day.
Technically, I’m not the expert in this area. Um, I’m pretty– I mean, my day-to-day work is very cross-functional.
So today, I will share a high-level perspective, you know, based on public cases and general industry observations about China. Um, so China, let’s start from China’s courts.
So, Chinese courts recently years have already issued several noteworthy SEP FRAND decisions. It’s very clear, we can see the trend. Chinese courts are not just handling their local SEP fights.
Now, actually, they are increasingly part of the global FRAND matters. So first thing we can see, China is very willing to set global, I mean FRAND rate. So you can see this clearly in OPPO versus Nokia. The Chongqing court, the local court in charge of this case, asserted on global jurisdictions, and also, you know, issued the first instance judgment setting global FRAND rate.
Right after that decision, actually, both parties just settled globally. They announced the settlement. So we can tell, actually, these rulings carry commercial weight.
Well, none of this just came out of, you know, thin air. Actually, in the Huawei versus Conversant case Chinese courts have already laid the foundation.
So the first ASI, anti-suit injunction, and the adoption of top-down FRAND method. Um, so secondly, we can see China is not just focused on the number, the rate. They also evaluate how or whether both parties, you know, really acted in good faith. In ACT versus Oppo, actually, the Supreme People’s Court made it very clear if either side, you know, drags its feet or just plays holdout, actually, this conduct will be reflected in the court’s final rate and damages.
So it’s a strong indication to, you know, show up and negotiate seriously. Um, third, I would say in cross– you know, cross-border disputes, China is also defining rules. In Huawei versus Netgear, the Supreme, Supreme People’s Court issued China’s first AASI, anti– anti-suit injunction, and said these tools may be granted where the SEP holder has fulfilled its, you know negotiation FRAND duties and the implementers is clearly at fault. So we can see procedural fairness really matters in China.
And we, we can also see Chinese courts extend, you know, their jurisdiction, and the FRAND scrutiny over the you know, patent pool context. In TCL versus AXA Advance, the case settled, but the signal is very clear.
So China is willing to scrutinize foreign-run patent pool, when, you know, it affected Chinese domestic industry. So yeah, that’s kind of from judicial side. Um, shifting from courts to regulator, I would see China is also shaping brand through administrative regulations.
So, as Raj said, you know we have some guidelines issued by Chinese administrative regulators. First, SAMR, that’s China’s top competition regulator, issued the SEP guidelines in 2024.
They basically just clarify how both parties, you know, negotiate in good faith on paper. This is the first time on paper. So, you need to have clearer disclosure, and you need to exchange meaningful and real information, just like patent charts claim charts and rate basis. Um, so second, I would say earlier this year, CNIPA China’s patent office released its patent pool guidelines.
So they emphasize market orientation, non-discrimination, and openness. They wanted to support more balanced pools with reasonable rates and some transparency. So, that’s kind of the China’s landscape.
[RAJ JAGDEV]
Thanks, Yang. And it’s very interesting, quite a few of the cases that, that you’ve talked about have also played out I– in Europe, and that’s just the nature of sub brand disputes with disputes taking place in multiple fora around the world. And Kai, can I hand over to you to talk a bit about the the European perspective and updates there?
[KAI RÜTING]
Sure, many thanks. I think it seems that China is, has more the focus on policies issues, policy guidelines, and then rate setting. When we now look to the UPC and Germany, so guess what? Probably not surprising, the focus is more on enforcement than on determination.
So let’s start with, with Germany. The reference point for, for the FRAND decision in Germany and also for the UPC is the CJEU decision, Huawei versus ZEE, where, where the European Court of Justice adds its five requirement tests, you need the notice from the patentee, willingness declaration from, from the implementor, then the FRAND offer from the patentee.
This is a counteroffer from the implementor and if the counteroffer is rejected, then the implementor should place a deposit. The Supreme Court of Germany reframed this to, to some extent and puts a focus on the willingness requirement, so it seems to be that there are not so many implementors are willing these days.
I think not a single decision the last years found willingness and so they applied a more or less conduct standard as a test and especially looked into the negotiation history and how they engage with negotiations. We have seen two main German judgments, or one was not a judgment, were guiding in the last, last months. One came from the Court of Appeal in Munich, which focused on the last requirement, as the first requirement is providing a deposit and the, the court came up in saying, “We are only looking in the FRAND offer and then consider FRAND determination if the implementor has provided a deposit.” And this deposit has to be according to the request of the patentee, which can be worldwide, which is a huge– it has a huge impact for the implementor.
This was one decision by the Court of Appeal in Munich, and the first instance in Munich made another, it’s, it’s ongoing case, it was just a guidance in, in one, one case, a guidance order because the court said, “We are not entirely following our Court of Appeal principles, we also require this, this deposit, but we are much– we’re a bit more flexible. So we, we, we look into, in, in, into the FRAND offer even if the deposit has not been placed, but what we require is that there has to be an actual payment done in the amount the parties can h– have an overlap of their FRAND offer and the FRAND counteroffer,” which is also new for the German standard.
So, and they also place focus on the conduct of both parties. So, which really places the implementor in the situation that they have to consider placing a deposit for litigation in Germany, even though it’s ongoing– can be an ongoing international battle, you have an– the, the, the, the FRAND offers on the table are for worldwide portfolio license. So let’s move to the UPC.
There we have seen two decisions in this year. S– first one was this Oppo versus Panasonic decision where the court accepted jurisdiction about the FRAND determination by, by the UPC. The court applied more or less the ZTE Huawei rules, a bit more flexible. So they, they looked at the last offers from, from the implementors and at the patent holders and they put similar like, like the German case law before, put emphasis on the conduct of, of the parties.
So they really want to see that the parties are engaged, that they render account about their activities and so on. Second decision, what we have seen is the NETGEAR Huawei case. Also, there, the FRAND defense was rejected and was more or less a similar analysis like in the Panasonic/Oppo case.
There is a certain trend. What we see is there, a first decision filed in the Paris local division, where the patentee is, seeking a royalty determination– and there seem to be further decisions also following suit. And currently, there is a discussion whether the UPC is competent to have this active royalty determination, so not as a defense, as a counterclaim, but as an active royalty determination.
There seems to be also the trend that the UPC just are keen to have this royalty determination. When they talk about conferences, they clearly indicate that they are willing into looking into this royalty determination. The question is then, with this, can also be a threat that maybe both parties consider settlement before the UPC is setting a royalty in order to not handing this over to a third party.
[RAJ JAGDEV]
And th– that probably takes us neatly onto the UK, because of course, the UK at the moment is the only jurisdiction in Europe that is willing to set global FRAND. I was about to say worldwide, but not in light of developments in China. And there is a tension, of course, between the UK and its global FRAND rate setting and the UPC courts and potentially also certain national German courts. Uh, Kai, you mentioned Huawei-ZTE and the approach in Germany, a– around putting deposits into court, and that’s to demonstrate the willingness of the, of the licensee.
Because I think what Huawei ZTE says is that a willing licensee would be prepared to take a license from day one of first use. So, that takes us to interim licenses or interim license declarations. So the UK courts in the last year has granted several interim license declarations starting with Panasonic, Xiaomi, and a few since then, the high watermark being Lenovo Ericsson case. So, what is an interim license declaration?
Well, it is a declaration by the court saying that a willing licensee and a willing licensor will be prepared to enter into a license pending final resolution of a FRAND dispute and final determination of FRAND rates on the terms set out. And in a recent Court of Appeal decision from the UK, one of the judges, Lord Justice Birss, equated the interim license regime to the requirement in the CJEU decision, Huawei ZTE, for a payment on account. How does that square with the approach taken in Germany?
Do the German courts see the interim licenses as a– as a mechanism for achieving that?
[KAI RÜTING]
Well, I–uh uh, it’s a good point. I think on the previous panel, we had this indication with this extra-territorial reach, where does it take us? So, we have seen this surprising development in the last two months, that, that in the Amazon-InterDigital case, Amazon was seeking a FRAND determination in the UK.
And they have not applied for interim license, but they have hinted that they might do so. And what InterDigital did is they went to, to the German court and to the UPC and asked for an anti-interim license injunction and got this granted. This is a court where, where arguing that this is not in line with EU competition rule and would deprive InterDigital from its right to, to enforce its patent in Germany and, and, and the UPC.
And for me, the question is about the character of this interim license. So it’s not–
[RAJ JAGDEV]
Yeah.
[KAI RÜTING]
–if It would be an actual license, then I could agree with this analogies analogies that, that then this would deprive the basis for, for the German litigation. But if you apply this with, with a starting and an end point, not as an actual license, you would be free to still do infringement litigation with Germany.
And so now we have this real-world situation that we have two conflicting judgments. We, we have this anti-interim license injunction, and the UK responded with an anti-anti-suit injunction against the German and the UPC action.
And so now it’s a tough thing. I think one of the judges mentioned in that he don’t know what to do, maybe he can be in breach of contempt of court, or so I think we are not going so far, but it’s really, it’s not an open conflict, but what we are have is this situation arrived that we have this really conflicting.
[RAJ JAGDEV]
Yes, it has been quite sensational in Europe with lots of commentary by, by various parties and judgments flying over, over the English Channel between Germany, uh, and the UK. And, and you’re quite right, the English court did grant an anti-anti-suit injunction in the InterDigital Amazon case, to protect the global FRAND rate setting application claim that Amazon had made in the UK. But the court was careful not to encroach on the anti-interim license injunction that was granted or the equivalent ASI by, by the German courts. And of course, Amazon didn’t seek an interim license and haven’t sought an interim license there.
But I understand there may have been a decision on this in the English courts, a return hearing on the AASI just in the last day. And so it is a very fast-moving area of law. I mean, in relation to that, there have been a number of other AASIs and an equivalent such reliefs granted by the courts. And certainly the English judges are, are conscious of the issue of comity.
I think comity is a topic that’s going to come up time and time again over today and tomorrow in the litigation stream. As long as, as well as the SEP FRAND space, we have the BSH judgment that was alluded to earlier, and reconciling the jurisdictions of independent courts is important. And so, Mr. Justice Mellor, in his recent ex parte decision in Warner Brothers and Nokia, did hint that in an upcoming decision, he’ll be handing down, hopefully, in the next week or two, he will address the issue of comity, and how the interim license regime that the UK is now de facto established can be reconciled with or maybe reconciled with the, the patchwork nature of FRAND litigation as it stands at the moment. All in all, it’s an interesting world to be in at the moment.
So, Jane.
[JANE BU]
Yes?
(Raj laughing)
[RAJ JAGDEV]
How does this play out for a SEP holder, or indeed a pool representing multiple SEP holders? How do you feel about the turmoil, perhaps that we’re currently in? Or I say turmoil, the–
[JANE BU]
Yeah.
[RAJ JAGDEV]
The active innovation?
[JANE BU]
Okay. So first of all, I wanted to do the same disqualification that, from Yang did, that I am not even a lawyer. I don’t know who invited me, I just realized. The Patent Law Institute, right?
(all laughing)
But I do work for a patent pool, and I’ve been done, have done nothing but SEP licensing for the past 15 years. So, I do have something to share, but only on a pragmatic viewpoint to share. And for all of those Americans who’ve seen Shrek, right?
He always says, “There’s an onion, there’s a lot of layers.” So, I wanna peel a couple of layers for you, in terms of that. So, the first question is, I want– if I were to ask you, don’t worry about it, you don’t have to answer, Yang and Kai, UK or China, which court is a better court, a better-fitted court, a more fairer court to adjudicate a worldwide rate? Don’t answer that.
I don’t wanna cause some trouble here, right? No one can, and, and because there’s no true answer for that, because once you start saying, “Oh, oh, UK is more pers– perspective for the licensors, and China’s protecting the licensees.” There’s no end because of the perspective, who you are talking to will give you an entirely different answer, and there’s no end to. So, what I wanna say to that is that, in the end of the day, it’s a tool, right?
Why do people go to court? I’ve seen hundreds of negotiations break down, I also see hundreds of negotiations that go well. But at the time when a negotiation breaks down, when a licensor says, “I want a dollar.” Licensee says, “I want a penny.”
And you have no way out of that situation, you have to go somewhere. So, it’s not about whether the court could, or is able, or should adjudicate a rate. But the fact there is a place you can go when everything else breaks down is a tool to force two sides more effectively, the two bosses, the two decision-makers to actually be adults and make a decision at the end of the day.
So, that’s the premise, the very first layer of that onion, of what I think of court adjudication, all the turmoil as you say, that’s out there. Everything that’s happening from a non-lawyer’s perspective is great, because that risk and uncertainty really brings people to the table, and actually agree on a price between a penny and a dollar. That’s just a random number, nothing is a dollar or a penny.
All right. Now, the second layer of that onion is that I used to be a litigator, and no one else, no one here is willing to admit that an end result of a case has 50% to do with the skillset of a lawyer, of the lawyer team, right? Depending on how good your experts are, did you get your trial exhibits in?
Did you get the expert to say the right thing? All of these things ultimately of a court procedural has nothing to do with market, nothing to do with FRAND, nothing to do with fairness or pricing, that ultimately contributes to the end result of a case. So, how would you say that number a particular court gives is the right number or the fair number?
But it has value because I was just chatting with Kai earlier, that the Unwired Planet case, right? That was 10 years ago. That was the first case that adjudicated rate. It had a huge impact on how business was done, even though what they said was ultimately a couple of courts converged to 4GMG.
It was 10 years ago, my memories are fading, was like 8% to 10% of ASP is the right rate. And I was like, “ASP? Oppo phone’s $100, iPhone’s $1,000.”
So, are we talking about 8% of $100 or 8% of $1,000? And IDC give you a average rate of $300. 8% to 10% is $24 or $36. I don’t see a lot of manufacturing out there.
I see couple. $12 putting on your BOM, would that make or break your business? It absolutely would.
25 cents would, 12 cents would, two cents would matter, right? So, a court gives a 8% to 10% has no real value and truly determine what is the right rate.
But it gives a framework for people like me who are not lawyers, go to the negotiation table to say, “All right, can we talk about this? Can we have a framework?” So, all of this talk comes back to the second layer of that onion is that it’s very useful. It may or may not be right, but it’s useful. And the third layer, finally, because we have to talk about pool because of the pool expert, ’cause you asked about there were a lot of pool adjudication of a worldwide rate that’s out there.
Now, it’s even more complicated, and I do not speak on behalf of my company or any other pools out there, or my licensors, or anyone else. Just from a very objective academic analysis point of view, is that the pool has a lot of consensual licenses. Thousands of licenses, hundreds of licenses that reached by two parties through negotiations without litigation.
And we can’t say whether these consensual rates are FRAND, they’re most likely probably FRAND,but they don’t have to be because two parties agreed. Who cares, right?
Frand is a legal determination. The consensual rates is a two-party voluntary decision, so there’s overlap, but when you have hundreds and thousands of consensual rates that have been validated by other licensees, I think it will be a little bit challenging. I’m not saying impossible, but it would be a little bit challenging for a court to look at that rate and say, “That’s wrong.”
Right? But I think a better and potentially smarter question to ask is maybe it’s the behavior of the pool administrator that should be questioned or should be adjudicated rather than technically a rate.
But all of this, again, I just wanna emphasize, I have colleagues here, I wanna keep my job. I’m not talking about my pool or anyone’s pool or any pool out there. Don’t get offended. It’s just a very academic discussion I wanna throw out at the audience as well as my co-panelists.
[RAJ JAGDEV]
So, that’s an interesting perspective and takes us nicely to another development in the UK. So Tesla is in litigation with Avanti and InterDigital in the UK where Tesla is seeking a court determination of the Avanti pool rates. And it’s not the first attempt at a pool rate determination in the UK.
The first was several years ago where Vestal sought a court’s termination of the Access Advance rate. And that failed the jurisdiction phase.
And similarly, Tesla failed the first instance and the Court of Appeal. But there was a dissenting opinion from Lord Justice Arnold, one of the ex Patents Court judges who now sits in the Court of Appeal suggesting that actually it, it ought to be possible to, to scrutinize a, a, a pool rate. And that case is now going to the Supreme Courts in April 2026. And we heard from, from Yang that uh, the Access Advance dispute, TCL access advance dispute in China also led to the Chinese courts at least saying in principle that it would be open to, to considering or looking at a pool rate, though that’s settled, I think.
[YANG YE]
I would say, I totally agree with you know Jane’s, you know, comments. I think for Chinese courts, I know recently when I introduced the case, they do have you know, some signal that, oh, I’m sorry. Sorry. We do see Chinese courts extending FRAND scrutiny, I mean, into the patent pool, right?
So, but during that context, I think even, you know, combined with their regulation issued earlier this year, I think Chinese, actually, no matter from judicial side or just regulation side, I think they just wanted to emphasize the transparency. Right?
[RAJ JAGDEV]
Yeah.
[YANG YE]
I think that’s a trend we can see, but for the pool rate, how reasonable I don’t think– Personal opinion as well.
[JANE BU]
Yeah.
[YANG YE]
I don’t think, you know, there’s a good answer for that.
[JANE BU]
So, if I have a if we have a black crystal ball, and then we come back here in five years, I think a court’s eventual adjudication of a rate is unavoidable because there’s too much space. It’s going to happen, right?
We can debate all we want. And and then, but it’s interesting to point out is that the Vestal case uh, against Access Events is not necessarily– It didn’t result into a pool rate challenge directly. It’s the Access Events comment on, “You figure it out. Your, you have a lot of bilaterals.
It’s none of my problem. You figure it out.” Right?
That is the thing that got them into– Was adjudicated, it wasn’t a direct attack on what that rate was. And as Yang said, the China court for TCL, Access Events was merely a indication of, we’re willing and we’re capable to do this, but they didn’t do it yet.
(laughing)
So it’s interesting to find out what’s going to happen
[RAJ JAGDEV]
It, it, it certainly is. And your perspective on what it may be appropriate, personal perspective on what it may be appropriate to put to judicial scrutiny is interesting. It also shines a bit of a light on the different approaches to, to looking at SEP FRAND between the UK, for example, and, and continental Europe. The UK, of course, is a common law jurisdiction like the U.S., and we look at FRAND through a contractual lens.
Whereas in, in, in Europe and certainly in Germany, it’s very much through a antitrust competition lens. And uh, I wonder, Kai, if, if that might flavor how a European court might look at, at, at a pool rate if it were asked to do so.
[KAI RÜTING]
Mm-hmm. Right. So let me provide some European angle. I think courts have looked in the past into the pool rate, and they should scrutinize it.
But of course, it’s difficult because you have so many indications from so many widely accepted license agreements, and it’s difficult to challenge them. But from an antitrust view of point, which is applied by the German courts, there might be some reasons, conduct of, of the pool administration, structure of the pool, or we also had this issue of double dips is that they’ve always same patent in two different pools, and then the pool said, ‘I pay you back, see, our higher royalty.’ And so there might be angles to challenge this, and court should be able to do so. What we now have in this David versus Goliath playing field is that we have, the antitrust perspective.
There was a notification from the German Antitrust Office in 2045, which allowed not a license negotiations group to sit together and to discuss licensing rates in the field of the automotive industry. And the same has now under very high restrictions allowed by the European Commission in July this year, they allow licensing negotiations group for the car sector, is that they can sit together and exchange transparency and other limitations are obviously a clear factor and also it has to be open, the licensing groups, even open to the SEP holder.
So that’s definitely something to really to, to provide two sides with at arm’s length to negotiate.
[RAJ JAGDEV]
And that’s quite an interesting development, and certainly has raised eyebrows on this side of the department. So the US Deputy Assistant Attorney General, Dina Kallay at an event in London recently responding to the ALNG approval by DG Comp, said that this seems to permit a collusive licensing negotiation groups which constitute illegal bias cartels under US anti-trust law. And so it perhaps shines a light on the different approaches to FRAND and competition law generally. But Jane, what, what do you think?
I mean, is it helpful to have a counterpoint to the pool? Would you rather negotiate with a single entity representing a group of licensees rather than going at them one at a time?
[JANE BU]
If you put it that way, of course, I only wanna negotiate once instead of 100 times, right? So it makes my job easier. But it’s interesting that I’ve been asked this question before, and the question usually is set up as, “What do you think of a licensee cartel?” I was like, “Well, why don’t you just ask me are these criminal behaviors okay?” Right? But it’s already, it’s already deeming such a negative connotation, cartel, it’s not a cartel, it’s a licensing alliance and then so, so again, I, I, I gave up my legal practice, which is the best thing decision I’ve ever made many years ago.
And so, I do not have to speak on an anti-trust perspective because in all seriousness, they are concerns, there are very serious concerns about having a group of competitors coming in a room to do collective holdout, right? That is a reality.
But however, from the pragmatic point of view, I’ve negotiated hundreds and hundreds of licensing deals. No one has ever said, “Is this price fair or FRAND?” They only ask, “Did my competitor pay more or less, right?” If I could answer that question, the deal could have been done, but a lot of times you couldn’t answer that question, and then so from a bilateral licenses point of view, going back to the onion, the first layer, there’s a lot of benefit to get industry feedback, a lot of licensing program what they need And they say, “We want industry feedback.” I wanna ask the audience, what is industry feedback?
Industry feedback is more than one licensee’s feedback on what the rate is, what they’re willing to pay. And that’s the most valuable information in real life that you can get in licensing negotiations. So there’s nothing more efficient and effective to have a group of similarly situated licensees be able to tell you, “This rate is the right rate,” and you get that market feedback, right? But on the other hand, I absolutely see the issue is that, well then, is there any safeguards like the way the pool has safeguards?
Is a three-month negotiation good enough or six-month or 12-months? Can it be forever? Are there any consequences if a group of licensees truly collective holdout?
Are there any benchmark rate that we can use after years of negotiations, no one gets anywhere, and you just lose three years of past practice because the statute of limitations out there is statute of limitation told for the time the licensing alliances is in discussion with the licensors. So all those details are not clear. So a lot more homework has to be done before I think a legitimate group of licensee alliances can step up and say, “Let’s get on the adults’ table and discuss real rates.” But ultimately, my personal opinion, not representing my organizations or my licensors or any pools out there, and I hope I have a job after I say this, is that pragmatically, I think it’s not smart to say that there’s not a single scenario that we can come up with.
There’s no efficiencies for a group of licensees to be able to talk about what a fair and a reasonable rate is collectively and just do this deal once for me, if I could just do the deal once instead of negotiating 100 times, I’ll do it in, but it’s not about me, it’s about what, you know, the lawyers and the laws and the courts will say, but that’s my kind of a pragmatic viewpoint.
[RAJ JAGDEV]
So, Kai, it is interesting that this Auto ALL Automotive Licensing Negotiation Group, the ALNG started off in the German–
[KAI RÜTING]
Mm-hmm.
[RAJ JAGDEV]
–uh, Federal Cartel Office uh, and then went to DG Comp for approval. Of course, the auto sector is very important in Germany. Do you think that played into its formation at all?
[KAI RÜTING]
Definitely, this was lobbied by the auto sector long ago.
[RAJ JAGDEV]
Yeah.
[KAI RÜTING]
Same like the auto sector lobbied the SEP regulation and put in the provisions in this respect. That definitely plays into the role. And well, one should also not forget where we had all these car litigations where they sued the last product in the chain, not at the ship level and so on. And this– Who’s real bloated to the industry?
They never faced the patent litigation in Germany. This has been the first times, and so thats’s what, where this come from, but you should also not forget, get this still puts the burden on the car manufacturer to, to get involved in the front negotiation. The history to declare willingness, and this conduct, so that’s still something which they have to, to chair for following this.
[RAJ JAGDEV]
Yes. Well, you mentioned the level of licensing in the auto sector, and that raised another interesting point around SSPPUs, which stands for, of course, smallest saleable patent-practicing units, a mouthful of an acronym. And Yang, you’re in-house a VP at VeriSilicon, which is a supply chain partner.
So, what considerations do you have to have in mind when contracting with customers when it comes to IP rights and steps?
[YANG YE]
I think that’s a great question. So first, I would say, you know, as I said, my work is very cross-functional. So, from an operation perspective, I would say SSPPU is often less, you know, about a strict legal formula. Actually, it’s more about, you know, understanding where value is created in a supply chain.
So, in my daily job, I would say, this is my observation, I would say if we do the contract negotiation, I would bring this topic, you know, upfront. Why?
Because you know, sometimes the standard, I mean, SEP is implemented at the component or just from the supplied IP level, but the licensing negotiation targets the downstream, I mean, high-value product. So, that disconnect just creates the very big contractual task, I mean, risk for the supplier, indemnification.
Because if a SEP claim arises, damages to you are usually tied to the high-end product value. But as a supplier, sometimes when you sell a relatively, I mean, comparatively, you know, lower-cost component or IP you need suddenly face such a big indemnification obligation because that tied to the high-value, you know, end– The product.
So, that’s why I said we should have an earlier communication. In the very beginning, both parties in, I mean, between the supplier and the OEM manufacturer, they should bring this topic up, you know, talk about whether they want to include, you know, any discussion about SSPPU.
Meaning, if SEP claim should be included or not included in the indemnification or if how both parties really want to allocate the risk. So, there’s no one single, I mean, correct answer for that, but I mean, aligning expectations between parties is very important. It’s much better than dealing with surprises later. Yeah.
[RAJ JAGDEV]
And for the moment of course the question of where to license supply chain appears to be relatively well-settled. It seems to be at the end device stage.
And I’m going to come to you, Jane, on this, but do you see that changing with more complex products? For example, cars, where a car is predominantly for driving and conveying people from place to place.
[JANE BU]
So I would divert that question, a typical lawyer tactic. I would divert that question to answer the one that I really want to answer.
[RAJ JAGDEV]
Of course.
[JANE BU]
Is that I don’t think the key is really SSPPU because it’s a tool to get to a pricing point. How much are you going to pay?
What’s the damages model? It’s about what you’re going to pay, right? So, the real issue is the level of chain.
Who is going to pay is more relevant rather than– because it doesn’t matter if it’s– I don’t want to use an actual pool price. I’ll just use a dollar for easy math.
If the price is a dollar, does it matter? If the price is a dollar that’s determined by a pool or by a group of licensees or licensors, doesn’t matter. It’s paid at which supply chain level or the end level. Now, the real debate is, should licensors allow supply chain, anyone at supply chain, to take the license at the same price, or you really want to go to the end manufacturer?
I think that’s the more relevant debate, more interesting topic because pricing, at the end of the day, when two parties agree, when a pool, an entity agree, nobody asks this is based on SSPPU or end unit. It’s like a dollar, I’m willing to pay, deal’s done, right? But who is paying for it?
That is the real debate, the timeless debate that is the ultimately relevant question.
[RAJ JAGDEV]
A wonderfully complex question.
(Jane laughing)
[JANE BU]
Which I did not answer, so.
(Jane laughing)
[RAJ JAGDEV]
So, we have three minutes left. I thought very quickly, Kai, the last topic. The interplay between the UPC and the UK.
Well, let’s focus on the UPC specifically. So, the judges in the UPC have indicated a willingness to engage in FRAND rate setting. And you mentioned earlier that there’s already a case in Paris, and potentially there are more in the pipeline for, for FRAND rate setting.
How do you think that’s going to play out, and how, in terms of the jurisdiction of UK and China also engaging in rate setting, but also given the specificities of the UPC agreements and the territorial limits of this?
[KAI RÜTING]
Well, it can only be a speculation. So, we see, we will see more and more rate setting, and as we were chatting in the beginning, I’m wondering whether everything started with with Unwired Planet. Before Unwired Planet, we have not seen a worldwide licensing setting, but then the Chinese court started or followed the UK courts, and now that the UPC is open doing, to do this.
And so the question is, where does it brings us in the end? And so there might be, one solution could be that everyone goes back and has this then continent or UPC-wide, UK-wide, US-wide, et cetera, which apparently is contradicting the licensing practice as applied by the pools, or whether you have some other solution model and then ADR might be arbitration, mediation might be a model. We see from our pending litigations sometimes that client pick a hybrid models that they continue with the litigation forcing with the injunction to unlock some settlement interest on the other side, by the same time, engaging in arbitration or mediation.
And we will have another arbitration institution at the UPC, the PMAC, which have some special SEP rules. I think there have been some initiatives also from the ICC, and the YPO also engaged in special SEP rules. So this one is another try.
So they have published the draft rules. I think they’re still flawed to some extent. They are not telling much on transparency.
They’re not telling how the– whether the judgments, award will be published, in what detail, and so on. But this could be, potentially, a way to sort this out and to avoid stepping the UK courts or vice versa, the UPC courts stepping on the foot of the other judges.
[RAJ JAGDEV]
Indeed. 30 seconds. EU SEP Regulation, which has not completely died.
Uh, there, there’s been a challenge to that by the European Parliament who’s now– which has now sued the European Commission in the Court of Justice of the European Union. Could that be an answer to this, to provide another forum for SEP dispute resolution?
[KAI RÜTING]
In theory, yes. And I think still some, some countries like Germany advocating for, for the SEP regulation, you have some, some provisions in there on this supply chain. Settle– uh, licensing and so on. So this could be an answer.
[RAJ JAGDEV]
Very good. Thank you very much. Dead on time. Please join me in thanking the panelists and–
(audience applause)