Standard Essential Patents and the 5G Royalty Wars: 

Balancing Intellectual Property Rights with Global Antitrust Compliance

 

1. Abstract

This article covers the 5G Standard Essential Patent licensing that has prompted battles between national jurisdictions. The fair, reasonable, and non-discriminatory (FRAND) framework to support SEP licensing is indefinite, leaving loopholes to be countered by domestic laws such as the US Sherman Act. Precedents like Huawei v ZTE and FTC v Qualcomm have revealed insecurities for both sides, while giants like the UK and China fight cross-border jurisdictional battles through Anti-Suit Injunctions (ASIs) and Anti-Anti-Suit Injunctions (AASIs). This paper focuses on tactics such as monopolising false declarations, and ASI is harming the SEP framework, arguing the need for a unified mediation forum, a definite FRAND framework and non-aligned professional rate setters.

 

2. Introduction

With the advancement of technology, 5G, the fifth generation of cellular network technology, has provided humanity with faster internet access than its predecessors. The 5G standard has to comply with the already-owned ‘Standard Essential Patents’. A standard patent can be termed as a kind of property that entitles a patent owner to the privilege over new innovations for a period, usually for 20 years. Some patents are so ‘essential’ that they cannot be avoided and have to be declared as Standard-Essential Patents (SEPs). These patents must be complied with, and their licences must be obtained. The essentiality of these patents creates a kind of hegemony over them, leaving the market exploited by the few owners.

The basis framework for licensing of the 5G standard is called FRAND: Fair, Reasonable, and Non-Discriminatory. However, there is a serious problem with FRAND: corporations rely on their own definitions of FRAND in certain situations. The reason behind this battle for defining FRAND is the lack of a universal definition. The absence of a defined framework for the 5G standard has turned the licensing for SEPs into a battlefield. Although the purpose of Standard Essential Patents is to facilitate technological advancements, the lack of a common FRAND definition has created 5G licensing monopolies. The non-uniformity in national court decisions and the limits imposed by anti-suit injunctions have fractured the market, compelling the world to shift from domestic jurisdiction towards an internationally consistent arbitration framework.

 

3. Legal Framework

 

1. Contractual & SDO Framework 

The 5G innovations rely on Contractual agreements between the inventors and the Standards Development Organizations (SDOs). SDOs are forums that initiate and set technical standards for various fields in consultation with all stakeholders in the technology. These SDOs force clauses that seek FRAND terms from the patent owners for possible third parties. The purpose of the FRAND clause is to act as a barrier against unfair attempts by the owner to unlicense the smaller third party. These FRAND clauses are not defined and hence open to interpretation, which varies across jurisdictions. European Telecommunications Standards Institute (ETSI), an SDO, is a prime example that uses Clause 6.1 of the ETSI Intellectual Property Rights Policy to enforce FRAND on sellers.

 

1. Cross-Border Statutory Foundations (~120 words)

Monopolizing intellectual property by patent owners, undermining the FRAND clause, does more than breach a contract; it breaches competition law statutes around the globe. Countries have made their own local antitrust laws against this monopolization. Section 2 of the Sherman Antitrust Act of 1890 of the United States is the most famous national law against monopolization, as it penalizes parties that trick others into becoming a standard and then exploit third parties. Another statute governing the same space is Article 102 of the Treaty on the Functioning of the European Union, which bars the ‘misuse of a dominant position.’ 5G patent owners, as limited, are in fact in a higher position, and therefore should not be permitted to exploit smaller parties.

 

4. Judicial Interpretation

 

1. Landmark Precedents on Injunctions

A confusing situation arises when the patent owner asks the court to restrict a third party’s merchandise. The judge is faced with two choices: either to ban the opponent’s product and risk monopolization, or protect the competitor’s interest and risk hurting the owner’s dominant position. Two cases are essential to understand the implementation of the choices at hand. 

• In the case Huawei v. ZTE (CJEU, 2015), the decision was tilted towards the second option. After heated rounds of negotiation between the two Chinese titans, Huawei appealed to prohibit ZTE from using its 4G essential patent. ZTE presented the case as an ‘abuse of dominance’ case against Huawei. The European court described the ban as legal in this case, but ordered Huawei to first follow a phase of goodwill talks and avoid a sudden restriction.
• In contrast, in FTC v. Qualcomm (9th Cir. 2020), where the US challenged Qualcomm’s policy of high royalties on chip patents, the court confirmed that antitrust liability cannot even arise in cases of a possible FRAND contract breach.

 

5. The Rise of Global Rate-Setting & Forum Shopping 

In the case Unwired Planet v. Huawei (2020), the UK’s legal system made its position clear when dealing with SEPs and FRAND cases. The court established that in addition to jurisdiction over English patent cases, foreign corporations with interests in the UK must comply with rates set by English courts or be banned from operating in the UK.

In response to the UK’s bold judgement, China, the hub of 5G smartphones, used ‘anti-suit injunctions’ as missiles to pressurize companies seeking direction from Western courts, fining millions to those who didn’t comply. This was a geopolitical move to declare that China alone could set such rates.

Recently, in May 2026, the two jurisdictions, i.e., the Chinese and the British legal systems, came face to face when the UK’s court calculated FRAND rates for a patent at $392 million. However, the Chinese court valued the deal at $731 million. The big fiscal difference between the two valuations is the exact reason corporations have their preferences when choosing jurisdictions.

 

6. Critical Analysis

 

1. Market Distortions: Hold-Up vs. Hold-Out

Two technicalities, one favouring each side of the equation, are ‘patent hold-up’ and ’ patent hold-out.’ Patent hold-up is a manoeuvre by patent owners to exploit implementors, threatening to ban their merchandise and isolate them in the market. On the other hand, patent hold-out is a tactic used by implementers who install patented technology illegally and then delay any talks or procedures while the owner tries to collect royalties, costing the owner millions of dollars just in collection. These are the two big loopholes that sellers and buyers use as weapons of exploitation.

 

1. The Jurisdictional Clash & Methodological Flaws

The parties are not the only ones complicating the world of SEPs; the courts are themselves confused, as they lack a uniform method to calculate royalties that comply with FRAND. Courts either rely on the comparable contract approach, which sets value based on recent similar contracts and is criticised for being against FRAND. The other approach is the bottom-up and top-down method, which uses a percentage valuation of the patents owned and divides among the owners, making it hard to calculate. The two completely opposite methods produce different rates. Another similar problem is the over-declaration of SEPs, which SDOs are unable to verify due to a lack of verification procedures from the standard setters. This allows false SEP declarers to enter the market even when the patent doesn’t comply with the standard.

 

7. Recent Developments

 

1. Current Policy Overreach & Injunction Webs

The recent developments are somewhat disappointing, and a deadlock hinders any decision-making on the future of SEPs. In February 2025, the European Commission withdrew a few regulatory proposals, including the EU SEP Regulation proposal discussed for some time. The regulation couldn’t proceed because of disagreement among major stakeholders. Another recent development is the rise of anti-anti-suit injunctions (AASI) that counter anti-suit injunctions (ASI). Courts, especially in the UK, counter Chinese ASIs through AASIs to prevent parties from choosing only Chinese forums, creating a messy situation.

 

8. Suggestions / Way Forward

• A major suggestion to avoid cross-border jurisdictional battles is to mandate arbitration through a universal forum. With the obligation to approach a common arbitration tribunal, the parties will be spared from the forum-shopping battles and the supremacy of a single forum with definite rules. The arbitration framework and awards should be strengthened.
• The FRAND definition must once and for all be determined and secured through international legislation. For this, the stakeholders will have to collaborate extensively.
• Lastly, the rates must be set by non-state royalty experts. Although this may still be biased, it is better than multiple royalty valuations by different jurisdictions clashing through ASIs and AASIs.

 

9. Conclusion

With the shift from 4G to 5G, SEPs have become a geopolitical weapon in the hands of a few giants. Inconsistencies in the FRAND framework and the lack of a common policy have led to legal battles as big as Huawei v. ZTE (CJEU, 2015) and FTC v. Qualcomm (9th Cir. 2020), which have contrasting decisions leading to forum shopping and a struggle for rate-setting rights. Loopholes, such as holding up and holding out by owners and implementers, respectively, illustrate mandatory arbitration, expert-led rate setting and a definitive FRAND framework as possible reforms. In this age of essential cellular technology, the stakeholders must work together to address irregularities and the indefinite nature of the SEP procedure in a united forum based on arbitration and uniform valuation.

10. Bibliography 

 

Statutes

• Sherman Anti-Trust Act 1890, 15 USC section 2 
• Treaty on the Functioning of the European Union, art 102 

 

Case Laws

• Case C-170/13 Huawei Technologies Co Ltd v ZTE Corp [2015] ECLI:EU:C:2015:477
• Federal Trade Commission v Qualcomm Inc 969 F3d 974 (9th Cir 2020)
• Unwired Planet International Ltd v Huawei Technologies Co Ltd [2020] UKSC 37 

 

Secondary Sources

• Luke McDonagh and Enrico Bonadio, Standard Essential Patents and the Internet of Things (European Parliament 2019) 9 
• Lemley, Mark A., and Timothy Simcoe. “How essential are standard-essential patents?.” (2018) 609
• ‘What Are SDOs: Understanding Why They Matter’ (Kite Compliance, 30 September 2025) https://www.kitecompliance.ai/navigating-complia
• European Telecommunications Standards Institute, Rules of Procedure (12 December 2022) Annex 6 (‘Intellectual Property Rights Policy’) cl 6.1
• Carlos Aboim and others, ‘SEPs and War in the Courts: How Anti-Suit Injunctions and Interim Licenses Influenced Global Litigation in 2025’ (IPWatchdog, 30 December 2025) https://ipwatchdog.com/2025/12/30/seps-war-courts-how-anti-suit-injunctions-interim-licenses-influenced-global-litigation-2025/ accessed 7 July 2026 
• ‘UK court orders Samsung to pay China’s ZTE a $392 million lump sum after patent trial’ (Reuters, 1 May 2026) https://www.reuters.com/legal/litigation/uk-court-orders-samsung-pay-chinas-zte-392-million-lump-sum-after-patent-trial-2026-05-01/ accessed 7 July 2026 
• Kirti Gupta and Urska Petrovcic, ‘Evidence of Systematic “Patent Holdout”’ (2023) 38 Berkeley Technology Law Journal 575, 576 
• World Intellectual Property Organization, FRAND Economics: Valuation Methods in Licensing Standard Essential Patents (WIPO 2026) 
• Robin Stitzing and others, ‘Over-declaration of standard essential patents and determinants of essentiality’ (2017) SSRN Electronic Journal SSRN 2951617, 12 
• ‘European Commission Withdraws Proposals for Standard Essential Patents Regulation’ (European Commission EISMEA Newsroom, 21 February 2025) https://ec.europa.eu/newsroom/eismea/items/871191/en accessed 7 July 2026 
• Igor Nikolic, ‘Global standard essential patent litigation: Anti-suit and anti-anti-suit injunctions’ (2022) Robert Schuman Centre for Advanced Studies Research Paper 2022/10, 2
• World Intellectual Property Organization, WIPO ADR Options for FRAND Dispute Management and Resolution (WIPO 2022) 3 
• Jorge L Contreras, ‘Global Rate Setting: A Solution for Standards-Essential Patents?’ (2019) 94 Washington Law Review 701, 733