The New SEP Powerhouse: How China is Shaping Global Patent Disputes

As 5G cellular standards continue to connect billions of smartphones, automobiles, and Internet of Things (IoT) devices, the licensing of standard essential patents (SEPs) on Fair, Reasonable and Non-discriminatory (FRAND) licensing terms has emerged as a key interest of businesses and policymakers worldwide. SEPs represent tens of billions of dollars in economic value, while the standards they comprise are key to unlocking the next generation of critical and emerging technologies such as 6G communications and autonomous vehicles.

Accordingly, governments have closely scrutinized SEPs and considered new policies, ultimately concluding that reliance on courts to resolve licensing disputes is the preferred approach in current circumstances. For example, the European Parliament recently abandoned a long-debated proposal to regulate SEPs through an out-of-court licensing framework, reaffirming the role of European courts in resolving such disputes. Courts in the United Kingdom and European Union (EU) have issued key decisions in recent years that continue to shape global SEP jurisprudence, addressing issues such as jurisdiction, willingness, and confidentiality. In the United States, in 2022 the U.S. Patent and Trademark Office and Department of Justice stepped back from setting SEP-specific rules. Courts instead generally rely on traditional legal principles, evaluating each case based on the specific FRAND commitments, recognizing the diversity across SEPs and different Standards Development Organizations (SDOs).

Meanwhile, China is becoming an important and noteworthy jurisdiction for the resolution of both domestic and global SEP disputes, challenging traditional patent regimes in the United States, United Kingdom, and EU. In particular, the 2023 decision by the Chongqing court in Nokia v. Oppo marked a significant shift by establishing the first global licensing rates for SEPs from China, while the Supreme People’s Court (SPC) has ruled that Chinese courts have the authority to set global FRAND rates for SEP pools, e.g., in TCL v. Access Advance, including for foreign implementers of pools.

China’s growing SEP jurisprudence is accompanied by significant concerns over transparency, with limited public access to court rulings and anonymized decisions impeding external analysis. These trends raise broader questions about industrial policy, global regulatory alignment, and potential rebalancing of economic interests in SEP licensing.

As Chinese companies invest heavily in research & development (R&D) and expand their SEP portfolios, China’s legal strategies also reflect a broader ambition to transition from net licensee to net licensor in the global technology ecosystem. Such a shift has also begun to take place in other technological areas, such as biotechnology. U.S., UK, and European Courts need to take note to inform the priorities for their own jurisprudence, while industry stakeholders and practitioners need to adapt to the impact of these decisions in China and beyond.

This article explores key developments that underscore China's increasingly assertive legal posture, including its expanded use of anti-suit injunctions, landmark rulings on global royalty rate-setting, and the evolving jurisdictional reach of its courts over international SEP disputes.