ZTE-Samsung Case: A Lesson on Global SEP Licensing from a Chongqing Court

The dispute over standard essential patent licenses between ZTE and Samsung should not be simply understood as a fight over patent license fees between enterprises.

It is more like an observation window. When the technical standards, license fees, cross-licensing, sales forecasts, comparable agreements, and multi-country lawsuits in the global communication industry are intertwined, can Chinese courts use their professional capabilities to enter the scene of rule interpretation?

The answer given by the judgment of the Chongqing court is yes!

Judgment No. 905, Civil First Instance Case of 2024, of the First Intermediate People's Court of Chongqing Municipality.pdf 

Samsung-v-ZTE-FRAND-judgment-REDACTED-Final-for-hand-down-005.pdf 

The Chongqing court is not simply handling an intellectual property dispute, but attempting to disassemble the global standard essential patent licensing system through judicial means. It is precisely in this sense that Chinese courts are no longer just "referees" in intellectual property disputes, but are gradually becoming participants in the global technology trading order.

I. The significance of this case lies in "who interprets the rules"

From the perspective of the litigation request, ZTE requested the court to determine the global cross-licensing conditions for wireless communication standard essential patents, covering 2G to 5G wireless communication standards. The license period is from January 1, 2025, to December 31, 2029. The licensed products include mobile terminals and infrastructure equipment, and ZTE claims that Samsung should pay a one-time amount of $731 million. That is to say, this is not an ordinary infringement lawsuit centered around a single patent, a single product, or a single market, but a typical case of determining global SEP licensing conditions.

What is really complex here is not the amount itself.

What is complex is the structure behind the amount:

How to calculate the generations of 2G, 3G, 4G, and 5G?

How to distinguish between terminal equipment and infrastructure equipment?

How to handle the historical period and the future period?

How to compare the strength of the patent portfolios of both parties?

How to incorporate global sales, forecast sales, and discount models into the judgment?

Which comparable agreement should be selected?

Between the top-down method and the comparable agreement method, which one has priority, which one is auxiliary, or can they be used together?

These issues have long been shaped in fact by European and American courts, international arbitrations, licensing departments of multinational enterprises, and large patent pools. What the Chongqing court really entered in this case is the scene of rule interpretation in this global technology trading order.

II. The difficulty of SEP licensing lies in the fact that the rules are public but the price is a black box

There is a long - standing contradiction in the standard essential patent licensing system. The standards are public, the FRAND commitments are public, and the global industrial chain knows that implementing the standards cannot bypass SEPs.

However, the real price formation process is often not public. The licensing agreements are not public, the cross - licensing structures are not public, and the real license fees are not public.

Historical exemptions, regional discounts, cap mechanisms, future licenses, and the separation of base stations and terminals are usually hidden in the business agreements between enterprises.

Therefore, the so - called FRAND can easily become a result highly dependent on negotiation strength in practice.

Whoever has more ability to initiate cross - border lawsuits, can bear more pressure from injunctions, has more licensing data, and is closer to the mainstream judicial jurisdictions is more likely to influence the license fees.

This is exactly why Chinese courts must enter this field.

If Chinese enterprises are already important contributors to global communication standards, important suppliers of global communication equipment, and important participants in the global 5G industry, but Chinese courts cannot interpret FRAND, cannot review comparable agreements, and cannot calculate global license fees, then Chinese enterprises can only accept the pricing order established by others when participating in global technology trading.

Therefore, the key to this case is not whether the Chongqing court is "willing to handle it", but whether the Chongqing court has the ability to open this black box.

III. What the Chongqing court has done is to disassemble the black box into a judicial structure that can be reviewed

From the case process disclosed in the judgment, before and after the expiration of the "2021 Agreement", both parties conducted technical discussions, business discussions, and agreement discussions on the "2024 Agreement". During the business negotiation period, ZTE provided five cross - licensing quotes and three one - way licensing quotes, and Samsung provided five counter - quotes for cross - licensing. The two parties continued to haggle over licensing conditions, license fees, actual sales data, third - party data, comparable agreements, and calculation methods.

This shows that what the court faces is not a static fact.

It faces a dynamic negotiation process.

Therefore, what the Chongqing court needs to judge is not only "whether the final license fee is reasonable", but also:

Whether the quotes are well - founded;

Whether the counter - quotes are serious enough;

Whether the sales data can support the calculation;

Whether the comparable agreements are truly comparable;

Whether the historical agreements cover 5G;

Whether the non - lawsuit commitment has an independent consideration;

Whether the future license period can be judged by the court;

Whether there is a realistic basis for global cross - licensing.

This is the importance of this judgment.

It is not simply calculating a number in isolation, but transforming the most core commercial, technical, and legal variables in global SEP licensing into a structure that can be judicially reviewed.

IV. Professionalism is not limited to the legal dimension, but a composite ability

The most difficult part of SEP cases is that it is not a pure legal issue.

It requires the court to understand four sets of languages at the same time.

The first set is the technical language.

2G, 3G, 4G, and 5G are not just communication generation labels, but correspond to different technical contributions, different industrial cycles, and different standard essential patent portfolios.

The second set is the industrial language.

Terminal equipment and infrastructure equipment have different sales scales, profit structures, market cycles, and business models, and cannot simply apply the same logic.

The third set is the economic language.

License fees are not formed out of thin air. They need economic analysis tools such as sales data, forecast data, discount rates, industry cumulative license fees, patent strength, and comparable agreement disassembly to support them.

The fourth set is the international rule language.

The FRAND commitments come from the framework of standard - setting organizations, and global SEP licensing is in an environment shaped by multi - country lawsuits, extraterritorial case precedents, and cross - border business agreements.

The significance of the Chongqing court in this case lies in that it did not simplify the case into an ordinary infringement judgment, but faced these composite issues head - on.

This is not "judicial expansion".

This is an inevitable requirement for the professional capabilities of the court as global technology trading develops to the present.

V. The choice of method itself is the right to interpret the rules

In this case, Samsung argued that in the presence of comparable agreements, the comparable agreement method should be given priority, and the top - down method can only be used as an auxiliary reference at most.

However, the Chongqing court did not accept this absolute ranking.

The court believes that currently in practice, both the comparable agreement method and the top - down method are the main methods for determining the standard essential patent license fees. Each method has its own advantages and disadvantages, and there is no conclusion on whether there is a superiority or inferiority between them. There are also cases of applying both methods in domestic and foreign judicial cases. Therefore, there is no sufficient evidence to prove that there is a necessary order of application between the two.

This judgment is very crucial.

It shows that the Chongqing court does not mechanically accept a certain existing international approach, but establishes its own logic for method selection based on the evidence structure of the case.

For the 2G to 4G part, the court used the "2021 Agreement" as a comparable agreement and calculated using the comparable agreement method.

For the 5G part, the court used both the top - down method and the comparable agreement method, and in the comparable agreement method, used the "Samsung Electronics Nokia Agreement" as a comparable agreement for 5G standard essential patent licensing for calculation.

What is reflected behind this is a maturity in method selection. It is not superstitious about comparable agreements, nor about mathematical models. It is about knowing the usage boundaries of each method.

Comparable agreements may be affected by litigation pressure, business background, and cross - licensing structures.

The top - down method may be affected by industry cumulative license fees, patent strength evaluation, and model parameters.

A truly mature judgment is not to choose one method and exclude the other, but to establish a verification mechanism between different methods.

This is exactly the embodiment of judicial professionalism.

VI. The court's intervention is to repair the failed market negotiation

SEP licensing should of course be resolved through business negotiation first.

However, this case shows that when business negotiation fails to reach an agreement for a long time, the disputes between the two parties no longer stay in the conference room, but quickly spill over into global lawsuits.

The judgment records that since Samsung filed a lawsuit in the High Court of England and Wales on December 19, 2024, both parties have filed multiple lawsuits in multiple judicial jurisdictions such as the UK, China, Brazil, the US, Germany, and the Unified Patent Court of Europe.

This is the typical consequence after the failure of SEP licensing negotiation:

Commercial issues become litigation issues.

Technical issues become procedural issues.

License fee issues become injunction issues.

Licensing issues become global issues.

If the court does not make a judgment on the FRAND licensing conditions, the two parties are likely to continue to transfer the negotiation pressure to infringement lawsuits, injunction applications, anti - monopoly lawsuits, and procedural games in different countries.

Therefore, the Chongqing court's intervention in this case is not to replace market negotiation.

On the contrary, it is to bring the disputes back to the licensing conditions themselves after the market negotiation fails.

What the court needs to solve is not who can overpower the other in global lawsuits, but whose licensing conditions are closer to FRAND.

This is exactly the legitimacy of the court's entry into the global technology trading order.

VII. The real judicial voice is to clarify complex issues

For Chinese courts to enhance their global SEP judicial voice, they cannot rely only on the results, but on the reasons.

The reason why British courts have long had an influence in SEP cases is not because the British market is the largest, but because they continuously output FRAND judgment methods that can be discussed, compared, and cited.

Similarly, for Chinese courts to enter the global technology trading order, they cannot just stay at the surface expression of "protecting Chinese enterprises".

The truly powerful way is to clarify complex issues.

Clarify global licensing.

Clarify comparable agreements.

Clarify the license fee model.

Clarify the historical period and the future period.

Clarify the relationship between technical contributions and business scale.

Transform FRAND from a principle into an operable judgment structure.

This is exactly what is really worth paying attention to in the judgment of the Chongqing court.

It does not enter the global rule competition with slogans, but enters the scene of rule interpretation with professionalism.

The signal given by the Chongqing court is very clear. Professional ability itself is international competitiveness. In global SEP disputes, whether the court has a voice ultimately depends on whether it can make the market believe that it understands technology, industry, licensing, economic models, international rules, and global business realities.

The value of the judgment of the Chongqing court is not only that it confirms a certain license fee figure, but that it demonstrates an ability. In a highly complex global technology trading dispute, Chinese courts can organize evidence, identify disputes, select methods, disassemble agreements, handle models, and finally provide an interpretable judgment path.

For the Chongqing court itself, this is a display of judicial ability.

For Chinese courts as a whole, this is a signal to participate in the global SEP rule interpretation.

For Chinese enterprises, it means that in the future global technology trading, they do not have to rely entirely on foreign courts to interpret the value of their own technology.

Judgment by Zhichanli

The most important thing about the judgment of the Chongqing court is not that it determines a license fee between ZTE and Samsung. It is that it uses its professional ability to enter the scene of rule interpretation in the global technology trading order.

In the era of standard essential patents, what the court deals with is no longer just the boundary of rights, but how the technical value is traded, how the industrial benefits are distributed, and how the global licensing order is reconstructed.

The real signal released by the ZTE - Samsung case is that Chinese courts are no longer just referees in intellectual property disputes, but are gradually becoming participants in the global technology trading order.

This article is from the WeChat public account “Zhichanli” (ID: zhichanli), author: Guan Yinda, published by 36Kr with authorization.