The Geopolitical Shift in Global SEP Litigation

Global standard-essential patent (SEP) licensing is undergoing a profound transformation, characterized by a jurisdictional tug-of-war between major international forums. At the center of this shift is the ongoing FRAND (Fair, Reasonable, and Non-Discriminatory) dispute between Chinese telecommunications giant ZTE and South Korean conglomerate Samsung Electronics in the Chongqing First Intermediate People's Court.

This case is not merely a bilateral licensing disagreement; it represents a major milestone in China's judicial strategy to establish its courts as the primary arbiters of global patent royalty rates. The dispute arose after negotiations for a 5G SEP cross-license between ZTE and Samsung stalled. ZTE sought a judicial determination of global FRAND terms in Chongqing, prompting a jurisdictional challenge from Samsung that has reverberated across the IP world.

The Jurisdictional Battle: Why Chongqing?

Chongqing, once seen as a regional industrial hub, has rapidly emerged as a key battleground for high-stakes IP litigation. In the ZTE v. Samsung case, Samsung filed a jurisdictional objection, arguing that the Chongqing First Intermediate People's Court lacked the authority to set a global rate for patents spanning multiple jurisdictions. Samsung contended that the connection to Chongqing was insufficient and that a Chinese court should not unilaterally dictate licensing terms for foreign markets.

However, the Chongqing court rejected Samsung's objection, a decision subsequently upheld by China's Supreme People's Court (SPC). The SPC's ruling clarified that Chinese courts possess the jurisdiction to determine global FRAND rates if the parties have a substantial connection to China, such as manufacturing facilities, sales markets, or where the licensing negotiations took place. Since both ZTE and Samsung have extensive commercial footprints and conducted licensing talks in China, the jurisdiction was deemed proper.

This ruling reinforces China's "home court" advantage in SEP litigation, signaling to global tech giants that they cannot easily escape the jurisdiction of Chinese courts once a Chinese patent holder initiates FRAND proceedings.

A Pattern of Assertive Judicial Action

The ZTE-Samsung dispute is part of a broader, highly coordinated effort by the Chinese judiciary. Over the past few years, Chinese courts have systematically expanded their reach in global FRAND rate-setting:

  • OPPO v. Nokia: The Chongqing First Intermediate People's Court previously made headlines by setting the first global FRAND royalty rate for OPPO's dispute with Nokia, demonstrating its willingness to calculate precise global licensing fees.
  • Xiaomi v. InterDigital: In this landmark case, Chinese courts issued anti-suit injunctions to prevent parallel litigation in other jurisdictions, securing their role as the primary decision-makers.

These rulings directly challenge the traditional dominance of Western forums, such as the High Court of England and Wales (which pioneered global FRAND rate determinations in the landmark Unwired Planet v. Huawei case) and US district courts in Texas and California.

For patent professionals and corporate strategists, the solidification of Chongqing and other Chinese courts as global FRAND forums introduces several critical considerations:

  1. Forum Shopping and Parallel Litigation: Litigants must carefully coordinate their global litigation strategies. A party seeking favorable rates may rush to file in China, while another might seek relief in the UK or Germany, leading to complex parallel proceedings and potential anti-suit injunction battles.
  2. Evidence and Valuation Standards: Chinese courts are developing sophisticated methodologies for calculating FRAND rates, often relying on top-down approaches and comparable license analyses. IP teams must prepare rigorous economic evidence tailored to Chinese evidentiary standards.
  3. Negotiation Leverage: The threat of a Chinese court setting a binding global rate can dramatically shift the leverage in cross-licensing negotiations. Implementers must weigh the costs of a protracted legal battle in China against the terms offered by SEP holders.

Outlook

As global SEP disputes grow more fragmented and legally complex, IP teams need the capacity to assess portfolio strength objectively, conduct claim-charting at scale, and analyze historical litigation data. With Chongqing solidifying as a global FRAND forum, the companies that proactively prepare jurisdiction-specific evidentiary records and valuation methodologies will hold the advantage in both negotiation and litigation.