UK rate determination in Samsung v. ZTE of $392M ends up far below what other courts deemed FRAND, invites ever more litigation

Rejection of Ericsson, Nokia, and InterDigital license agreements with Samsung as comparable: ZTE must license at lower rates because it litigated less in the past

A particularly striking point is that the UK ruling rejects the “ENI” (based on the first letters of the names of Ericsson, Nokia, and InterDigital) licenses with Samsung for the purpose of comparable license agreements, arguing that those companies can charge more because they are very sophisticated at outbound licensing and because Samsung (without any hard evidence) overpaid for fear of injunctions, particularly in Germany. (In InterDigital’s case, there is also a $1B arbitral award that Samsung is fighting against.)

The decision says that there are (unspecified) portfolio-specific reasons not to take the ENI license deals into consideration, and notes “the ENI counterparties’ very great expertise at out-licensing and, particularly, their willingness and ability to litigate.”

This approach is simply wrong:

• We know from the licensee side of the market that Ericsson and Nokia are definitely not the most demanding SEP holders relative to portfolio size. In fact, one major licensee told us that they wish everyone else took similar positions. We cannot disclose or uniquely define such sources, but this is simply what we were told, and we are talking about a large and sophisticated licensee.
• Nokia has never sued Samsung over patents.
• When Samsung settled with Ericsson in May 2021, no injunction was on the horizon. Infringement litigation had just begun less than four months earlier. FRAND actions had started slightly before, but they were not going to result in patent injunctions.
• Samsung has enormous SEP licensing expertise, and actually knows both sides very well. Samsung was being investigated by antitrust authorities in the early 2010s over allegations of SEP abuse. But most of the time (before and after that episode) it was on the inbound-licensing side. Samsung’s expertise was definitely a match for Ericsson, Nokia, and InterDigital. And Samsung knows how to defend very well against infringement lawsuits.
• Arbitration results should be considered. They are the outcome of how both sides agreed to resolve a rdispute.

The UK ruling also describes both parties’ licensing experts’ testimony as saying that “if litigation became necessary, patentees could move swiftly, in about a year or so, to obtaining an injunction in at least some jurisdictions, most notably Germany, and that a FRAND defence was often not meaningfully available.” That is also wrong. We have published and discussed multiple German SEP decisions this year. They discuss licensing dynamics and economics in detail. And it is particularly wrong here, with a view to the ZTE-Samsung situation, where the Munich I Regional Court went out of its way to help the parties come to an agreement and listened to expert testimony.

Apart from being wrong for various reasons, the UK approach is also bad policy:

By holding it — with a view to the economic effects of rejecting those comparables — against a party that it was not quite as litigious in the past as some others, the UK court creates an incentive to litigate more in order to then be able to point to more favorable comparables.

ZTE’s Apple and (prior) Samsung license deals were sub-FRAND due to special circumstances, yet the UK court considers them appropriate starting points

What the decision reveals is that ZTE entered into license agreements with Apple and Samsung at relatively low rates because the company was shut out of the U.S. market, so it wanted to generate revenues and was prepared to offer low royalty rates in exchange for quick wins.

At first sight, it appears that the UK court recognizes this as a reason for ZTE to seek higher royalties this time around. But instead of attaching substantial weight to license agreements in the industry that came into being on regular circumstances, today’s decision still uses those lowball deals (and only them) for starting points. Starting from a low base and then making conservative adjustments, the result is an outlier as courts on two continents agreed with ZTE, and disagreed with Samsung, on FRAND. It appears that other courts were more willing to give ZTE the chance to obtain fair terms now.

By using fire-sale types of terms for a starting points and then making subjective adjustments as opposed to real-world outcomes under regular circumstances, the decision increases the degree of its subjectivity. It is highly questionable whether the exclusion of relevant evidence in favor of this approach would be affirmed on appeal.

Arbitrary contract interpretation

Subjectivity is what defines that decision more than any other word. But sometimes subjectivity borders on, or descends into, arbitrariness.

One disputed aspect of the old (2021) ZTE-Samsung license agreement was the coverage of 5G SEPs. ZTE had pretty good arguments that Samsung was not fully licensed to ZTE’s patents for 5G purposes, not even for such 4G patents that became essential to 5G again, but with the functionality of the relevant parts of the standard having changed. ZTE was able to point to a recital of the old Samsung agreement that said they would negotiate 5G, but especially to the combination of a definition and a clause. In the end, the UK court agreed with Samsung’s all-inclusive approach because it would be too difficult in practice to distinguish between what 4G patents were used in 5G and are covered by the agreement versus those that are not. But license agreements can be complicated, and it’s not like this complicated anything for Samsung’s engineers: it was just something that had to be sorted our later, either through negotiation or, failing that, litigation.

Another one is whether the covenant not to sue (CNS) for the year 2024 was effectively a period during which Samsung was licensed. The UK court’s interpretation that the CNS period was covered by Samsung’s overall payment under the 2021 agreement (only because damages claims were ruled out and ZTE contented itself with a clause according to which the value of that use of its patents would have to be considered when doing the next deal) is illogical. There is simply no plausible explanation for which the parties would have distinguished between a license period and a CNS period. As long as someone is licensed, they cannot be sued and damages for a licensed period cannot be sought. The UK courts themselves recognize in the interim-license and generally FRAND determination context that a license is a defense to infringement.

Assumptions instead of evidence concerning portfolio quality

The decision also disadvantages ZTE by simply “buying” Samsung’s argument that certain other portfolios are of a higher per-patent quality, but doing so based on the rejection of indications to the contrary, such as different essentiality studies. Essentiality studies can be criticized for many reasons. But the idea that ZTE has to prove something that cannot really be proven does not appear fair.

Other jurisdictions, such as the Munich I Regional Court, do not (at least not without more) attach weight to a given patentee’s filing strategy. If a company files more patents in one jurisdiction than another, its contribution to the standard (which is what it should be rewarded for) is not necessarily lower.

Reliance on essentially just one comparable license

This is not the first time that a single license agreement was considered by the court as the comparable to base the entire decision on. In InterDigital v. Lenovo, a 2017 license with LG was singled out.

It does not enhance the credibility of those UK rate-setting decisions when all sorts of reasons (some of which are downright arbitrary) are used to exclude various license agreements from consideration, ultimately using a single deal for a point of reference. Courts in other jurisdictions have no reason to rely on such determinations. If the UK seeks to impose the results of such decisions on SEP holders on a global basis, other jurisdictions should push back.

Forum-selling and more interjurisdictional friction

Above all, the decision is an invitation to licensees to seek UK FRAND determinations because even arguments that other jurisdictions would not take seriously can help them bring down SEP royalty rates.

Consistent with that forum-selling intent is the fact that the court issued a press summary (PDF). That is an understandable course of action when something is of interest to mainstream media, and also if applicable rules do not allow a court to make the full judgment available in a public redacted version. Neither of that applies here. Instead of the summary, one must read the actual decision to identify parts that raise concern.

The UK decision does not bode well for interjurisdictional peace:

• After the appeals court’s decision on the interim license (where ZTE prevailed), the lower court should have stayed rather than fast-tracked its own proceedings. The appropriate thing would have been to await the Chinese ruling.
• While other courts declined to reward Samsung’s scattershot FRAND litigation tactics (most recently the UPC by dismissing Samsung’s FRAND counterclaim), the UK court took an outlier position in Samsung’s favor.
• Just yesterday, the United States government officially expressed concerns over such “sovereignty impinging” global FRAND rulings (May 1, 2026 ip fray article).
• China has put regulations in place against extraterritorial overreach by foreign courts (April 13, 2026 ip fray article).

The sentence quoted in the Direct impact section of the box about Mr Justice Meade not compelling ZTE to do anything is helpful in the sense of not suggesting that this declaration gives Samsung an enforceable right. But it remains to be seen what will happen in the further proceeings, such as in a scenario in which Samsung might seek a specific-performance injunction. Nevertheless, what Mr Justice Meade did was to make a declaration on licensing terms for patents with respect to which ZTE does not have any reasonably arguably licensing obligation:

Despite not seeing the issue as a major one, and despite the lack of an explanation from ZTE about why it cares, I must decide it. I have come down on Samsung’s side, but I make clear that I am not making any far-reaching or general conclusion about how FRAND applies to non-cellular patents/products, or to NEPs. The forthcoming RAND trials in the ITU-T context in this jurisdiction have the issue of NEPs (and encoding patents whose SEP status is disputed) front and centre in very different contexts where the patentees have taken, they say, longstanding and much more closely reasoned objections to such “other” patents falling under the RAND regime. Nothing in this judgment in any way prejudges those cases, which are likely to be much more fully argued in contexts where major commercial interests are said to be engaged.

Foreign jurisdictions will be particularly concerned about the preparedness of the English courts to include non-SEPs in FRAND determinations. In fact, the UPC’s Mannheim Local Division (LD) is concerned about this in InterDigital v. Amazon.

Four EWHC FRAND determinations to date, each by a different judge

Today’s decision is Mr Justice Meade’s first FRAND rate-setting decision.

The first one, in Unwired Planet v. Huawei, was made by Mr Justice Colin Birss (as he then was; he’s now a Lord Justice and the Chancellor of the EWHC). That one was the least sophisticated one, and the focus at the time was on jurisdictional more so than quantitative issues.

In 2023, Mr Justice James Mellor decided InterDigital v. Lenovo, and Mr. Justice Marcus Smith Optis v. Apple. Both those decisions were adjusted heavily on appeal. InterDigital and Lenovo terminated their litigation (by switching to alternative dispute resolution). Apple appealed the Optis EWCA decision, and the UK Supreme Court (UKSC) accepted to hear the case. The UKSC hearing will take place in late June and early July.