From the courts to arbitration: The changing shape of FRAND disputes

Standard essential patents (SEPs) and associated fair, reasonable and non-discriminatory (FRAND) licensing commitments are becoming increasingly relevant across a range of sectors. 

Historically that has in large part related to traditional telecoms technology (eg, 4G/5G) but it is becoming increasingly relevant in other areas such as video streaming and electric charging standards, driven by rapid technological advancement and growing digital dependence. As these technologies become more widespread, the commercial stakes are significant — disputes often exceed hundreds of millions of dollars.

Wherever technologies need to be compatible, a standard needs to be set to ensure all of those technologies can work together. For example, an Apple iPhone needs to be able to talk to the same 5G base station as a Samsung handset, and those of any other manufacturer. The 5G standard ensures that all of those phone and base station manufacturers are incorporating the same technology in their products so that they can all work together. 

These technologies are protected by large portfolios of patents known as standard essential patents, or SEPs. Ordinarily, the owners of those patents would be able to sue anyone using that technology for patent infringement and demand damages, or even seek an injunction. This has the potential to give patent owners monopoly power to shut competitors out of the market because anyone using a particular standard will inevitably infringe the patents essential to it. To address this issue, patent owners, when their technology is contributed to a standard, are required to undertake to license their patents on fair, reasonable and non-discriminatory (FRAND) terms. 

The aim of the FRAND obligation is to ensure that parties using the patented technology can access it by payment of a reasonable royalty. In some jurisdictions, such as the UK, it is treated primarily as a contractual obligation via the undertaking given to the standard setting organisation (SSO) in favour of all third party users of the standard (implementers of the standard). In other jurisdictions, such as Germany, it is treated primarily as a matter of anti-trust law. 

In theory, the FRAND framework should facilitate agreement. In practice, however, difficulties emerge when parties cannot reach agreement on what constitutes FRAND terms. Typically, when licensing negotiations break down the SEP holder (patent owner) will commence litigation for patent infringement against the implementer. Given that these technologies are used globally, that litigation can take the form of multiple proceedings running in parallel across many jurisdictions. In response, the implementer may also commence proceedings for determination of FRAND licence terms in jurisdictions that it considers will be more favourable to it. 

Where there are multiple parallel proceedings, there is the risk of conflicting judgments in different national courts. There is often also a race to judgment in the court considered most favourable to a particular party, potentially resulting in resolution of the global dispute by whichever court comes to a decision first. For example, if a court in a major jurisdiction orders an injunction, then the implementer may feel it has no choice other than to accept terms closer to the SEP holder’s offer or otherwise face being taken off the market. 

How is arbitration relevant to FRAND?

For many years now a number of commentators, including leading IP judges, have suggested that arbitration would be a suitable dispute resolution mechanism for global FRAND disputes. The technologies that are the subject of these disputes are global in nature and commentators have suggested that it makes sense for there to be a global resolution of these disputes in a single forum. 

Related to this is the relative ease with which arbitral awards can be enforced across a large number of jurisdictions. While enforcement of judgments in national litigation is largely limited to the jurisdiction in which the decision was made, the New York Convention allows an award from an arbitration to be enforced in over 170 contracting states, with limited scope for further oversight by the national courts. This allows for a degree of finality in FRAND arbitrations that is not always possible with court proceedings. 

However, arbitration is a creature of contract and there is usually no agreement between the SEP holder and implementer to engage in arbitration. Once a dispute has arisen and spread to multiple different national courts, it is difficult to subsequently reach agreement between the parties on submission to a particular dispute resolution mechanism. 

That being said, there have been a number of publicised arbitrations of FRAND licensing disputes in which parties have agreed between them to submit an existing dispute to arbitration. While it is difficult to determine how prevalent this has been given the confidential nature of arbitral proceedings, there are a number that have been publicly disclosed, including Nokia v Samsung, Nokia v LG, InterDigital v Huawei and Ericsson v Huawei. 

The primary ways in which arbitration can arise are:

There has also been discussion of introducing an arbitration agreement into the FRAND undertaking that SEP holders give to the SSO when declaring that their patents are SEPs. However, this has not been adopted by SSOs, and there would also be questions around enforcement of this agreement to arbitrate in circumstances where it would be a unilateral undertaking from the SEP holder, but would not bind the implementer. This could be seen as an offer to arbitrate by the SEP holder but would then leave discretion with the implementer as to whether to accept that offer or proceed with court litigation. 

It is worth noting that the use of arbitration to resolve IP and patent licensing disputes is not limited to FRAND disputes. Patent licence agreements can, and often do, provide for arbitration to resolve disputes under the agreement and around renewal of licence terms, and parties can of course always agree to arbitration where they wish to avoid court proceedings.

A growing trend

A number of recent developments suggest that arbitration of FRAND disputes may be becoming more common:

• Samsung and InterDigital engaged in an ICC arbitration to determine FRAND terms that resulted in a 2025 decision awarding total royalties of $1.05 billion to InterDigital. Perhaps unhelpfully for the perceived fairness of FRAND arbitration to implementers and the finality of arbitration decisions, Samsung has subsequently challenged the royalties awarded in a further set of ICC proceedings.  
• In mid-2026, Amazon and InterDigital have agreed to end UK court proceedings in favour of resolving their FRAND licensing dispute through arbitration. 
• Also arising out of UK proceedings, (Acer Incorporated & Anor v Nokia Technologies Oy [2026] EWCA Civ 564) Acer and Nokia have agreed to resolve a FRAND licensing dispute in ICC arbitration. This development is particularly interesting as discussed below. 

By way of background, the claim for determination of (F)RAND global licence terms in the UK was brought by Acer and ASUS, the prospective licensees of Nokia's SEP portfolio relating to certain video coding standards (ITU-T H.264/AVC and H.265/HEVC), following several years of unsuccessful licensing negotiations. Separately, Nokia had brought patent infringement proceedings against Acer and ASUS in Germany, the Unified Patent Court (UPC), Brazil and India. 

In addition to making a traditional licensing offer to Acer for specific royalty terms, Nokia also made an offer that was subject to a royalty to be determined by an arbitral panel. In other words, upon accepting the offer Acer would be licensed but the terms of that licence would be set by a later arbitration. This was referred to as an "Adjustable Licence Offer". 

Nokia then sought a permanent stay of the UK court proceedings based on the fact that its "Adjustable Licence Offer" meant that Acer’s claim for determination of FRAND licence terms in the UK had no real prospect of success. The issue was whether an offer subject to arbitration discharged Nokia’s FRAND obligation or not. 

In assessing this point, the Court of Appeal recognised that FRAND licence terms can and have been determined by arbitration. Indeed two such arbitrations to determine (F)RAND licences involved Nokia, although Arnold LJ noted that there is "no settled industry practice for FRAND disputes to be determined by arbitration". 

The court considered that the Adjustable Licence Offer was "essentially identical to the interim licences sought by the claimants" except for the fact that the final (F)RAND licence would be determined by an arbitral tribunal rather than the English courts. While Acer/ASUS argued that they could not be forced to arbitrate, Arnold LJ concluded that implementers still had a choice whether or not to accept arbitration. If they chose not to do so then they could proceed with litigation in the UK but would effectively waive their FRAND defence. This could result in a finding that they were an unwilling licensee and risk an injunction in the UK. Otherwise, Arnold LJ held that they could accept Nokia's licence offer, which provided for arbitration as part of its terms, thereby agreeing to the arbitration. 

As part of its decision, the UK Court of Appeal recognised some of the benefits of resolving (F)RAND disputes through arbitration, including:

• Resolution through a single tribunal, rather than via multi-jurisdictional litigation. 
• Availability of global enforcement under the New York Convention, while enforcement of national court judgments is territorially limited.
• As a result of the above factors, reduced risk of jurisdictional conflict. 
• Determination by an independent and impartial tribunal under established rules (such as the ICC). 

Other potential advantages of arbitration (albeit not mentioned by the UK Court of Appeal) include (i) the ability of parties to select the tribunal (ii) party autonomy to tailor the procedure to the relevant dispute (e.g. asking the tribunal to set the royalty rate and fill in other specific terms of a draft licence) and (iii) confidentiality.

In light of this, the Court of Appeal permanently stayed the UK proceedings in favour of arbitration. This resulted in Acer accepting Nokia’s Adjustable Licence Offer and so proceeding with arbitration. 

In a subsequent decision the UK court also allowed all of the confidential material that had been disclosed in the UK proceedings to be used in the arbitration proceedings, and confirmed the arbitral tribunal is empowered to resolve future disputes over confidentiality (once it has been constituted). The general tone of the UK courts in these judgments has been very positive as to the merits of arbitration and its capability as a forum to deal with such disputes.