Standard essential patent (SEP)

Definition : Standard essential patent (SEP)

A standard essential patent (SEP) is a patent with at least one claim that necessarily covers the implementation of a technical standard, so that a product complying with that standard cannot be made, sold or used without practising the patent. The proprietor who has declared the patent to a standards body has undertaken, in return, to grant licences on fair, reasonable and non-discriminatory (FRAND) terms.

Why the concept matters

Telecommunications standards (2G to 5G, Wi-Fi), video coding and connectivity standards rest on thousands of patents declared essential. Once a standard is adopted, industry can no longer work around it: a manufacturer of smartphones, connected cars or communicating devices practises these patents merely by complying with the standard. A standard essential patent therefore gives its owner unusual bargaining power, and the FRAND undertaking exists precisely to balance that power. The whole field of FRAND litigation, from injunctions to royalty rates, flows from this tension between patent exclusivity and the promised access to the standard.

The two components of the qualification

The qualification requires a technical element and a declaratory element.

The technical element is essentiality. Under the ETSI IPR Policy, a right is essential where it is not possible, on technical but not commercial grounds, to make or operate equipment complying with the standard without infringing it, taking into account the state of the art available at the time of standardisation. Essentiality is assessed claim by claim and standard by standard, and it may change as the standard evolves through successive releases.

The declaratory element is the declaration made to the standards body. At ETSI, a member taking part in the development of a standard must inform the institute in a timely fashion of the rights it considers essential, and then give an irrevocable undertaking to grant licences on FRAND terms. The declaration is not an essentiality check: standards bodies verify neither that a declared patent is actually essential nor that it is valid. A significant share of declared patents are not essential in the technical sense, which explains the weight of essentiality assessments in negotiations and in court.

What the qualification changes in law

A standard essential patent remains a patent: validity and infringement are assessed under the ordinary rules, and the proprietor in principle retains the right to seek an injunction. What changes is the existence of a contractual licensing undertaking that binds the proprietor and, as a consequence, frames its remedies.

Since the Court of Justice of the European Union’s judgment in Huawei v ZTE, the proprietor of a standard essential patent in a dominant position who has given a FRAND undertaking must, before bringing an action for a prohibitory injunction or for the recall of products, alert the alleged infringer by designating the patent and specifying the way in which it has been infringed, and then present a specific, written offer for a licence stating the royalty and the way in which it is calculated. The alleged infringer must respond diligently and without delaying tactics and, if it rejects the offer, promptly submit a specific written counter-offer and provide appropriate security if it continues to use the patent. Actions for damages and for the rendering of accounts in respect of past use are not subject to this framework.

The firm advocates a contractual reading of this undertaking: the ETSI IPR Policy is expressly governed by French law, so that the FRAND undertaking is a French-law commitment on which third-party implementers may rely. This qualification determines the applicable law, the interpretation of the undertaking and the articulation between contractual remedies and competition law.

Useful distinctions

A standard essential patent differs from a commercially indispensable patent, which protects a feature the market expects without being mandated by a standard, and which carries no FRAND undertaking. It also differs from a merely declared patent, whose essentiality nobody has verified. Finally, a FRAND licence is not a compulsory licence: the former stems from a voluntary undertaking given to the standards body, the latter from a decision of a public authority.

Before the Unified Patent Court

The Unified Patent Court applies the Huawei v ZTE framework and delivered its first applications of it in 2024. The Mannheim local division in Panasonic v Oppo, then the Munich local division in Huawei v Netgear, examined the conduct of both parties over the course of the negotiation and granted injunctions against implementers found insufficiently willing to take a licence. These decisions confirm that, before the Court, the FRAND defence is argued on documents, with a chronology in hand, and that an implementer who lets the negotiation drag on is exposed to an injunction covering all contracting member states.

Key takeaways

The qualification of a patent as standard essential is neither automatic nor final: it is proved technically and can be challenged. For the proprietor, the FRAND undertaking requires a documented negotiation before any action for an injunction. For the implementer, compliance with the standard is not a licence, and silence or slowness in the negotiation counts against it. In both cases, the negotiation file is built before the trial and shapes its outcome.

Sources

This glossary entry is general in scope and does not constitute legal advice.

Dhenne Avocats handles FRAND licences, standard essential patents and contracts bearing on patents, in advisory work as well as in litigation.

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