At the 14th IP and Competition Forum, the panel “FRAND, SEPs and the Economics of Litigation & Rate Setting” examined one of the most difficult questions in standard essential patent disputes: how should courts determine value when legal systems, valuation methods, timing and litigation strategies point in different directions?
The panel was moderated by Paul Brown, Partner at Hogan Lovells. Speakers included Prof Roya Ghafele, Managing Director of OxFirst, and Earl Nied, Founder of Veracity.
Prof Ghafele used the Samsung/ZTE dispute to illustrate the problem. Samsung chose the UK, while ZTE turned to Munich and China, because each party believed — correctly — that those jurisdictions would best serve its interests. Courts in different parts of the world were presented with broadly the same valuation methods, yet reached very different conclusions and substantially different monetary outcomes.
The divergence lay not only in law, but in method. The devil is in what a court admits as a comparable, what it dismisses, and how it treats the top-down approach. The UK court rejected the top-down approach on the facts before it. The Munich court, by contrast, based its analysis on top-down reasoning after treating certain comparables as distorted. This makes it difficult to say what is “right” or “wrong” in any simple sense, because consistency is lacking.
A central theme was assumptions. Lawyers often criticise economists for relying on assumptions, but the law itself is far from settled. The real issue is not whether assumptions are used, but whether they are credible, defensible and capable of being substantiated.
Earl Nied added another important dimension: timing. In his opinion, SEP licensing is often treated as if the patent landscape were fixed. It is not. New patents issue, older patents expire, essentiality is reassessed and standards evolve. A licence negotiated today may therefore concern a different set of relevant rights than a licence concluded earlier. As Nied’s analysis of the AVC/H.264 pool illustrated, a significant share of listed patent entries had expired by early 2026. Counts alone do not determine value, but they show that the SEP landscape changes over time.
‘This matters for FRAND’, so Earl Nied Expired patents may still be relevant for past sales, but future rates should reflect current rights. Historic licences may be useful evidence, but only if they still correspond to the rights, products and market conditions at issue.
Prof Ghafele also placed FRAND rate setting in a broader IP valuation framework. Accounting statements often fail to capture the value of intellectual property adequately, leaving much IP valuation “off book”. That creates shortcomings in IP management, funding and commercial strategy.
Well-explained IP valuation can help turn an IP right into an IP asset — or liability. Against that background, the FRAND debate should not be treated as a narrow fight over damages or royalty rates. It belongs in a wider discussion about how innovation is valued, managed and used for economic growth and prosperity.
Disclaimer: This article is based on the author’s recollection of the panel discussion. It reflects comments made by speakers in their personal capacity and should not be read as a verbatim or complete factual summary of the debate, nor as representing the views of the organiser.