Standard Essential Patents (SEP) and FRAND Litigation in China

The following is general information on standard-essential patent and FRAND litigation in China, not legal advice for any specific dispute. Obligations, forum rules and injunctive relief turn on the facts of each case; consult qualified counsel before acting.

The framework: Patent Law, Anti-Monopoly Law and Interpretation II

SEP and FRAND disputes in China are governed by a layered framework. The Patent Law, amended in 2020 and effective 1 June 2021, supplies the infringement and injunction baseline. The Anti-Monopoly Law, amended in 2022 and effective 1 August 2022, supplies the competition-law overlay, reinforced by the State Council Anti-Monopoly Commission's IP Anti-Monopoly Guidelines (2019). The key judicial text is Interpretation II of the Supreme People's Court on patent infringement disputes (法释〔2016〕1号), whose Article 24 addresses the SEP-specific question of injunctions. A dedicated SEP judicial interpretation has not been formally enacted, although a draft has circulated; practitioners should confirm the current status rather than assume settled text. In practice the two statutes interact: a licensing demand that runs contrary to the Anti-Monopoly Law can be attacked not only as a patent question but as a competition question, which is why SEP strategy in China is never purely about patent validity.

Article 24 and the FRAND defence to an injunction

Article 24 of Interpretation II (法释〔2016〕1号) is the provision an implementer cites first. It restrains an injunction where the SEP holder has breached its FRAND obligations and the implementer is not at fault in the negotiation — a codified FRAND defence that shapes the leverage in every licensing dispute. In practice the court examines the conduct of both sides: whether the holder made a concrete, FRAND-compliant offer, and whether the implementer negotiated in good faith rather than engaging in hold-out. A foreign SEP holder that sues in China must therefore be able to document its offer and its negotiating record, because the injunction it seeks can be conditioned on them. An implementer, for its part, gains the most from showing a genuine willingness to take a licence on FRAND terms, since that is what keeps the defence available.

Global FRAND rate-setting and anti-suit relief

Chinese courts have accepted jurisdiction to set a global FRAND rate, not merely a China rate — a development that has made China a leading forum for worldwide SEP disputes. The relief runs in both directions. Courts grant ordinary injunctions against bad-faith implementers who refuse a FRAND licence, and they grant anti-suit and anti-enforcement injunctions (禁诉令 / 禁执令) to restrain a counterparty from pursuing parallel proceedings abroad, backed by daily fines for non-compliance. A foreign party litigating a SEP case should therefore anticipate that the forum may reach across borders, both in the rate it sets and in the conduct it orders. The message for foreign parties is that China is no longer merely a venue for national claims — it is a place where the worldwide licence may be priced.

The leading cases

The line of authority is now well developed. In Huawei v. Conversant ((2019)最高法知民终732、733、734号, on appeal from the Nanjing Intermediate Court), the Supreme People's Court issued what is regarded as China's first anti-enforcement injunction in August 2020, imposing a daily fine of RMB 1 million for breach. OPPO v. Sharp (Supreme People's Court) affirmed jurisdiction over global FRAND rates. Xiaomi v. InterDigital (Wuhan Intermediate Court, 2020) combined a global rate with an anti-suit injunction. OPPO v. Nokia (Chongqing First Intermediate Court) went further still, setting a full 2G–5G global FRAND rate. Together these cases show a judiciary willing to determine global royalties and to police parallel litigation through coercive interim relief. For a foreign SEP holder or implementer, the practical consequence is that any China filing can quickly become the focal point of a worldwide dispute, with the risk of daily fines running in parallel.

A pre-litigation checklist

• Map the SEPs and the FRAND commitments attached to them before any demand or filing.
• Document your own negotiating conduct: the offer made or received, its FRAND basis, and the counterparty's responses.
• Assess the injunction risk in both directions — an ordinary injunction for hold-out, or an anti-suit/anti-enforcement injunction with daily fines for parallel proceedings.
• Assume global rate-setting jurisdiction: prepare a worldwide royalty position, not only a China one.
• Choose the forum deliberately, given the concentration of authority in the Supreme People's Court and the specialist intermediate courts.

The summary above is general information current as of the date of writing; the Patent Law, the Anti-Monopoly Law and the SPC interpretations should be confirmed against the current official texts. For the wider context of IP disputes involving foreign companies, see IP litigation in China for foreign companies, and for the competition-law dimension see China antitrust investigations and SAMR dawn raids. Our Intellectual Property practice handles these matters.