From 2015 to 2020, new Standard Essential Patent (SEP) families in telecom jumped threefold from 6,457 to 17,623. The 5G standard alone accounts for over 150,000 declared patents since 2015. Despite this increase, implementers continue challenging essentiality claims and pushing back on royalty demands for SEP Licensing.
Essentiality checks are performed with different evaluation methods to question whether a declared SEP is truly essential. They also analyze technical specifications within standards to argue that certain patents do not directly map to mandatory standard functions. This leads to challenging a patent’s strength for lower SEP licensing costs.
Courts, arbitration panels, and negotiators want proof that a patent is relevant and adds value. For better licensing terms, merely claiming essentiality is not enough. SEP holders must use measurable facts in their arguments.
This article outlines five effective strategies to strengthen your portfolio and help you negotiate better licensing outcomes. This means showing that your patents are essential in many standard releases. It also involves using industry comparisons to back up royalty rates.
1. Proving a higher SEP essentiality percentage
Essentiality reports assess how many declared SEPs are truly essential to a standard, influencing licensing and litigation outcomes. However, a global essentiality ratio will not be enough to strengthen your position in SEP licensing negotiations. To gain leverage, focus on region-specific essentiality assessments.
How to implement this in SEP licensing negotiation:
Instead of relying on a global essentiality ratio, identify which SEPs are granted in the relevant region using portfolio management softwares. Analyzing ETSI or 3GPP declaration data can reveal where your patents are cited more frequently, indicating stronger essentiality in those markets.
A patent family essential in the U.S. may hold less weight in China if no corresponding Chinese patent exists. Recognizing where your portfolio has higher essentiality influence allows you to justify stronger licensing terms in those regions.
For example, Nokia’s essentiality share in Europe is higher than in the U.S. or China due to its stronger representation in European standard releases. If litigation occurs in Europe, Nokia can emphasize this 1-5% higher essentiality share to push for better royalty rates.
| Ownership Share of 5G Active & Granted Declared SEP Families | |||
| Country | Nokia | Qualcomm | Huawei |
| In China | 3.8 | 8.7 | 22.2 |
| In United States | 6.8 | 13.8 | 12.8 |
| In Worldwide | 5.5 | 9.8 | 15.8 |
| Note: The above numbers are based on ETSI Declared 5G SEPs Families (not a True SEP Essentiality Share) | |||
Use independent essentiality reports that break down essentiality by region and standard release. Public reports offer broad insights, but custom analyses tailored to specific markets provide a stronger foundation for regional licensing discussions. Benchmarking your essentiality share against local competitors strengthens your portfolio’s positioning and helps secure better negotiation outcomes.
GreyB’s regional SEP breakdown tool helps companies assess their competitive standing in key markets. Request a tailored analysis to uncover opportunities for strengthening your patent portfolio and optimizing your licensing strategy.
Explore our detailed 5G SEP report and see how such reports will work in your favor during patent licensing negotiations.
2. Evaluating SEP essentiality across multiple releases
While 3GPP continues to produce new releases, companies may still choose to implement older versions of the standards in their devices and technologies. The licensing terms and the specific release of 3GPP companies use affect the number of “true” standard-essential patents (SEPs). This also influences which companies are involved.
Companies that invested more in developing and supporting earlier releases should receive higher royalties. This is especially true when those older SEPs are relevant to licensed products.
How to implement this in SEP Licensing negotiation:
Identify which 3GPP release the licensee is using. Analyze product specifications, chipset compatibility, and regulatory filings. Check standard tracking tools, like ETSI’s declaration database or 3GPP reports. They can help confirm their reliance on earlier releases. This is where your SEPs might be more assertive.
In early releases, such as 3GPP Release 9, fewer companies contributed. The ratio of SEPs held by each company was much higher. More companies joined in later 3GPP Release 17 or 18. This cut each company’s SEP ratio by about 4-8%. If a licensee uses newer SEP ratios to demand lower royalties, highlight your early-release contributions. Your portfolio had a bigger SEP share and was key in building the standard.
Use independent essentiality reports that break down SEP contributions by standard release. Public reports share general insights. Use custom analyses focused on specific releases to get stronger evidence for negotiations.
GreyB’s SEP portfolio analysis lets you compare your early-release SEP share with competitors. This comparison helps you defend higher royalty rates. This is especially true when your foundational SEPs are still used in licensed products.
Read SEP Related Posts:
Get Higher Royalties for Your SEPs
3. Analyzing the specific device focus of SEPs
Not all SEPs carry the same weight in negotiations. Some apply to many devices. Others are specific to parts like user equipment (UE), base stations, or core network elements. In litigation, you can boost your case by proving that your SEPs align well with the other party’s products.
How to prove device-specific SEP relevance for licensing negotiation
Your patents should be filtered to match the business model of the opposing party:
- If the implementer is a UE manufacturer, prioritize patents covering UE functionalities like antenna systems, power management, or signal transmission.
- If the opposing party produces network infrastructure, highlight patents relevant to base stations or core networks.
The table below presents findings from GreyB’s analysis of a sample set of 1500 declared LTE families.
| Parameter | Essentiality Findings from GreyB’s Analysis | |
| UE SEP Families | Non-UE Families | |
| Overall | 62.3% | 38.7% |
- A lower percentage of SEPs focused on UE from the opposing company can boost licensing leverage.
- A licensee with broad-spectrum SEPs for both UE and base stations can demand higher royalties. This is better than a competitor with patents that apply to just one segment.
A company with patents for many devices, like UE and base stations, can negotiate better terms than patents covering just a small part of the market, such as only base stations.
4. Examining the patent families for depth of coverage
A strong patent family gives more protection and improves your position in licensing talks. The table below implicitly indicates the geographical coverage by showing the average number of patents per family of major companies in 5G-Declared SEPs:
| Company | Average patents per family |
| Huawei | 5.15 |
| QUALCOMM | 8.79 |
| Samsung | 7.14 |
| Datang Mobile | 3.65 |
Qualcomm and Datang Mobile show how patent family strength affects an SEP portfolio. Qualcomm holds an average of 8.79 patents per family. This shows strong geographical coverage. As a result, its patents stay enforceable in key markets like the US, Europe, and China. This broad protection makes it tougher for implementers to skip licensing fees. It also boosts Qualcomm’s power in negotiations. Datang Mobile has 3.65 patents per family. This narrower reach might limit its ability to demand higher compensation.
Examine patent families for a favorable licensing outcome:
Start by mapping SEP families across key jurisdictions using tools such as Derwent Innovation.
Finding patents granted in key markets like the US, Europe, and China helps ensure they can be enforced worldwide. This makes it harder for users to dodge your licensing costs. If you own many patent families for key technologies, these patents are vital for the standard’s success. So, licensors should compensate you at a higher rate.
Citations and forward references provide further proof of impact. When competitors often cite your patents, it shows they matter to their research strategies and the market as well. This boosts your portfolio’s licensing value.
Highlighting patent family depth in addition to SEP volume strengthens your negotiation position. It helps you defend against essentiality challenges and secure better licensing terms.
Conclusion
If implementers challenge essentiality and push back on SEP licensing royalty rates,
- Do you have objective verification to counter their arguments?
- Can you present economic models proving the financial impact of your standard patents?
- Do you have benchmarking insights to demonstrate your portfolio’s strength in the market?
Without these, you face a weaker negotiating position. Getting litigation-ready arguments using data will help strengthen your SEP licensing negotiations and get the cost you put on the table.
Ensure your portfolio is accurately assessed and independently verified to maximize its value.
GryeB has provided data-backed advice in over 50 licensing deals in 4G, 5G, and many other enabling technologies. Our IP experts can do the same for your portfolio and SEPs. Identify the true potential of your portfolio and act on it for better licensing deals.
Authored By: Aman Kumar and Nripdeep Singh, Patent Search team
Edited by: Annie Sharma, Marketing team
