Much of the commentary on the Chongqing First Intermediate People’s Court’s recent decision in ZTE v. Samsung (May 1, 2026) has focused on the result: a global FRAND determination that produced a substantially higher valuation for ZTE’s SEP portfolio (approximately $731 million) than the contemporaneous English judgment (approximately $392 million). Royalty rates naturally attract attention. Yet the more significant question may be whether the court adopted a different methodology for measuring technological contribution and FRAND value. The metrics relied upon by the court are also closely associated with activities that national and local Chinese industrial and innovation policies have encouraged for decades, including patent accumulation, standards participation, SEP declarations, and portfolio expansion.

From Many FRANDs to One FRAND

Several years ago, I published a series of articles examining China’s many translations of FRAND and the effect those translations were having on Chinese SEP jurisprudence. My principal concern was that the constituent elements of FRAND: “Fair,” “Reasonable,” and “Non-Discriminatory,” as well as the conjunction “and”—were gradually acquiring meanings derived from domestic legal concepts rather than international licensing practice. Chinese courts often disaggregated FRAND into separate analytical components and applied them independently to determine FRAND values. They thereafter applied successive analytical discounts and, in some cases, introduced concepts that had little connection to the operation of FRAND commitments in international licensing markets.

Thankfully, mistranslations of FRAND do not play a significant role in the judgment. FRAND is instead applied largely in its original English form without translation. The court rarely translates it and never disaggregates it into separate analytical components. Non-discrimination, for example, receives surprisingly little independent analysis. Fairness appears as a background principle. Reasonableness is evaluated through the parties’ conduct, negotiations, offers, counteroffers, and licensing behavior. Rather than treating FRAND as a collection of separate legal tests, the court treats it as an integrated licensing standard. The emphasis on licensing conduct is also not entirely new in Chinese SEP jurisprudence.

This shift away from semantic flexibility is significant. Chinese courts may have recognized that earlier efforts to distinguish Chinese FRAND jurisprudence through varying and inconsistent translations, and doctrinal reformulation to conform to Chinese civil code principles created analytical inconsistencies and unnecessary divergence from international licensing practice. The Oppo v Nokia court similarly applied Chinese civil law concepts of “fairness”, “reasonableness” and “integrity/honesty” to FRAND litigation. That case was decided in Chongqing by Judge Fan Wengong (樊雯龑), who also presided over ZTE v. Samsung roughly two years later.

ZTE v Samsung moves further than its predecessor Chongqing decision. ZTE v Samsung may also be understood as an evolution of a developing Chongqing approach to FRAND valuation rather than a wholly new methodology. The Oppo court determined that a lower rate for China was necessary based on “global patent distribution of the relevant countries, the income, the consumer buying power in relevant countries, the strength of the patents, etc., combined with GDP.” The Chongqing court adopts a different kind of formalism. Instead of reinterpreting the meaning of FRAND itself and arguing for a lower rate for China, the court instead focuses its attention on how portfolio values may be measured.

ZTE v Samsung refined and expanded the Oppo v Nokia decision through greater reliance on portfolio metrics, territorial coefficients, comparable licenses, and quantitative allocation methods. The court still attempts to anchor itself in civil law; the judgment begins with the application of California law, especially its civil code to a prior agreement between the parties, including expert testimony and a determination that the earlier license did not resolve the parties’ dispute regarding 5G licensing rights. Once that contractual question is answered, California law largely disappears, and China’s civil law regarding contracts is referenced at the terminus of the decision. Nonetheless, the civil code references appear to be an effort to place the decision within a familiar civil-law framework and reduce the appearance of foreignness.

The appendix reinforces this observation. Unlike the case summaries often attached to Chinese judgments, the appendix appears to form part of the judgment itself. It catalogues licensing agreements, foreign decisions, ETSI materials, valuation studies, expert reports, technical analyses, negotiation records, and industry data.

The court’s methodology is grounded less in international law than in international licensing practice. The opinion repeatedly seeks legitimacy through internationally recognizable legal doctrines, including choice of law, consistency in FRAND translations, and reliance on generally accepted valuation methodologies. Yet legitimacy depends not only on methodology but also on the variables chosen for measurement. The court’s selection of quantitative portfolio metrics was not inevitable. Other indicators of technological contribution were available but received little attention. The significance of that choice becomes more apparent when viewed against the broader backdrop of Chinese innovation policy, standards participation, and patent accumulation. The relevant question is not what international law and practice require, but how sophisticated parties negotiate and value global SEP portfolios.

Measuring Contribution

To date, most published commentary has focused on differences in comparables, bargaining positions, aggregate royalty burdens, and top-down methodologies in the ZTE v. Samsung decision in China compared to the U.K. or German court decisions. Relatively little attention has been devoted to the underlying portfolio metrics used by the court, particularly in the context of the evolution of Chinese court adjudication of FRAND disputes.

The court adopts a hybrid top-down methodology. It constructs an aggregate 5G royalty stack and then applies a series of adjustments based on declared SEP-family shares, technology-generation weighting, geographic patent strength, and expert evidence.

The court accepted declared SEP-family shares as a proxy for “patent strength” (专利实力), explaining that where a license covers a large number of patents and there is no evidence of significant differences in patent quality, the use of declaration counts is “relatively reasonable” (具有相对合理性). On that basis, it adopted average declared 5G SEP-family shares derived from ten publicly available reports, resulting in estimated shares of 7.7% for ZTE and 8.7% for Samsung. The court thus treated declaration counts as presumptive evidence of patent strength. Yet the record reveals no independent analysis of patent quality and no explanation of how the court determined that any quality differences were insignificant. The approach differs markedly from the parallel English litigation, where Dr. Baron testified on Samsung’s behalf that patent-family counts have “little explanatory power” for portfolio value, that portfolios differ significantly in geographic composition and quality, and that a firm’s share of technological value cannot reasonably be inferred from its share of declared SEP families.  The contrast raises a more fundamental question: who bears the burden of demonstrating differences in patent quality, and how should those differences be measured?

The court’s use of ‘patent strength’ (专利实力) is noteworthy. In English-language patent discourse, strength often refers to legal robustness against validity challenges. Here the term appears closer to portfolio position or technological presence. The terminology also resonates with China’s policy objective of becoming a ‘strong IP country’ (知识产权强国). The opinion does not explain why patent strength should be measured principally through portfolio-level indicators rather than indicators of technological significance. Nor does it explain why the burden appears to fall on a party challenging declaration-based metrics rather than on the party relying upon them.

The court also assigned changing values to different generations of wireless technology. Relying on Ericsson traffic data, expert testimony, and party submissions, it concluded that the value attributable to 5G increased substantially as 5G moved from initial deployment toward commercial maturity. It therefore assigned greater weight to 5G technology during the later years of the license period.

The court adopted a geographic adjustment methodology that assigns significance to patent strength in manufacturing and sales jurisdictions. “Patent strength” in manufacturing locations establishes a baseline for valuation, while stronger positions in important sales jurisdictions may justify upward adjustments. Because China remains both a major manufacturing center and one of the world’s largest handset markets, this aspect of the methodology has important practical consequences. The more appropriate question, as identified by WIPO in its recent report on SEP licensing, should be whether the licensor possesses sufficient enforceable patent coverage in the commercially significant territories that a willing party would treat the global rate as reasonable. The question is not whether manufacturing economies should receive greater weight, but whether territorial concentration accurately measures technological contribution.

The court was presented with competing valuation approaches and repeatedly selected metrics that are administrable across large patent portfolios and capable of producing predictable outcomes. Those choices were methodological, but they were not neutral. These choices are not outcome-neutral. They tend to reward portfolio breadth, SEP declaration activity, territorial coverage, and manufacturing-linked patent strength while placing comparatively less emphasis on qualitative measures of technological contribution. They also align well with current and past national and local policies subsidizing patent filings and even Chongqing local policies supporting participation in standards setting activities.

Ironically, a February 2022 USPTO study on SEP licensing declined to consider the value of ZTE’s patents, precisely because “its patents and applications were more highly concentrated in its home market, and its patenting activity in foreign markets was smaller relative to the other six firms.”  The USPTO study demonstrates that different metrics produce different leaders. Rather than relying solely on declaration counts, it examined qualitative and semi-qualitative measures including patent-family coverage, citation data, legal breadth, and the scope of international filings. These are precisely the kinds of valuation data that the Chongqing court did not appear to embrace.

The court also treated comparability differently from some earlier FRAND cases. Rather than focusing exclusively on portfolio similarity, it examined the commercial circumstances under which agreements were negotiated. Several licenses advanced by Samsung were discounted because the court concluded that they arose under materially different conditions, including due to export control restrictions imposed by the U.S. on ZTE. The treatment of comparables therefore became part of the broader inquiry into contribution and value rather than an independent valuation methodology. By contrast, the court subjected the underlying portfolio metrics to comparatively less scrutiny.

The Policy Choices Embedded in the Metrics

The significance of the decision lies not merely in the royalty rate it produced, but in the valuation choices it made. The methodological issue is familiar from broader debates regarding Chinese innovation. For years, analysts cited raw patent counts as evidence that China had surpassed other countries in innovation. Critics responded that patent quantity and technological contribution are not the same thing. The same issue now appears in FRAND valuation. Portfolio size, SEP declarations, and patent-family counts may provide useful information about licensing activity, but they are not necessarily direct measures of technological contribution.

Patent-family counts and SEP declaration counts do not directly measure essentiality, validity, enforceability, technological significance, or commercial value. As I recently noted, evaluating China’s innovative capacity based on patent filings without recourse to other indicia such as citations, is a metric that has long been distorted by state subsidies and other interventions. David Teece has also observed that  patent subsidies and filing incentives can introduce systematic bias into patent data by encouraging portfolio expansion without necessarily increasing technological contribution. Teece has argued that a better alternative may be analysis of each party’s strongest patents, accompanied by additional qualitative and quantitative data. The patent sampling approach appears to be one that was also undertaken between the parties in the parallel case in Brazil.

Chinese applicants have historically filed the overwhelming majority of their patents domestically rather than internationally, in part because domestic filing incentives primarily reduced the costs of portfolio accumulation. Major SEP licensors such as ZTE and Huawei are likely important exceptions, with heavily internationalized portfolios tested through licensing and litigation worldwide. Nevertheless, a methodology that relies heavily on patent-family shares risks rewarding portfolio breadth rather than demonstrated technological contribution.

The court’s geographic adjustment methodology raises similar concerns. The issue is not whether Chinese patents are inherently weaker or stronger than foreign patents, nor whether the court explicitly favored Chinese patentees. Rather, the selected metric rewards concentration of patent rights in heavily weighted jurisdictions. To the extent Chinese firms possess dense domestic patent coverage, the metric may systematically elevate the value assigned to Chinese portfolios.

The decision may represent a transition from one form of Chinese exceptionalism to another. Earlier debates focused on the meaning of FRAND. In a sense, the court now engages in a kind of “quantitative formalism” that may be less obvious to those unfamiliar with Chinese metric-driven national and local policies.  

Influence Without Precedent

From the perspective of China’s hierarchical judicial system and formal and informal precedential weighting, the significance of the Chongqing decision would not ordinarily be expected to carry substantial precedential weight. The case was decided by an intermediate court rather than the Supreme People’s Court. The case also does not appear to have received the institutional endorsements that often accompany decisions intended to shape future jurisprudence. Nor has it yet received the type of official promotion commonly associated with leading Chinese judicial decisions, such as designation as a Guiding Case, Typical Case, or Model Case. The case appears to have been published through unofficial sources, and without the redaction of party names that is common for cases published on the official database, China Judgments Online. The case is also not yet available on the official database.

This does not mean that the case will necessarily be without influence. Some of the most influential developments in Chinese intellectual property law that have affected litigants’ behavior have not depended on formal precedent and have also involved foreign parties. Cases such as Huawei v. InterDigital, the  Wuhan antisuit injunction cases, Fujian Jinhua v. Micron, and Chint v. Schneider Electric, exerted influence far beyond their immediate holdings. Their significance derived from the signals they sent to litigants, courts, officials and licensing professionals regarding the direction of Chinese policy and judicial thinking.

The timing of the decision further reinforces its significance. The Chongqing judgment and the contemporaneous English judgment emerged at nearly the same moment yet produced materially different outcomes.

The Chongqing decision may prove influential in a similar way. Parties negotiate in the shadow of judicial decisions. A judgment need not survive appeal, or even acquire formal precedential status, to affect settlement dynamics. The existence of a detailed opinion supporting a substantially higher valuation for a major Chinese SEP portfolio immediately changes bargaining positions, negotiation expectations, and litigation risk assessments. At a minimum, the methodologies it advances have now entered professional conversation. That influence may persist regardless of the outcome of any appeal.

Whether or not the case is reversed, it may ultimately prove influential regardless of its formal status within the Chinese judicial hierarchy. The most important question may not be whether the decision survives appeal unchanged, but whether its methodologies become part of the standard toolkit of Chinese SEP litigation. If so, the decision may influence litigation strategy, patent prosecution, standards participation, and business organization by rewarding large portfolios, extensive Chinese patent coverage, and commercial activity in heavily weighted jurisdictions.

FRAND-onia

Perhaps the best way to understand the decision is through a metaphor. In Duck Soup (1933), the Marx Brothers preside over the fictional state of Freedonia. The movie is a satire against war and autocracy. Freedonia, a fictional state, does not lack rules. Rather, it possesses its own institutions, assumptions, and internal logic.

The Chongqing decisions (OPPO and ZTE) suggest the emergence of what might be called “FRAND-onia”: a domain in which global licensing agreements, ETSI commitments, foreign judgments, expert testimony, and valuation methodologies interact aggressively but in ways that are not fully reducible to any single approach. The most important question raised by the Chongqing decision is not whether the royalty rate was too high or too low. It is whether the variables used in modern FRAND valuation frameworks actually measure technological contribution. Earlier Chinese FRAND jurisprudence debated the meaning of FRAND in a consequential way that was largely invisible to individuals who could not read Chinese. Chongqing and parallel cases between ZTE and Samsung suggest that the next debate may concern something that is both well-disclosed and even more fundamental: how FRAND value itself is measured.