Abstract

In 2025, Optis and Apple secured landmark judgments from the appellate courts of the United States and the United Kingdom. The parallel lawsuits delivered starkly divergent outcomes: the U.S. court vacated the original judgment after strict procedural scrutiny of the exclusion of the "Apple-Qualcomm Settlement Agreement" and inconsistencies in the jury’s verdict; by contrast, the UK court directly determined the global FRAND royalty rate via in-depth economic analysis. This striking contrast offers actionable strategic insights for global Standard Essential Patent (SEP) stakeholders navigating ongoing FRAND disputes.

1. Introduction: The Transatlantic Legal Divergence

In the realm of Standard Essential Patents (SEP), the FRAND commitment serves as a cornerstone for curbing patent holdup and fostering technology diffusion. Yet, when SEP holders and implementers fail to agree on the meaning of "FRAND," courts serve as the ultimate arbiters. The 2025 appellate judgments in the protracted Optis v. Apple dispute offer a critical lens through which to examine the current FRAND dispute resolution framework.

The U.S. Court of Appeals for the Federal Circuit (CAFC) vacated the infringement judgment and the $300 million damages award issued by the U.S. District Court for the Eastern District of Texas. This decision was grounded in the improper exclusion of the "Apple-Qualcomm Settlement Agreement" and procedural defects regarding jury verdict inconsistencies. Meanwhile, the UK Court of Appeal confirmed its jurisdiction to set global rates, substantially increasing the first-instance award from $56.43 million to approximately $502 million, covering the period from 2013 to 2027.

These judgments highlight the core challenge in global SEP litigation: as jurisdictions apply FRAND commitments through the lens of their distinct legal traditions, how is the landscape being redefined? This article analyzes the legal reasoning behind these decisions and distills strategic implications for stakeholders.

2. Procedural Barriers: U.S. Courts’ Dual Review of Evidence and Verdicts

The CAFC’s judgment underscores its commitment to procedural justice in SEP disputes—particularly in jury trials. This is evident in its rigorous review of evidentiary admissibility and its protection of the right to a consistent verdict.

A．Strict review of evidence admissibility: A three-part framework

The CAFC established three criteria for evidentiary review: comparability, negotiating context, and value composition. Optis argued that the "Apple-Qualcomm Settlement Agreement" should serve as a key comparable for determining FRAND rates. Apple vigorously opposed this. The dispute led the CAFC to develop the following analysis framework:

1. Lack of basis for comparability: conflict between comprehensiveness and pertinence

The CAFC adopted a strict stance when reviewing the alignment of the agreements’ scopes. The Apple-Qualcomm settlement agreement constitutes a "package" resolution for global, multi-faceted commercial and legal disputes. Its scope—encompassing disputes related to patents, antitrust, infringement, interference, and trade secrets—extends far beyond a standalone patent license. By contrast, the present case involves only five LTE Standard Essential Patents (SEPs) held by Optis. This discrepancy in scope creates a fundamental defect in the comparability of the two agreements.

From an evidentiary perspective, using the total consideration of a "package" settlement—intended to resolve a comprehensive commercial dispute—to measure the licensing value of patents in a specific technical field is methodologically flawed. While the expert witness retained by Optis sought to rely on the agreement as a benchmark for a "reasonableness check," his testimony failed to quantify the extent to which other business arrangements and value components in the agreement (unrelated to the five patents at issue) impacted the total consideration. This failure directly undermined the probative value of the evidence. The CAFC held that the agreement’s holistic nature diminishes its relevance for patent license pricing.

This ruling aligns closely with the "substantial similarity" requirement for comparable agreements under U.S. evidentiary law—a requirement that mandates the transaction used as a comparison basis must be sufficiently similar to the transaction at issue in terms of key terms and commercial context. Failure to meet this standard renders the transaction’s relevance questionable. In the present case, the Apple-Qualcomm agreement not only involves far more patents than the instant case but also includes antitrust settlements, business collaborations, and other commercial arrangements unrelated to patent value. This gap between comprehensiveness and specificity negates the validity of direct comparison.

2. The impact of negotiation background on value signals

In reviewing the negotiating context, the CAFC conducted a detailed analysis of how the circumstances surrounding the agreement’s formation impacted value assessment. The settlement agreement emerged amid the peak of global litigation between Qualcomm and Apple. This "litigation-era" negotiating environment typically leads to the inclusion of a "peace premium" in the agreement—paid in exchange for "litigation finality." The presence of this premium distorts the technical value signal that would otherwise be reflected in a normal commercial negotiation context, making it impossible for the agreement amount to accurately reflect the patents' inherent technical value.

Citing the ruling in LaserDynamics, the court noted that litigation settlement agreements are of questionable reliability when used to prove reasonable royalty rates. This is because their pricing is driven by complex motives, which may include numerous considerations unrelated to technical value. Notably, Optis was compelled to acknowledge in its testimony that the agreement was "not directly comparable"—a concession that further undermined the agreement’s status as benchmark evidence. The CAFC held that equating the value of an agreement reached in this unique context to FRAND value could seriously mislead fact-finders.

This analysis underscores the CAFC' s focus on the“purity”of the negotiating environment—emphasizing that FRAND rate assessment must be grounded in normal business considerations, not special circumstances shaped by litigation strategies. From an economic standpoint, decisions made under litigation pressure often deviate from the rational actor assumption, as they incorporate considerations of non-technical factors such as potential litigation costs, harm to business relationships, and reputational damage. This makes it extremely challenging to conduct a pure technical value assessment.

3. Ambiguity in value composition and risk of jury bias

Most critically, the CAFC’s application of Rule 403 of the Federal Rules of Evidence (FRE) illustrates the nuanced implementation of evidentiary law in complex technical cases. The total consideration of the agreement represents a blend of values from patent licensing, antitrust settlements, business collaborations, and other components—yet Optis failed to reliably disaggregate these distinct value elements. In such circumstances, admitting this evidence to the jury would pose significant risks to the accuracy of the fact-finding process.

During the trial, Optis repeatedly presented the jury with the agreement’s large monetary figures—conduct that the CAFC found would unfairly inflate the jury’s damages expectations. Jurors could have been psychologically swayed by these large sums, leading them to base their decisions on irrelevant, sensational figures rather than focusing on the specific technical value of the five patents at issue. This "anchoring effect" would have caused irreparable prejudice to defendant Apple and compromised the fairness of the proceedings. After a careful balancing test, the CAFC ultimately held that the substantial unfair prejudice posed by this evidence far outweighed its limited probative value—warranting its exclusion.

This ruling reflects the U.S. judicial system’s special protection of jury proceedings and its nuanced understanding of the potential for complex commercial evidence to be misleading. In patent litigation—particularly cases involving major technology companies—the psychological impact of exorbitant monetary figures on juries often far outweighs the evidence’s inherent probative value. Such cognitive bias could seriously undermine the objectivity of the fact-finder.

B．Fundamental procedural instability: Jury verdict inconsistencies

Beyond its rigorous review of evidentiary admissibility, the CAFC’s ruling also identified a more fundamental procedural defect: the failure to uphold the requirement for jury verdict consistency.

The CAFC held that the district court committed a structural error by consolidating the infringement claims of five independent patents into a single question: “Did Optis prove by a preponderance of the evidence that Apple infringed any of the asserted claims?” This error deprived Apple of its fundamental procedural right to a unanimous jury verdict. The critical defect in this approach is that it permits jurors to find infringement without reaching a consensus on the same patent. For instance, if some jurors conclude that only Patent A was infringed and others determine that only Patent B was infringed, they could still collectively answer “yes” to the single question. This violates the fundamental principle that “each asserted patent constitutes a separate cause of action”—meaning infringement must be proven individually for each patent.

This error directly undermines the legal foundation of the infringement judgment, resulting in the collapse of the damages award that relied on this flawed infringement finding. This underscores that in U.S. jury proceedings, a failure to uphold procedural justice is sufficient to warrant the complete reversal of substantive outcomes.

3. Substantive Adjudication: The British Court’s Methodology

In contrast to the U.S. procedural focus, the UK Court of Appeal exercised its jurisdiction to set global rates through detailed economic analysis.

A．The interplay between "bottom-up" and "top-down"

The English courts have adopted the double test approach that has become increasingly sophisticated in SEP litigation around the world. On the one hand, the valuation baseline is constructed through “bottom-up” analysis of comparable agreements. The judge examined the licensing agreement between Optis and Google in detail, converted it into a comparable per-unit royalty (DPU) via 'unbundling' methodologies, and used Innography patent data to standardize the licensing agreements from Apple, Ericsson, InterDigital, etc. based on patent shares, constructing a detailed value evaluation system.

On the other hand, UK courts concurrently employ a “top-down” test as a key calibration tool. This methodology first requires determining the total royalty needed to implement the entire LTE standard—i.e., the total value of the “patent stack”—before calculating the royalty owed to Optis based on the share of its patents in the overall stack. (As measured by Innography data, this share is 0.38% after accounting for the Ericsson license.) The UK Court of Appeal noted that if the royalty derived from the “bottom-up” approach, when recalculated using the patent share ratio, results in an unreasonably high total patent stack value (e.g., exceeding 15% of the device price), this indicates the outcome may deviate from the FRAND commitment.

This systematic methodology—combining “bottom-up” analysis rooted in specific transactions with “top-down” validation based on the broader market structure—highlights the UK Court of Appeal’s proactive role in cross-validating and calibrating FRAND rates via multiple economic models in complex technology and commercial disputes.

B．Judicial discretion in complex data assessment

Confronted with data that remained highly dispersed even after standardization, the UK Court of Appeal rejected the first-instance judge’s approach of outright dismissing expert evidence and devising his own “averaging” methodology. Instead, the appellate court proactively exercised judicial discretion to assess and weigh the evidence.

In its judgment, the UK Court of Appeal noted that Apple—by leveraging its strong market position and adhering to negotiation strategies such as “patent-by-patent licensing”—may have engaged in a degree of“holdout”during negotiations. This conduct resulted in relatively low royalty rates in agreements with certain SEP holders, which do not fully reflect true FRAND levels. Guided by this finding, the appellate court adopted a targeted approach: it prioritized agreements with major SEP holders (e.g., Ericsson, InterDigital, and Nokia)—which included higher implicit rates—while treating the Optis-Google agreement as another key reference benchmark for value. By combining qualitative analysis with quantitative calculations, the court ultimately established a royalty rate in the upper-middle range of the value spectrum: $0.15 per device.

This ruling process underscores that when determining FRAND rates, the UK Court of Appeal did not limit itself to the surface of the data. Instead, it conducted a thorough examination of the business logic and negotiation dynamics underlying the data, and exercised its discretion to assess and integrate the information.

C．Confirming jurisdiction for global rates

While utilizing the aforementioned economic tools to calculate the rate, the UK Court of Appeal’s judgment reaffirmed its adherence to the judicial precedent established in Unwired Planet v. Huawei. Specifically, based on the contractual obligations stemming from SEP holders’ FRAND commitments to ETSI, the UK courts have both the authority and the propriety to determine a unified FRAND license for a global patent portfolio. The legal basis for this principle was established by Judge Birss in the first-instance judgment of Unwired Planet v. Huawei. A key tenet of this principle is that under certain circumstances, only a global license complies with FRAND obligations. Judge Birss argued that a reasonable licensee is not entitled to demand that a patent holder grant a license with a narrower scope (e.g., limited to the UK) and then seek a court ruling on the terms of that local license. This is because negotiating licenses on a country-by-country basis would be considered “foolhardy” for both parties.

This approach seeks to address the high costs, inefficiencies, and potential conflicting judgments associated with fragmented cross-border litigation by offering a “one-stop” dispute resolution solution. That said, it also represents a notable expansion of the UK courts’ role in SEP dispute resolution: the courts have established the determination of global licensing rates and terms as a core litigation procedure, effectively precluding implementers from pursuing only local licensing alternatives within that jurisdiction from the outset. Ultimately, this mechanism positions compliance with the UK court’s global licensing ruling as the only effective means—from the court’s perspective—to avoid an injunction in the UK market and thereby resolve global disputes.

4. Substantive Adjudication: The British Court’s Methodology

From procedural focus to substantive adjudication, and from jury trials to judicial discretion, the differences between the U.S. and UK approaches essentially reflect the institutional choices of their respective legal systems. They also offer a practical comparative framework for companies navigating global litigation strategies.

In this case, the U.S. and UK judgments have provided a critical lens for stakeholders in the SEP ecosystem, highlighting the need for differentiated strategies when litigating across different jurisdictions. While these insights are not definitive action guidelines, they merit careful consideration when formulating global strategies.

A．For SEP Holders: Refining evidence and anticipating procedural risks

SEP holders must recognize that judicial support for their claims across jurisdictions is increasingly contingent on building a high-quality, credible 'comparable agreement' portfolio.

Enhance the "interpretability" of agreements: In day-to-day licensing activities, SEP holders should proactively secure a portfolio of agreements with transparent terms and clear scope, as these will be more persuasive in future litigation. For complex "package" arrangements like the "Apple-Qualcomm Settlement Agreement", their reference value largely hinges on whether the SEP holder can reliably "unbundle" and reasonably justify the patent value components within them. The shortcomings of Optis’ experts in the U.S. case highlighted, to some extent, the potential challenges associated with using such evidence.

Strengthen expertise in "comparability analysis": For any comparable agreements intended for use in litigation, SEP holders should proactively prepare a detailed comparability analysis report capable of withstanding cross-examination. This report must systematically demonstrate the agreements’ similarities and differences across technical fields, market scope, business terms, and other relevant factors— a critical step in enhancing evidentiary weight.

Prioritize understanding the uniqueness of U.S. procedural rules: When litigating in the United States, SEP holders must fully grasp the country’s complex procedural rules— particularly the nuances of the jury trial system. Holders must also anticipate that even with strong substantive evidence, procedural errors could result in the judgment being reversed on appeal.

B．For Implementers: Diversifying defense strategies

Technology implementers can also identify diverse defense strategy pathways, the effectiveness of which is highly context-dependent on specific judicial settings.

Establish a proactive licensing track record: Technology implementers should not limit themselves to passive rebuttals in litigation. Instead, they should proactively develop and maintain a portfolio of licensing agreements that they have entered into and that support their FRAND positions. The UK Court of Appeal’s skepticism regarding some of Apple’s low-rate agreements also serves as a reminder that not all executed agreements will automatically be deemed reflective of FRAND levels— and that the negotiating circumstances underlying the agreements may also be subject to scrutiny.

Adopt tailored defense strategies: In jurisdictions with a jury system—such as the United States—technology implementers should leverage procedural rules to the fullest extent and mount effective defenses using tools like motions to exclude evidence. In contrast, in jurisdictions like the United Kingdom—where judges oversee substantive trials—implementers must focus on systematically challenging the reliability of the opposing party’s evidence and the reasonableness of its calculation methodologies, grounded in economic and business logic.

C．Global Strategy: Venue selection and risk management

The U.S. and UK judgments collectively underscore the critical role of procedural strategies in global SEP disputes. Companies should consider elevating procedural decision-making to a strategic priority.

Risk Assessment Under the UK Approach: Technology implementers must clearly recognize that once they engage with the UK courts to resolve UK patent disputes, they may face a difficult choice: either accept a court-determined global license or abandon the UK market. Through the principles set forth in Unwired Planet v. Huawei, the UK courts have established a robust procedural framework—one that makes successfully challenging their global jurisdiction extremely unlikely. This means companies must make far-reaching strategic decisions early in litigation regarding whether to recognize the UK courts as the “global FRAND rate court.”

Procedural Risk Mitigation Under the U.S. Approach: The Optis case demonstrates that even with strong substantive evidence, procedural errors can result in a verdict being reversed. Consequently, both parties to the litigation must master and effectively utilize local procedural rules. Whether an SEP holder is establishing a damages basis through evidence admissibility or a technology implementer is limiting damages scope via procedural motions, both must fully recognize and prepare for procedural risks.

5. Substantive Adjudication: The British Court’s Methodology

The 2025 transatlantic “legal dialogue” between Optis and Apple illustrates the context-dependence of FRAND rate determination. The U.S. approach prioritizes procedural integrity to prevent jury bias, while the UK approach utilizes judicial discretion to synthesize imperfect data into a global rate.

The U.S. judgment emphasizes the importance of aligning evidentiary admissibility with jury verdict consistency within a specific procedural context—particularly the prevention of potential bias in jury trials. In contrast, the UK judgment illustrates how to establish global rates through the refined analysis and economic evaluation of imperfect evidence, within a judge-led substantive review process. These two approaches each have distinct internal logics and institutional foundations, and together they represent two sides of the same coin in current global SEP dispute resolution.

The implications of this series of judgments extend beyond the boundaries of individual cases. They offer distinct pathway options for global SEP licensing practices and serve as valuable judicial precedents for future FRAND litigation. For stakeholders in the global SEP ecosystem, the core challenge lies in understanding and adapting to the complex “one jurisdiction, one approach” landscape. Building on this understanding, stakeholders must develop a more robust FRAND value demonstration framework—one that can withstand the dual scrutiny of procedural and substantive requirements across different jurisdictions. As national courts continue to gain experience, this legal framework will evolve further, and its long-term implications remain to be seen.

AUTHOR BIO

Xiaoyan Zhou

Ms. Zhou has nearly a decade of experience in the intellectual property (IP) field, holding both the PRC Legal Professional Qualification and Patent Agent Qualification. Formerly an examiner at the Patent Office of the National Intellectual Property Administration (CNIPA), she specializes in end-to-end patent analysis, FTO, and invalidation. She has extensive experience in the field of Standard Essential Patents (SEP), is well-versed in licensing negotiations, and has been deeply involved in multiple overseas patent litigation cases. Ms. Zhou holds a Master's degree in Vehicle Engineering from Beijing Institute of Technology.Contact her at chloe.zhou@purplevineip.com.