Two New Papers on China and FRAND

1.  Mark A. Cohen has published China’s Many Faces of FRAND, 47 EIPR 418 (2025).  Here is the abstract:

China has become a major destination for resolution of disputes over the licensing of patents incorporated into global technical standards. These patents are generally required to be licensed on "FRAND" terms. FRAND is an English language acronym that consists of four separate components: (A) "fair", (B) "reasonable", (C) "and" (D) "non-discriminatory." Chinese courts have typically applied these four admittedly vague components in their Chinese translations, rather than their native English. These translations have not been standardised across cases and policy documents. There are often multiple translation variants in an individual judicial decision with at least 120 potential variant translations of the four FRAND components. In addition, there are three significant grammatical variants, plus various combinations of the four components, which brings a total of potential variants used by Chinese courts to over 500. Not all these variants impose new meanings of FRAND. In fact, the most significant of the variant translations is grammatical and not based on a semantic difference. It entails removing a Chinese term for "and" and utilising the Chinese enumerative comma or dunhao, which looks like a backwards comma, to replace the Western comma. According to relevant Chinese national standards and practice, the use of the dunhao means "pause." It can mean "and" or "or." It potentially fragments the integrated concept of "FRAND" into its separate components. In this dominant translation variant, FRAND means "fair and/or reasonable and/or non-discriminatory." It might more appropriately be called "FRND". The Chinese courts’ use of FRND maximises judicial discretion by facilitating new combinations of individual FRAND components, thereby selectively ignoring certain FRAND components, and by introducing new terms into FRAND. These translations have also worked to the disadvantage of the foreign party by imposing preferential treatment for a Chinese licensee or a rate that is equal to the lowest rate charged by [sic] the licensee, regardless of the costs and challenges faced by the foreign licensor in negotiating and litigating with its Chinese counterpart. While foreign courts and companies have observed that it is difficult to obtain fair remuneration for standards-essential patents ("SEPS") licensed to China, these varied translated "faces of FRAND" are not observable to readers who rely solely on English translations. The English translations that I have reviewed have uniformly declined to address inconsistent translations from English into Chinese and back into English. These Chinese translations are also inconsistent with the translations into Chinese of international organisations and the approaches to translating FRAND’s vague components that have been undertaken by many foreign countries and economies. The effect of these mistranslations is to not merely to uniquely translate FRAND in judicial decision making, but, in certain instances, to suggest or impose new meanings based on Chinese law upon FRAND. These new Chinese meanings also serve to facilitate transplanting FRAND into new areas of the law and diplomacy where the Chinese government typically has expressed an interest in managing private property rights to serve governmental interests.

2. Zhang Guangliang, Qiao Zixuan, and Huang Yu have published Probe into Component-Level Licensing and Judicial Pricing of Standard Essential Patents, China Patents & Trademarks, No. 3, 2025, pp. 30-39.  The authors argue, among other things, that FRAND licenses should be available on a license-to-all, rather than on access-to-all basis (I tend to agree), and that regardless of which party pays the royalty the amount should be the same (a point Judge Thomas Kühnen has made, and with which I also agree).  They then go on to argue that, in FRAND litigation, the SEP owner should be able to recover the entire royalty from the end manufacturer; but that the component manufacturer who itself has infringed the SEP should be obligated to reimburse a portion of those royalties; and if I am understanding correctly, they believe that, in general, more of the responsibility should fall on the end manufacturer than on the component manufacturer (see pp. 34-35).  They also suggest that the end manufacturer and component manufacturer “can negotiate in advance and count the reimbursed damages into the component price.”  They proceed to discuss the merits of the SSPPU and entire market value rules, expressing a mild preference for the former but concluding that the choice should be determined case-by-case (see discussion at p.37).  The authors then conclude by proposing that the SEP royalty should be apportioned between the component manufacturer and the end manufacturer “according to the ratio of the component manufacturers’ profits to the end-product manufacturer’s profits” (pp. 37-38),  but I’m not persuaded.  In addition to the difficulties of determining what those profit levels are (a point which the authors acknowledge, while concluding nonetheless that they can be adequately estimated), I fail to see the significance of comparative profitability as a criterion for apportionment between the manufacturers, particularly when profitability can depend on so many extraneous factors (including that, by assumption, the parties’ profits would be inflated by not having paid for a FRAND license in advance).  More fundamentally, it’s not clear to me why the division of financial responsibility between end manufacturer and component manufacturer cannot be simply a matter of contract law—or, absent a contractual provision addressing this issue, whatever default rules applies under the relevant state’s commercial law.