Why Standards-Essential Patents Matter to the Wireless Industry
Andy Malis
The wireless industry depends on standards. Every mobile device, from a basic phone to a 5G-enabled tablet, operates within a system defined by technical specifications. These standards allow devices from different vendors to talk to each other across networks operated by different carriers. At the center of this system are standards-essential patents (SEPs). These are patents that claim inventions that must be used to comply with a standard. Without access to SEPs, a company cannot legally build a standards-compliant product.
The wireless industry’s reliance on SEPs began with 2G technologies like GSM and CDMA. It increased with the rise of 3G and 4G, and it is now critical in 5G. As radio interfaces, baseband processing, channel coding, and mobility management have grown more complex, the use of SEPs has exploded. Today, thousands of patents are declared essential to each generation of wireless standards. That scale creates both opportunity and risk.
Interoperability and access
Standards make interoperability possible: SEPs make standards possible. Wireless networks must work across countries, across equipment manufacturers, and across devices. Without clear rights to use the patented technology within a standard, every new device would risk patent infringement. SEPs provide a predictable legal path.
To support this, most standards development organizations (SDOs) require contributors to license SEPs on fair, reasonable, and non-discriminatory (FRAND) terms. FRAND licensing encourages widespread adoption of standards by balancing two needs: access to patented technology and compensation for innovators.
FRAND is a compromise. On one hand, it prevents SEP holders from blocking others from implementing a standard. On the other, it compensates companies that invest heavily in R&D. The result is patent licensing that supports global adoption of wireless technologies.
Innovation and return on investment
Wireless R&D is expensive. Developing a new codec, improving spectral efficiency, or reducing latency can take years of effort and cost hundreds of millions of dollars. Patents provide a return on that investment.
SEPs in particular are valuable because they describe the core parts of the standard. For example, in 4G LTE, key technologies like modulation, multiplexing, antenna technology, and handover mechanisms are protected by SEPs. A company that holds patents on these technologies is entitled to license fees from every other company that uses the standard.
This licensing revenue funds further R&D. It allows companies to maintain engineering teams, build prototypes, and contribute new ideas to the next generation of standards, while also generating profit for their shareholders.
Market structure and competition
SEPs also shape market structure. Some companies focus on R&D and SEP licensing, while others primarily focus on using licensed SEPs to build products. Qualcomm is a well-known example of the former. It develops new wireless technologies, contributes them to standards, and licenses the resulting SEPs to handset makers. In contrast, Apple and Samsung are examples of companies that do both: they develop some of their own patents but also rely on licensed SEPs to build compliant devices.
This separation allows specialization. It lets companies choose their business model while still participating in a global market. But it can also lead to tension. Disputes over SEP licensing terms have led to years of litigation. Companies argue over what FRAND means, how rates should be set, and whether injunctions should be allowed.
Courts in the U.S., Europe, and Asia have taken different views. Some have tried to calculate fair licensing rates based on comparable agreements. Others have focused on the behavior of licensors or licensees to assess whether they negotiated in good faith. The result is a patchwork of legal outcomes, but one constant: the importance of SEPs remains.
Global standardization and national interests
Because wireless standards are global, SEP ownership has strategic value. Countries and companies that hold many SEPs gain leverage in negotiations, trade policy, and industrial planning.
China, as an example, has pushed its domestic companies to contribute to 5G standards and build large SEP portfolios. Chinese companies such as Huawei and ZTE now hold thousands of declared 5G SEPs. The U.S. and Europe have responded with policy debates over SEP transparency, licensing practices, and the role of government in standards bodies.
Some regulators worry that SEP licensing can be abused—either by charging too much or by seeking injunctions to block competitors. Others argue that strict regulation would reduce incentives to innovate. Finding the right balance is difficult, but no one disputes that SEPs are central to the future of wireless.
Managing complexity
With thousands of declared SEPs and dozens of major holders, licensing is complex. Companies must negotiate dozens of agreements or join licensing pools like Avanci, Via Licensing, or Sisvel. These pools simplify the process by offering bundled licenses from multiple patent holders.
Still, verifying which patents are truly essential is difficult. Not all declared SEPs are actually required to implement a standard. Independent evaluations and patent analytics tools are growing in use, but the system remains opaque.
Efforts to improve transparency are being attempted. The European Commission had proposed a SEP Register with essentiality checks and public licensing terms, but unfortunately that proposal was withdrawn earlier this year after the failure of stakeholders to reach agreement on the details. Some standards bodies have increased disclosure requirements. But progress has been mixed, and SEP licensing and enforcement mainly follow existing legal frameworks, case law, and the use of national courts to resolve SEP disputes.
Why it matters now
The importance of SEPs is growing, not shrinking. 5G is spreading into new applications such as factories and public infrastructure. As wireless moves beyond handsets and into industrial control and critical infrastructure, the role of standards—and the patents behind them—grows more important.
If licensing fails, adoption slows. If SEP holders are underpaid, R&D dries up. If implementers face legal uncertainty, they delay products. SEPs are not just legal tools. They are part of the basic plumbing of the wireless world.
To keep the system working, companies need clear rules, predictable enforcement, and incentives to innovate. Standards must be open and inclusive, but they must also reward contribution. Without that balance, the engine behind wireless progress will slow down.
The next wireless generation, 6G, is already under discussion. It will rely on even more complex technology, and its standards are likely to embed artificial intelligence, non-terrestrial networks, and advanced security features. That means more SEPs, more licensing, and more need for clarity.
SEPs are not the only part of the wireless industry, but they are one of the most important. They tie together legal rights, technical standards, commercial products, and global policy. If the wireless ecosystem is a network, SEPs are the switch points. They connect the invention to the market—and the standard to the product. That connection must remain strong.