5G & 6G Standard Essential Patents (SEPs) – Who Owns the Future?

Introduction – Patents Are the New Spectrum

Spectrum grabs headlines, but patents quietly dictate who profits from each new generation of wireless technology. For telecom boards, the hidden truth is stark: every 5G call, every IoT packet, every future 6G holographic stream is riding on technology covered by Standard Essential Patents (SEPs) — and every one of those patents represents a royalty payment.

Unlike spectrum, which is finite but public, SEPs are private property. The holder can demand licensing fees, set terms (subject to FRAND – Fair, Reasonable, and Non-Discriminatory – rules), and use them strategically in negotiations.

In effect, SEPs are the tollbooths of the digital highway.

This blog explores the current state of SEP ownership, the strategic moves shaping 6G, and what boards should be doing now to mitigate risk and position themselves for the next decade of connectivity.

1. The SEP Landscape Today – 5G as a Case Study

How Big is the SEP Universe?

For 5G, the European Telecommunications Standards Institute (ETSI) database contains over 150,000 declared SEPs, grouped into about 20,000 patent families. Not all are valid, and not all are truly essential, but the concentration is remarkable:

• Top 10 SEP owners control more than 80% of declared SEPs.

• The top five players – Huawei, Qualcomm, Samsung, Nokia, Ericsson – dominate both infrastructure and device licensing.

• China’s share of global SEPs has grown dramatically — some estimates place Chinese entities at over 38% of declared 5G SEPs, with Huawei the single largest owner.

This is not an academic statistic. Royalty payments flow from every device manufacturer, every module integrator, and indirectly from operators when they buy RAN equipment.

SEP Ownership by Region

• China: Huawei, ZTE, and the government-backed China Academy of Information and Communications Technology (CAICT) are major contributors.

• United States: Qualcomm leads, followed by InterDigital and a handful of semiconductor players.

• Europe: Nokia and Ericsson are still IP powerhouses, despite losing market share in some equipment segments.

• Korea & Japan: Samsung, LG, and Sharp maintain strong, vertically integrated portfolios.

For boards, the key takeaway is that SEP ownership is heavily geopolitical. Dependencies on Chinese portfolios create risk exposure if cross-border licensing disputes escalate or if sanctions regimes tighten.

2. The Next Frontier – 6G Has Already Started

Although commercial 6G networks are not expected until 2028–2030, the R&D race is well underway.

• Europe: The Hexa-X and Hexa-X-II programmes, backed by the European Commission, are shaping key technical directions — such as AI-native air interfaces and sub-THz spectrum usage.

• United States: The NextG Alliance (under ATIS) is coordinating industry and academia to keep the US competitive.

• China: The IMT-2030 promotion group is already filing patent families aimed squarely at 6G requirements.

• Japan & Korea: Both governments are funding early research into terahertz communications and network-of-networks architectures.

The implication? The first to file will be the first to collect royalties. Many 6G patents being filed today will mature just in time for mass-market deployment, creating the royalty base for the 2030s.

Boards that wait until 6G standardisation is complete will find themselves price-takers, not price-setters.

3. Why SEP Ownership Matters at Board Level

SEP portfolios are not just legal assets — they are strategic weapons and financial instruments.

Revenue Stream and EBITDA Impact

Licensing revenue is one of the highest-margin businesses in telecoms. Qualcomm’s QTL (Qualcomm Technology Licensing) division historically enjoys operating margins above 60%. For boards, the inverse is also true: license fees paid out are a direct drag on EBITDA.

Negotiation Leverage

A company with a strong patent portfolio can negotiate cross-licenses and effectively “wash out” a large portion of incoming royalty claims. This is why even network operators are beginning to explore acquiring patent portfolios or supporting open-source alternatives to standards-based tech to reduce exposure.

National Security and Industrial Policy

SEP dominance is now a matter of state strategy. The US and EU have voiced concerns that China’s rising share of SEPs could create a chokepoint. The EU’s proposed SEP regulation seeks to increase transparency, require essentiality checks, and standardise FRAND rate setting — all to prevent “royalty shocks.”

Boards must recognise that SEP exposure is not just a procurement concern; it is a supply-chain resilience issue.

4. Quantifying the Risk – A Practical Approach

Boards should ask management for:

• Net Royalty Burden Analysis: Total royalty cost per device, per base station, and per GB of data carried.

• Jurisdictional Exposure: Where are the licensors headquartered? What geopolitical risks exist?

• Future Scenario Planning: Model royalty rates under different FRAND outcomes (e.g., EU regulation, Chinese court rulings).

This is not just a legal exercise — it’s a finance, strategy, and risk function collaboration.

5. Case Studies & Lessons Learned

• Apple vs Qualcomm (2017–2019): Apple withheld royalties, leading to a global legal battle. Settlement cost: reported $4.5–$6B plus ongoing royalties. Lesson: litigation is expensive and disruptive — pre-emptive strategy matters.

• Unwired Planet vs Huawei (UK, 2020): UK Supreme Court confirmed UK courts can set global FRAND rates. Lesson: boards must track which jurisdictions could set precedent and affect global payments.

• Nokia vs Oppo (2021–2023): Multi-country dispute that saw injunctions granted in Germany, India, and the Netherlands. Lesson: injunction risk can block market access entirely, not just raise costs.

6. Strategic Options for Boards

1. Engage in Standards Development: Active participation in 3GPP, ETSI, and other SDOs ensures visibility and influence.

2. Acquire or License Early: Consider buying distressed portfolios or joining patent pools early for preferential rates.

3. Collaborate with Peers: Industry consortia can collectively negotiate or challenge unfair licensing practices.

4. Develop Internal IP Competence: Boards should insist on regular briefings from IP counsel and CTOs, not just legal teams.

Board “So-What” – Turning Risk into Advantage

Boards cannot treat SEP exposure as a back-office compliance issue. SEP strategy should sit alongside spectrum strategy and capital allocation on the board agenda.

Key Board Actions:

• Request a quarterly IP risk dashboard.

• Mandate participation in standards bodies for technology leaders.

• Ensure IP considerations are factored into M&A due diligence and vendor selection.

• Explore IP insurance and contingency funding for major litigation.

Handled well, SEPs can become a competitive differentiator rather than a cost centre. Handled poorly, they can erode margins and create strategic dependency on competitors or hostile jurisdictions.

“The 6G standards war has already started — and patents, not spectrum, will decide who wins.”