Arbitration as the new forum for global FRAND disputes? What the UK Court of Appeal’s Nokia ruling means for SEP licensors and implementers

The UK Court of Appeal's decision in Acer Inc and another v Nokia Technologies Oy; ASUSTek Computer Inc and another v Nokia Technologies Oy [2026] EWCA Civ 564, handed down on 12 May 2026, marks a significant development in the global SEP licensing landscape. In a unanimous judgment, the Court granted Nokia a permanent stay of FRAND rate-setting proceedings brought by Acer and ASUS, holding that Nokia's offer of an adjustable interim license subject to ICC arbitration constituted a FRAND-compliant offer capable of acceptance.

Background: the Nokia codec SEP dispute

Nokia owns a portfolio of SEPs declared essential to the ITU-T H.264/AVC and H.265/HEVC video decoding standards (the "Nokia Codec SEP Portfolio"). Following the breakdown of licensing negotiations, Nokia commenced patent infringement proceedings against Acer, ASUS and Hisense in multiple jurisdictions — including Germany, the UPC, the United States, Brazil and India. Acer and ASUS responded by filing claims in the UK Patents Court seeking a global FRAND rate determination and interim license declarations. Nokia challenged jurisdiction and, in the alternative, offered each claimant an "Adjustable License" — an interim license whose final terms would be determined by an ICC arbitral tribunal rather than the English courts.

The decisions below and on appeal

The High Court held that Nokia's adjustable license offer was merely an offer to enter into arbitration — not a FRAND license capable of acceptance. The Court held that, only at the conclusion of the arbitration would a FRAND license offer be made available which was capable of acceptance by the claimants. The Court also expressed concern about the transparency implications of arbitration as a mechanism for determining FRAND terms. On that basis, the Court refused a case management stay and made interim license declarations in the claimants' favor.

The Court of Appeal disagreed, overturning the stay refusal in a unanimous judgment. The Court identified the key question not as whether Nokia's offer was capable of acceptance, but whether the terms of the Adjustable License were themselves FRAND.

On that question, the Court of Appeal reasoned in three stages. First, Nokia had offered each claimant an immediate global license to the Nokia Codec SEP Portfolio, capable of acceptance at once and providing protection against injunctive relief in the interim. Second, the terms of that interim license were agreed in all material respects save for the mechanism for determining the final license terms. Third, and most critically, the fact that the final terms would be determined by ICC arbitration rather than the English courts did not render those terms non-FRAND: Nokia was offering a license on whatever terms an independent and impartial tribunal ultimately determined to be FRAND, and there could be no objection to ICC arbitration as the mechanism for making that determination. The ICC Rules provide for transparency — including the possibility of a public non-confidential summary of the award — and Nokia had gone further by proposing that arbitrators be required to produce such a summary as a matter of obligation.

The Court noted that implementers who refuse a FRAND-compliant offer cannot invoke the English courts' declaratory jurisdiction, since that jurisdiction depends on the implementer being willing to accept a license on FRAND terms. The Court further noted that the claimants' argument that they were willing to accept FRAND terms determined by the English courts was circular: Nokia was entitled to select among FRAND-compliant options, and the claimants could not insist on one forum over another. The permanent stay was thus granted. In a follow-on judgment of 18 May 2026, the Court addressed a further disputed term in Nokia's offer that would have required each party to stay or withdraw any litigation concerning patents the other party contended should be included within the scope of a cross-license. The Court held that this term was not FRAND, and made the stay conditional on Nokia's removal of it.

Strategic implications of Nokia for SEP owners and implementers

The decision offers SEP owners a powerful new tool. By making a FRAND-compliant adjustable license offer tied to ICC arbitration, a patent licensor can — provided the offer is otherwise unimpeachable — effectively foreclose the implementer-led FRAND rate-setting proceedings that have become a feature of UK litigation in recent years.

For implementers, the calculus is more nuanced. Accepting an adjustable license offer means consenting to arbitration and forgoing court-determined FRAND terms. Refusing it means being treated as an unwilling licensee, with the consequence that the English courts' declaratory jurisdiction is unavailable. The Court of Appeal acknowledged an inherent asymmetry: SEP owners can choose their preferred FRAND forum in each case, while implementers cannot insist on court determination where the licensor has made a FRAND-compliant arbitration offer.

From a US perspective, the decision warrants close attention. US courts generally do not resolve global FRAND disputes in the same way UK courts do — proceedings in the United States typically concern individual patents rather than entire portfolios, and US courts have generally declined to impose mandatory worldwide licensing terms absent agreement of the parties. The UK, by contrast, has since Unwired Planet v. Huawei become the default forum for global FRAND rate-setting, with courts asserting jurisdiction to set worldwide rates backed by the threat of injunctive relief. Once an arbitral panel sets a binding global FRAND rate under a mechanism like the one endorsed in Nokia, any US breach-of-contract claim for failure to offer a FRAND rate would likely become moot, and there would be strong arguments that US courts should stay pending cases pending the outcome of the arbitration proceeding.

The case for and against arbitration in global FRAND disputes: outlook and practical implications

The Nokia ruling crystallizes several reasons why international arbitration is well suited to resolving global FRAND disputes.

1. Jurisdictional coherence. Patents are territorial but standards are global. Multiple courts — in the UK, Germany, China and the UPC — have each asserted the power to set global FRAND rates, producing conflicting determinations and a proliferation of anti-suit and anti-anti-suit injunctions. An arbitral award is jurisdictionally neutral, removing any jurisdictional conflict. Enforcement under the New York Convention across 172 countries provides a further practical advantage that no national court judgment can match.
2. Expertise and flexibility. Arbitral tribunals can be constituted with arbitrators possessing the technical, legal and economic expertise that FRAND disputes demand. Parties can tailor disclosure, agree on sampling methodologies for large SEP portfolios, and design proceedings that are faster and more cost-effective than multi-jurisdictional litigation.
3. Portfolio-wide resolution and institutional support. Arbitral tribunals can assess entire SEP portfolios — including patents from multiple jurisdictions — in a single proceeding. This approach enjoys broad institutional backing: the CJEU in Huawei v ZTE explicitly contemplated third-party determination of FRAND terms, and the EU Commission, the USPTO, the ICC and WIPO have all expressed support for ADR in SEP disputes and developed specific frameworks for FRAND arbitration.

The case for FRAND arbitration is not without its critics, however, and the Nokia ruling does not resolve the deeper structural tensions that arbitration inevitably raises. Three concerns merit attention.

1. Transparency and rate accuracy. The most serious systemic objection is that confidential arbitration obscures the comparable license data on which FRAND rate calculations depend. Widespread FRAND arbitration risks producing progressively less accurate rate determinations as information imbalances between experienced SEP owners and pure implementers widen. The Nokia Court of Appeal addressed this directly, endorsing Nokia's proposal for a public non-confidential summary of the award and suggesting that a full published award (with necessary redactions) would be preferable. It is also worth noting that much FRAND rate setting already occurs through private agreements, negotiated between private parties without public disclosure. Even in court proceedings, information is often sealed, so the practical difference from engaging in arbitration to resolve FRAND disputes is likely minimal.
2. Antitrust and public policy. FRAND disputes engage competition law — Articles 101 and 102 TFEU in the EU context — and have third-party effects that arbitration's consent-based framework struggles to accommodate. National courts have limited ability to review arbitral awards for competition law compliance, and arbitral tribunals cannot refer questions to the CJEU for preliminary rulings. These concerns apply with equal force, however, to negotiated settlements.
3. Consent and asymmetry. Arbitration is a consensual process, yet the Nokia Court of Appeal has effectively permitted a SEP owner to make arbitration the only viable route to a license by framing its offer in FRAND-compliant terms. Implementers who prefer the disclosure tools available in national court proceedings, or who have legitimate concerns about a particular arbitral forum, may find themselves with little practical choice. The Court acknowledged this asymmetry but declined to treat it as a reason to deny the stay. It remains to be seen whether declining to arbitrate will impact proceedings by a SEP owner requesting injunctive relief.

Ultimately, these objections are valid but not unique to arbitration: national court proceedings generate their own transparency deficits, jurisdictional conflicts, and asymmetries of bargaining power. The more productive question is whether — with appropriate institutional design and transparency safeguards — arbitration can outperform the fragmented, multi-jurisdictional litigation that has come to characterize global FRAND disputes. The Nokia Court of Appeal's decision suggests that, at least in the right circumstances, the answer may be yes. And viewed alongside the broader trajectory — including the Ericsson/Lenovo settlement, the Nokia/LG and Nokia/BlackBerry ICC arbitrations, and the growing institutional infrastructure for FRAND ADR — the Nokia decision arguably reflects and adds to a growing market consensus that a single, neutral arbitral forum may prove a more efficient and durable mechanism for resolving complex, multi-jurisdictional SEP licensing disputes than the current patchwork of competing national court proceedings.

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