5G, 6G, AI: The Invisible Billion-Dollar Battle Over Patents That No One Sees
Every time you pull a 5G smartphone out of your pocket, money flows – to companies whose names never appear on your receipt. Nokia collects up to 3 euros per 5G handset sold, Ericsson between 2.50 and 5 euros, and Qualcomm a percentage of the device price. In 2025 alone, Nokia generated roughly 1.5 billion euros in net licensing revenue at an operating margin exceeding 70 percent. At the heart of this silent battle lies a legal concept most consumers never encounter: the Standard-Essential Patent (SEP) – and an EU law that collapsed spectacularly in 2025 and is now being fought over before Europe’s highest court.
What Are Standard-Essential Patents?
A Standard-Essential Patent protects a technology without which a technical standard – such as 5G, Wi-Fi, or video codecs – simply cannot function. Anyone who wants to build a standard-compliant device must license these patents; there is no technical workaround. For the 5G standard alone, more than 87,000 patents have been declared essential to the standards body ETSI.
It is precisely this inescapability that gives SEP holders their market power. To rein it in, patent holders commit during standardization to license their SEPs on FRAND terms – fair, reasonable, and non-discriminatory.
The Existing Legal Framework: Huawei v. ZTE
To this day, SEP enforcement in Europe is not based on a dedicated regulation but on competition law (Art. 101, 102 TFEU) and CJEU case law. The decisive precedent is the landmark ruling Huawei v. ZTE (C-170/13) of 16 July 2015.
There, the CJEU set out a veritable “negotiation dance” as a precondition for an injunction:
- The SEP holder must first alert the alleged infringer to the infringement.
- It must present a concrete, written FRAND licensing offer.
- The user, in turn, must negotiate seriously and without delay.
The weaknesses are well known: courts cannot conclusively define what FRAND means in concrete terms, which is why ever-new detailed questions keep arising – the Düsseldorf Regional Court has once again referred FRAND-obligation questions to the CJEU. This legal uncertainty was the real trigger for the EU’s regulatory attempt.
The Proposed EU SEP Regulation
On 27 April 2023, the European Commission presented its draft regulation (COM(2023)0232), which the European Parliament adopted by a large majority on 28 February 2024. The aim was a more transparent, more efficient licensing system that would reduce the information asymmetry between patent holders and implementers – especially in favor of SMEs.
The core building blocks of the draft:
- A Competence Centre at the EUIPO in Alicante to manage an SEP register and database.
- A registration obligation for SEP holders, whose patents would undergo essentiality checks.
- Determination of an aggregate royalty for a standard, plus a mandatory conciliation procedure before any litigation.
The Bombshell: Withdrawal in 2025
On 11 February 2025, the EU Commission unexpectedly withdrew the proposal – officially citing “no foreseeable agreement” between Parliament and Council. The withdrawal was formally completed in October 2025. As a result, the existing framework – competition law plus Huawei/ZTE – remains in force unchanged.
Intense lobbying lay behind the withdrawal. SEP holders and organizations such as the Council for Innovation Promotion welcomed the decision, while the Commission itself had concluded in a September 2024 report that regulation would hamper growth in the EU.
The Dispute Escalates Before the CJEU
Parliament refused to accept the withdrawal. On 4 November 2025, the Legal Affairs Committee (JURI) voted to sue the Commission before the CJEU. On 25 November 2025, the plenary confirmed this action for annulment against the withdrawal decision.
The accusations are serious: the Commission allegedly breached EU law through the withdrawal, denied Parliament access to SEP meetings, and was barred by court order from deleting documents relating to the withdrawal. In parallel, a tender-based study on hypothetical implementation continues – and the Commission has not ruled out further steps.
Who Wins, Who Pays?
The interests are clearly split between patent holders (licensors) and implementers (licensees).
The financial stakes are enormous: Nokia holds over 26,000 patent families, including more than 7,000 5G SEPs, around 70 percent of which still have over ten years to run. No smartphone manufacturer – from Apple and Samsung to Xiaomi – can avoid these royalties.
Why 6G and AI Raise the Stakes
Today’s 5G battle is only the beginning. With the rise of 6G, the Internet of Things, and AI-powered connected devices, the number of license-bearing products multiplies – and with it the potential for disputes. Even in the 5G era, licensing revenue for connected devices grew sharply, while IoT royalty rates in some cases have yet to be determined. For the automotive industry, where every connected vehicle becomes a licensee, this is already a billion-dollar issue today.
Practical Takeaway
Until the CJEU rules on the action for annulment, the status quo governs SEP holders and implementers alike: negotiations along the Huawei/ZTE template, and FRAND disputes before national courts and the Unified Patent Court. The UPC’s first FRAND ruling by the Mannheim Local Division in 2024 tilted in favor of the SEP holder – a signal that the enforcement position of patent holders in Europe currently remains strong.
