As discussed in the first brief of The Patentist SEP Edition, determining a FRAND rate is rarely about finding a single, magical number. It is about the method used to arrive at that rate. Because this ecosystem thrives on predictability and fairness, any effort to shed light on how FRAND determinations are made is a step in the right direction.
The recent study published by the EPO Observatory is thus a welcome addition to the field. Co-authored with Brela Consulting, Methodologies for FRAND determination surveys 65 court decisions across seven jurisdictions to map how global case law addresses the thorny issue of FRAND valuations.
Transparency in this space is sorely needed, and the EPO report offers a valuable synthesis of global judicial trends. However, as we dig into the findings, it is crucial to understand what the report actually tells us—and, perhaps more importantly, what it doesn’t.
Complementary lenses: EPO vs. WIPO
The EPO study and WIPO’s recent FRAND economics report serve different purposes. WIPO’s report is normative and analytical, approaching FRAND valuation primarily from an economic theory standpoint. It explains, among other things, why structured valuation matters, why comparables can mislead when they reflect bargaining distortions, and why bottom-up and top-down methods have distinct economic rationales.
The EPO study takes a different approach. It is descriptive and practice-oriented, asking how courts have, in fact, proceeded when forced to translate FRAND into numbers, ranges, or judgments about offers. Read together, the two reports are highly complementary.
Strong in operational details
The EPO study is particularly strong in its operational details. It does not merely tell us that comparable licenses are common; it shows how difficult the comparables exercise is.
Across the surveyed cases, courts were presented with anywhere from two to 54 proposed comparables, yet accepted far fewer as genuinely comparable. The hard work lies in selection, unpacking, and discretionary adjustment. If a license is a lump sum or a cross-license, what is the effective rate once it is unpacked? If the license reflects different bargaining conditions, how should it be normalized?
Furthermore, the report highlights that forum and procedural posture shape methodology. This nuance is critical to avoiding the trap of conflating legal constraints with economic best practices. FRAND assessments in the sample are heavily concentrated in the EU (especially Germany), often in the context of injunction analysis under Huawei v. ZTE and Article 102 TFEU. By contrast, US cases often arise in patent-damages litigation, while UK cases appear as standalone portfolio-rate determinations. Therefore, any apparent judicial “preference” for one method is inseparable from the institutional task those courts are performing.
Judicial prevalence is not economic superiority
The report’s most quoted finding is that comparable licenses have emerged as the main method relied on by courts, while the top-down approach is used less frequently and often as a “cross-check.”
While this statement reflects the surveyed case law, it does not imply that comparables are economically superior. The fact that UK and German courts often treat top-down as a cross-check should not be mistaken for proof that top-down lacks an independent economic rationale. When applied well, the top-down framework imposes vital discipline on portfolio claims, directly addresses royalty stacking, and tests whether a proposed portfolio rate is plausible once scaled to the standard as a whole. As the EPO study itself acknowledges, Chinese and US courts have at times treated top-down as a principal method, noting insufficient evidence that one method is superior to the other. Neither method is self-executing: methodological pluralism is often wiser than methodological triumphalism!
The danger of unscrutinized comparables
This discussion brings us to a subtle but critical implication from the report’s findings. If courts default to the comparables method without rigorous scrutiny, there is a profound risk of perpetuating rates that are fundamentally non-FRAND simply because precedent treats them as FRAND.
A comparable is only as good as the fairness of the underlying agreement. If past licenses were signed under the threat of an injunction, or between parties with vastly asymmetric market power, using them as a baseline embeds historical imbalances into future FRAND determinations. Therefore, the section of the judicial debate that scrutinizes whether these underlying comparable decisions were fair in the first place is paramount.
A shared vulnerability to data
FRAND discourse often treats the top-down approach as the only method vulnerable to data weaknesses (such as patent counting). The EPO report offers a useful corrective. It shows that data limitations do not solely plague the top-down approach; they affect the comparables method just as much. As the study shows, patent counts, essentiality screens, validity, family deduplication, and portfolio-strength metrics are equally necessary when courts must unpack cross-licenses or adjust rates across disparate portfolios. The report candidly acknowledges that patent counting is rough, the gap between declared and truly essential patents can be large, and no universal measure of SEP value has been accepted by courts—evidentiary challenges that ultimately undermine both methods alike.
What’s missing and what’s next
We should read the EPO report as a beginning rather than an ending. Public availability of data remains uneven and exceptionally thin. Arbitration outcomes and valuation methods are generally confidential, leaving the pool of observable SEP licenses small and incomplete. We need more information from private, undisputed contracts if we want comparables analysis to become robust.
In short, the EPO is an excellent, careful survey of judicial practice. But if we want to know which method is economically justified, we must keep the WIPO report close at hand. The real challenge for the next phase of this debate is bringing these two conversations together. The field now needs better public data on licenses, reliable essentiality-checked portfolio metrics, and standard, objective frameworks to value technical contribution.
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