Draft Arbitration Rules of PMAC: Possible effects on FRAND/SEP disputes

On 4 June 2025, the Patent Mediation and Arbitration Centre of the Unified Patent Court (PMAC) launched a public consultation to gather feedback on its draft arbitration rules (Draft Rules). Building on our previous blog post that looked at the (PMAC's jurisdiction), with this post we now take a closer look at draft provisions for FRAND/SEP disputes (defined below).

What is the background of FRAND/SEP disputes?

Patents that are essential for implementing a standard are known as Standard Essential Patents (SEPs). The use of such standards ensures compatibility, functionality, and interoperability across devices and systems. In exchange for having their technologies incorporated into a standard and to address antitrust concerns due to market participants agreeing on the selection of specific technologies to the exclusion of other potential solutions, patent holders voluntarily commit to licensing their SEPs on fair, reasonable, and non-discriminatory (FRAND) terms to any party seeking to implement the standard according to the respective policy of the standard-setting organisation. However, questions like (1) what share of a SEP-portfolio is genuinely essential and (2) what constitutes FRAND terms frequently give rise to disputes in license negotiations that often lead to litigation. Recognising the practical relevance of SEP disputes, the PMAC has included specific provisions in the Draft Rules seeking to address them and particularly welcomes comments from industry stakeholders on this matter.

Can specialised ADR frameworks be effective means for resolving FRAND disputes?

Despite years of legal debate and landmark rulings—not only by the CJEU (see Huawei v. ZTE) but also in other key jurisdictions such as the United States, the United Kingdom, and China—litigation in this area remains widespread. These disputes are often global, with licenses spanning multiple jurisdictions. Some therefore pitch ADR as a suitable option for consolidating and resolving FRAND licensing disputes in one place.

It is therefore no surprise that other institutions than PMAC have sought to offer a forum for settling multijurisdictional FRAND/SEP disputes. Initiatives such as the WIPO ADR Options for FRAND Dispute Management and Resolution and the FRAND ADR Case Management Guidelines of the Munich IP Dispute Resolution Forum have been offering ADR frameworks tailored to FRAND disputes for some time. Both institutions stress that ADR could resolve licensing disputes through a single procedure rather than separate litigations in different jurisdictions.

Nevertheless, these previous efforts have not succeeded in cutting the Gordian knot. The PMAC seems to be hoping to change this, by leveraging the Unified Patent Court’s growing popularity. Yet it remains to be seen whether the renewed efforts of the PMAC, with the provisions outlined below, will produce a tangible shift.

What do the Draft Rules offer for FRAND disputes?

Despite the complexity of FRAND licensing disputes and SEP litigation, the Draft Rules contain only a very limited number of provisions that are specific to FRAND disputes. That might seem surprising given the PMAC’s goal to become an important venue for SEP disputes. Three FRAND-specific provisions are included in the Draft Rules. They address (1) the scope of FRAND disputes in arbitration, (2) confidentiality, and (3) parallel proceedings.

1. The scope of FRAND disputes (Art. 46)

The Draft Rules provide that parties should define the scope of their FRAND dispute as precisely as possible. Art. 46 specifically lists several issues which may serve as examples of matters that parties may raise in arbitration. These can be grouped into three categories:

• First, the patent-related issues, e.g. the SEP(s) in dispute or other patents concerned, any patents that might be subject to cross-licensing, and any essentiality assessment to be conducted for the patents.
• Second, the legal possibilities and issues, which can specifically relate to the claim and defences, whether the proceedings should be conducted in multiple stages, and whether the parties have any applications to the Tribunal (or a competent court), e.g. requesting production for evidence or an order concerning confidentiality.
• Third, issues concerning licensing, e.g. the determination of selected licensing terms and conditions, the determination of any selected licensing terms on a temporary basis pending determination of final licensing terms by the Tribunal or a competent court—a clear reference to the recent interim license decisions by UK courts—, the determination of the scope of the royalty base and range, and the methodology for calculating a FRAND royalty rate.

2. Confidentiality (Art. 48)

Art. 48 enables the parties to set up a specific (more restrictive) confidentiality regime for FRAND disputes. It supplements the general confidentiality provisions set out in Art. 45 of the Draft Rules.

The confidentiality provisions of Art. 45 are already broadly formulated, requiring the parties to keep confidential the mere fact that the parties arbitrate, the proceedings, any documentary or other evidence disclosed during the proceedings, the award, orders, and other decisions of the Tribunal, as well as information proprietary to non-parties that is designated confidential and disclosed during the proceedings.

In addition, Art. 48 provides that, in relation to FRAND disputes, the parties may agree, or the Tribunal may order, (1) to appoint a confidentiality advisor to ensure effective confidentiality protection, (2) to restrict access to confidential information to a limited number of individuals bound by specific confidentiality conditions (the Draft Rules target comparables or other valuation evidence), and (3) to issue separate confidentiality orders or to enter into separate non-disclosure agreements to protect against the use or disclosure of confidential information.

In this context, it is worth noting that Art. 45 para 7 in general provides for the possibility that the PMAC may publish the award, orders, corrections thereof and other decisions of the Tribunal in an anonymised form, unless a party objects in writing to the publication within 60 days from the day of making the decision. This provision triggers the question whether key elements of arbitral awards that concern SEP disputes should not be published on a mandatory basis.

3. Parallel Proceedings (Art. 49)

The final provision of the slim FRAND-specific framework once more seeks to expand the parties’ autonomy, rather than to provide a clear framework. According to Art. 49, the parties may agree to stay parallel proceedings or parts of such proceedings and/or can refrain from seeking or enforcing any injunction or order granted by a competent court—provided they agree to that. In case only parts of a dispute are referred to arbitration, Art. 49 allows the parties to agree that proceedings concerning other parts of the dispute that are not subject to the pending arbitration can continue.

The terminology of the provision raises question marks: While the Draft Rules define “proceedings” as arbitration proceedings under the Draft Rules, Art. 49 does not make it clear whether the parties’ agreement to stay applies only to such arbitration proceedings or extends to other types of proceedings in particular national litigation. In the context of SEP disputes, it would be more natural to address the issue of parallel court litigation, but the terminology used seems to indicate otherwise. If the provision truly aims at other ADR proceedings, it would be atypical for arbitration rules to include a provision allowing the parties to stay proceedings that are not conducted under the same rules. Furthermore, the provision appears to treat the stay of proceedings solely as a matter of party agreement, without acknowledging that in arbitration it is usually the Tribunal that ultimately decides on a stay—an authority recognised as part of the Tribunal’s inherent powers under many arbitral rules. This underscores that more clarity would be welcome, raising the follow-on question whether a voluntary stay of parallel litigation (which the parties could always agree to) is the truly appropriate rule for SEP arbitration.

Conclusion

The Draft Rules reiterate the parties’ contractual freedom when it comes to FRAND disputes: the parties can (and ultimately should) define the scope of their dispute that they want to solve through ADR, they can seek a stricter confidentiality regime, and they can agree to stay parallel proceedings (although it remains unclear precisely to which parallel procedures the Draft Rules refer). One may, however, question whether this flexibility will really help PMAC’s ADR mechanism to resolve FRAND/SEP disputes as compared to previous ADR-offerings focusing on such disputes.

The FRAND-specific provisions in the Draft Rules concern primarily procedural details which are certainly important but do not tackle the fundamental obstacles that parties face in SEP licensing or SEP litigation according to the European Commission’s findings in its impact assessment for the SEP Regulation: lack of transparency, information asymmetry, lack of level playing field, and inefficiency.

It remains to be seen how the final PMAC rules will evolve in response to the feedback received, particularly whether they will include substantial provisions on the determination of FRAND terms or the disclosure of comparable licences. It will also be interesting to see whether the final rules will address procedural aspects such as mandating the publication of key elements of arbitral awards that concern FRAND rates. The general provision on the publication of awards in Art. 45 para 7 of the Draft Rules could provide a basis for addressing that particular point. Stakeholders are invited to provide their input what the PMAC’s FRAND arbitration framework should look like by 4 August 2025.