Willfulness evidence demonstrating knowledge of a standard-essential patent (SEP) and infringement may include failing to participate in good faith negotiations toward a license under fair, reasonable, and non-discriminatory (FRAND) terms, according to a recent decision from the Eastern District of Texas. 

When a patent is declared to a standard-setting organization (SSO), the patent owner commits to licensing the patent on FRAND terms. An implementer of a patented technology covered by a SEP declared to an SSO is expected to enter into good-faith discussions with the SEP owner to reach a licensing agreement under FRAND terms, and the SEP owner, too, is expected to negotiate in good faith.

There are two potential problems with this. One is referred to as “hold-up,” which is when the SEP owner does not negotiate in good faith (or at all). The other is referred to as “hold-out,” in which the implementer does not negotiate in good faith (or at all). Both issues cause the equilibrium of the market for good-faith FRAND negotiations to break down and have been the subject of world-wide litigation. This has forced courts to be creative, and remedies have varied depending upon the circumstances.

In a recent U.S. SEP litigation, SEP owner Pantech Corporation and Pantech Wireless, LLC (“Pantech”) sued OnePlus Technology (“OnePlus”) in the Eastern District of Texas (Pantech Corp. et al. v. OnePlus Technology (Shenzhen) Co., Ltd.), alleging direct and indirect and willful infringement of eight of its patents (which it asserted to be SEPs), breach of FRAND duties, and unjust enrichment, based on failed licensing negotiations between the parties. OnePlus filed a motion to dismiss all counts of the complaint. Pantech Corp. et al. v. OnePlus Technology (Shenzhen) Co., Ltd., Case No. 5:24-cv-00038-RWS-JBB, slip op. at 1-2, 8 (E.D. Tex., August 27, 2025) (Baxter, Mag. J.) (“Recommendation”); later adopted by the court, Pantech Corp. et al. v. OnePlus Technology (Shenzhen) Co., Ltd., Case No. 5:24-cv-00038-RWS-JBB, slip op. (E.D. Tex., September 26, 2025). In the adopted Recommendation, the motion to dismiss was denied. Id. at 26.

In discussing the allegations of willful infringement against OnePlus, the Recommendation stated, “Pantech’s complaint adequately alleges that OnePlus had knowledge of infringement prior to the filing of the complaint. Not only does the complaint detail negotiations between the parties, including notice to OnePlus of its infringement, but it also details Pantech’s identification of certain patents and products, numerous meetings between the parties, and OnePlus’s alleged refusal to take a patent license.” Id. at 8. (Emphasis added.) The Recommendation further pointed out, “Pantech alleges that ‘[d]espite the allegations raised in [a previous suit filed in June 2022 by Pantech against OnePlus based on the same patents] and the contentions made therein, including by expert witnesses testifying to infringement and damages, OnePlus has refused to accept a license on FRAND terms or even offer a reasonable counteroffer….’” Id. (Emphasis added.) That is, in determining whether or not willful infringement was adequately pleaded, the magistrate pointed to the alleged hold-out by OnePlus set forth in Pantech’s complaint! This creates a potential new consideration in SEP litigation/damages in the United States, namely, that hold-out may be considered as evidence of, or at least a consideration in determining, willfulness.

It is noted that while, as discussed above, this recommendation has been adopted by the court, the case was subsequently stayed, pending the outcome of parallel proceedings at the International Trade Commission (“ITC”). However, if this litigation proceeds following the outcome of the ITC proceedings and if Pantech prevails on willful infringement, this would create a further incentive for implementers to come to the negotiating table and negotiate in good faith and a disincentive against hold-out. Accordingly, it may be interesting for SEP owners and implementers of standardized technologies to watch the outcome of this case.