On July 14, 2025, local time, Presiding Judge Dr. Oliver Schön of the 7th Civil Chamber of the Munich Regional Court I issued a detailed FRAND (Fair, Reasonable, and Non-Discriminatory licensing) Guide in the case "ZTE v. Samsung". This guide discusses the core content of relevant adjudication rules and touches upon the latest developments. This article extracts the key viewpoints and principles as follows:
VoiceAge EVS v. HMD: Judge Dr. Schoen’s panel does not believe that the Munich Higher Regional Court’s position will be affirmed by Federal Court of Justice. As the guidance explains, the regional appeals court would not make the provision of collateral a safe harbor, but it is a precondition to an assessment of whether the patentee’s offer is FRAND. The panel is right that it does not make sense to place so much emphasis on security. Not only does this delay the virtuous cycle by postponing the point at which the SEP holder gets paid and can reinvest in new R&D, but the guidance document explains that there must also be ways for an implementer to prove willingness even without posting collateral. Note that Germany is not a common law jurisdiction, so the lower court is not bound by appellate case law.
Huawei v. ZTE: The guidance says that a lot has changed since the European Court of Justice (ECJ) made that decision about a decade ago. The Munich I Regional Court rejects the notion that implementers come under so much pressure from litigation that they agree to pay supra-FRAND rates if there is a serious threat of an injunction. Instead, the document says that it’s part of the normal course of business that companies have to cope with litigation and deal with the related risks.
Royalty level: SEP holders will love the passage where the guidance document explains that higher SEP royalties are desirable, provided that they are not so high as to result in the removal of products from the market (which is not meant in terms of injunctions, but commercial viability). Increases of consumer prices are acceptable if that helps fund innovation.
FRAND is range, not point: Unlike UK courts with their “whatever rate is in fact FRAND” approach, the Munich court opposes the idea that a court could require a party to accept or offer a single rate. Instead, FRAND is a range, and a SEP holder may even make an initial offer that is supra-FRAND if it then grants discounts during the further negotiations that result in a FRAND rate.
Top-down valuations are, at best, useful for cross-checks: The guidance document explains that top-down valuations based on portfolio size do not accurately reflect the value of the technology involved. Apart from the fact that there can be a wide range of views on what the value of the entire stack should be, there can be contributors to standards that have budget constraints (for example, university institutes) and file for fewer patents relative to the actual value of their contributions than large corporations with sizable patent prosecution budgets.
Royalty base should be average of products in given category: If there is anything in the guidance document that Apple, the world’s richest SEP implementer, may like, it’s that the Munich court believes percentage-based royalty rates should not be applied to actual selling prices but a category average.
Implementers must involve high-level decision makers if necessary: One can deduce from the guidance document that the court has seen cases in which implementers delayed negotiations by leaving them to low-level staff without sufficient decision-making authority to cut a license deal. The guidance document indicates that a failure to involve more senior decision makers when the lower echelons don’t make progress could weigh in favor of an unwillingness finding. The document also notes that both parties must make efforts to conclude a license agreement swiftly, but it is particularly up to implementers who are making unlicensed use of patented inventions to work toward a deal.
Licensors can also be unwilling: The document gives more examples of what implementers must (and must not) do, but licensors must also do their part. For example, if circumstances have changed objectively and a licensor insists, in a renewal situation, on the same royalty level as before and declines to engage in constructive talks with the implementer about adjustments, it may be deemed unwilling.
Only actual payments fund new innovation: Implementers can (and practically will) be expected to make royalty payments based on the undisputed royalty level. The Munich I Regional Court has a far better understanding of commercial realities than certain UK and German appellate judges who think that interim payments or deposits are valuable (in reality, they only matter if there is a bankruptcy risk). We discussed that part last week. The guidance document explains why and how payments of the undisputed amount can be reconciled with Huawei v. ZTE.
Arbitration offers: If an implementer makes a reasonably acceptable arbitration offer only shortly before an injunction might be ordered, that will probably not be enough to be considered a willing licensee. If the offer is timely and reasonably acceptable, then it could help.
No entitlement to interim license: The Munich court says implementers do not have a justiciable entitlement to an interim license. The court also can’t see how the delay caused by interim licenses helps.
Comparable license agreements: Payments for past unlicensed use are much less relevant than what is paid going forward as implementers can’t retroactively increase prices for products they already sold.
SMEs may sometimes get better terms from licensors: Given that enforcement against small and medium-sized enterprises is less profitable or unprofitable, it is possible that SMEs actually pay lower per-unit royalties than larger licensors.
Cross-licenses: In cases where it is clear who the net licensee will be, the fact that the outcome will be a cross-license does not make a big difference. In practical terms, German courts will decide patent by patent, and will then focus on whether the offer for the portfolio including the given patent-in-suit is FRAND.
How implementers can demonstrate willingness: swift disclosure of unit volumes；high percentage of standard already licensed；provision of security；willingness to pay the undisputed part of the royalties the licensor demands；offering arbitration binding on the implementer at an early point in time, but not without previously having engaged in negotiations to a sufficient extent.
