A little more than five years after the landmark decisions FRAND objection I and FRAND objection II in the SEP dispute between Sisvel and Haier, the Federal Court of Justice (FCJ), Germany’s highest court in patent and antitrust law matters, on January 27, 2026, issued the eagerly awaited FRAND objection III decision in the dispute between VoiceAge and HMD, making it a trilogy.
The dispute received unprecedented attention in the global IP community because the European Commission (EC) weighed in with an unusual amicus curiae letter arguing that the FRAND negotiation process (FRAND dance) established by the Court of Justice of the European Union (CJEU) in Huawei v ZTE was to be understood strictly sequentially and ultimately warranted another referral to the CJEU. The FCJ disagreed on both counts and thereby confirmed and refined its earlier case law. It also specifically looked at the case law of the UPC as well as of the Dutch and English national courts to arrive at its conclusions. Consequently, it can be expected that the FRAND objection III decision will not only shape future decisions of the German national courts and influence other national courts, but will also be carefully considered by the UPC.
1. Facts of the case
The initial complaint was filed by VoiceAge at the Regional Court of Munich I. VoiceAge sued mobile phone maker HMD for the infringement of its European patent 2 102 619, which is essential for the Enhanced Voice Service (EVS) ETSI standard. The Regional Court of Munich I issued an injunction against HMD and dismissed the defendant’s FRAND objection because it considered HMD to be an “unwilling” licensee. HMD’s appeal to the Higher Regional Court of Munich was dismissed based on essentially the same reasons. The EC had submitted an amicus curiae letter during the appeal stage in which it took a position that was very much in contrast to the established case law of the German courts on FRAND. It advocated a strictly sequential approach to FRAND in which each step of the FRAND dance laid out by the CJEU in re Huawei v ZTE (C-170/13) had to be taken one after the other, thus requiring the SEP (standard-essential patent) owner to provide an offer which is FRAND in each and every respect after the implementer has signaled its general willingness to take a license. The Higher Regional Court of Munich had rejected this approach of the EC as too formalistic – just like the Local Divisions in Mannheim and Munich did in the first UPC decisions on FRAND (those were issued before the appeal judgment in VoiceAge v HMD).
Another controversial point was the issue of security to be provided by the implementer. Under the approach advocated by the Higher Regional Court of Munich, the implementer has to provide security based on the SEP owner’s final license offer and has to commit to accept this offer in case it is found to be FRAND by a legally binding court decision. Only if such security and commitment are provided in time, will the court substantially assess whether the SEP owner’s final license offer is FRAND and otherwise dismiss the FRAND objection and grant an injunction. If the court assesses the SEP owner’s final license offer and finds that the offer is FRAND and if the implementer does not accept this offer, the court will issue an injunction; if the court finds that the SEP owner’s offer is not FRAND, an injunction is denied. The Higher Regional Court of Munich granted HMD leave to a further, legal appeal to the FCJ and HMD consequently asked the FCJ to review the ruling of the Higher Regional Court of Munich. This is clearly the exception rather than the rule and in substance limited to a purely legal review. New facts or evidence cannot be submitted at this stage of the proceedings.
2. Decision
The FCJ rejected HMD’s further appeal and confirmed the findings of the prior instances that HMD was an unwilling licensee. It thus dismissed HMD’s FRAND objection and confirmed the granted injunction which it found to be proportionate in the circumstances given. Another referral to the CJEU was refused.
Specifically, expressly disagreeing with the EC, the FCJ confirmed its earlier case law that no strictly sequential approach to FRAND is warranted, in which each step of the FRAND dance laid out by the CJEU had to be taken one after the other, thus requiring the SEP owner to provide an offer which is FRAND in each and every respect after the implementer has signaled its general willingness to take a license.
Essentially, the present decision continues the case law that began with the decisions FRAND objection I and FRAND objection II about five years ago. The FCJ repeatedly references them just like the CJEU’s Huawei v ZTE decision. Both parties’ obligation to negotiate in good faith and work swiftly and constructively towards a FRAND license agreement, in light of the circumstances of the individual case, remains the legal core of the FCJ’s jurisprudence. However, (even) more than in its previous decisions, the FCJ focuses on the obligation of the SEP implementer to engage in negotiations with the SEP owner.
This is at the heart of the initial, comprehensive reasoning of the decision, in which the FCJ reiterates the applicable legal standards before applying them to the case at hand:
At the outset, the FCJ establishes that the SEP owner is not per se prohibited from enforcing claims for injunctive relief and withdrawal of infringing products from the market. Rather, the willingness of the implementer to sign a license agreement on FRAND terms was the precondition for the SEP owner’s obligation to grant a license. Since the SEP owner could not force the implementer to enter into a license agreement, the FCJ finds that injunctive relief and withdrawal of infringing products are the SEP owner’s only means to motivate the implementer to agree to a license. According to the FCJ, it is precisely the right to seek injunctive relief that makes the SEP a subject of market transactions and forces the parties to articulate their respective interests and find a commercially reasonable solution:
“Only with the powers resulting from the exclusive right can the intellectual property – in this case, the invention –become the subject of market processes at all, and the rights holder is given the means to persuade those who wish to use the invention to conclude a license agreement. This ensures that the parties disclose their use preferences and interests when initiating the contract and coordinate them mutually in line with market conditions.”
This is remarkable. The FCJ does not only regard the injunction as the necessary consequence of failed negotiations but also as a precondition for a licensing transaction. Starting from this perspective, the decision points out that the SEP owner, due to its dominant market position, had a responsibility not to abuse this power. In particular, the FCJ holds that the SEP owner must enable the implementer to license the SEP on reasonable terms. According to the decision, it is, however, not an abuse of market dominance if the SEP owner makes an initial license offer which is not yet FRAND in each and every respect. The FCJ explains that an abuse can only be assumed if the SEP owner is, until the end of reasonable negotiations, still not willing to extend a license offer which is fully in line with FRAND.
The Court confirms that a concrete obligation of the SEP owner, due to the responsibility stemming from its dominant market position, is the well-known infringement notice, which serves to inform the implementer about the patent in suit. However, after such notice has been issued, further obligations of the SEP owner were subject to the willingness of the implementer. The FCJ finds that the willingness of the implementer to work towards a FRAND license is the basis of the obligation of the SEP owner to make a license offer and explain the terms and conditions offered, the latter at a level of detail which is reasonable in the current negotiation situation. The FCJ emphasizes that the mutual willingness to negotiate a FRAND license is not only crucial because otherwise an agreement cannot be reached but also because the legitimate interests and concerns of both parties – or in other words: what is actually FRAND – only become clear in the process of negotiations. In the FCJ’s view, the obligations of both parties in such negotiations are dependent on each other. Decisive was what a reasonable party, working towards a balanced solution, would do in the individual situation. Therefore, the FCJ holds that it is impossible to abstractly define the obligations of the parties.
With this “holistic” approach, the FCJ expressly rejects the position of the EC, provides a comprehensive reasoning analyzing the FRAND case law of the CJEU and – to the extent it exists – of national courts, specifically the Dutch and UK courts, and ultimately refuses another referral to the CJEU based on the EU law acte éclairé doctrine. As main reasons, the FCJ argues that the CJEU and national case law uniformly required a case-by-case assessment, which contradicted the EC’s interpretation under which the parties’ obligations must be assessed strictly sequentially.
After establishing the legal framework, the FCJ then moves on to apply it to the case at hand: The FCJ first confirms the Higher Regional Court of Munich’s approach to not assess whether VoiceAge’s license offer was FRAND before it determined that HMD was an unwilling licensee. The FCJ expressly states that it was not necessary to first determine whether the SEP owner’s offer is FRAND before the willingness or unwillingness of the implementer is established. Either way, the implementer had to consider the license offer made by the SEP owner and work towards a license agreement even if that license offer is (initially) not FRAND. Further, the FCJ notes that it is impossible to determine in court whether a complex license agreement is FRAND in every detail without looking at all of the issues, interests and reasons raised during a negotiation process. Whether a license agreement complies with Art 102 TFEU could only be determined if both parties communicate their objections against the respective offer or counteroffer and justified interests with a swift reasoning.
Then, analyzing HMD’s willingness to take a license, the FCJ explains that an unwillingness can in particular be derived from (a) the implementer not swiftly responding to a license offer or (b) the implementer not providing adequate security once a counteroffer has been rejected. In this context, the FCJ confirms the opinion of the Regional Court of Munich I that a counteroffer eight months after the SEP owner made a license offer was a sign that the implementer is not willing to take a FRAND license. Furthermore, the court takes issue with HMD having made alternating requests for lump sum and running royalty arrangements during the negotiations. Finally, the FCJ finds that the security provided by HMD was insufficient, confirming the view of the Higher Regional Court of Munich. HMD had increased its counteroffers from USD 10,000 to USD 1,000,000 over time, and it only raised the security to USD 1,000,000 after the oral hearing in the appeal instance, which the FCJ considers insufficient and too late. In this context, the FCJ expressly leaves open whether the Higher Regional Court of Munich was right in requiring the implementer to provide security for the royalties according to the last offer of the SEP owner (as sort of safe harbor). The FCJ rather focuses abstractly on the fact that the security must be sufficient to cover the royalties the SEP owner is entitled to. The security must, in other words, reach the uppermost end of the FRAND range.
Finally, the FCJ holds that an unwilling licensee regularly had no disproportionality defense against the grant of an injunction. Also in this regard, no referral to the CJEU was warranted because this question had to be decided on a case-by-case basis, which was independent of EU law and thus reserved for the national court to decide.
3. Comments and remarks
At first sight, the FRAND objection III decision might seem like an unsurprising continuation of the earlier decisions in the trilogy, offering little further guidance. It is in any event not the groundbreaking change some might have hoped for, but it does provide some valuable guidance on details of the parties’ obligations within the FRAND dance:
A first takeaway is that the FCJ confirmed that the infringement notice can be provided by way of an infringement action in which only claims for information, rendering of account, and determination of liability are asserted. This had already been established as case law by the German instance courts, and the FCJ dismissed HMD’s challenge to this practice.
More importantly, the FCJ decides the “dispute” between the German national courts in Munich and Mannheim on the one hand and in Dusseldorf on the other, and rules that the FRAND dance does not have to be assessed strictly sequentially. The FCJ takes a holistic view and reiterates that the court does not need to establish whether the SEP owner’s license offer is FRAND in each and every respect before considering the willingness of the implementer.
The FCJ also reiterates the legal core of its FRAND jurisprudence, namely that the parties have to swiftly and constructively engage in good faith licensing discussions working towards a solution. In this context, the FCJ repeatedly emphasizes that the willingness of the implementer to work towards a FRAND license is the basis of the so-called FRAND dance. Without this willingness, the SEP owner has to do nothing more than to issue an infringement notice. According to the FCJ, the SEP owner is usually not in a position to make a license offer which is clearly FRAND if the implementer does not engage, voice concerns, reasons, or interests to be taken into account. Of particular practical relevance is the following statement of the FCJ:
“For the user to be deemed to have the necessary license, it is not sufficient that a serious and definitive refusal by the patent infringer to conclude a license agreement on FRAND terms cannot be established.”
This likely means that procedurally, the implementer has to positively establish and eventually prove his willingness to take a FRAND license.
Overall, the present decision confirms that the threshold for a successful FRAND defense in Germany remains very high. After having received an infringement notice, implementers need to engage swiftly and work constructively towards a license agreement. Not only does this require an early, comprehensive disclosure of concerns, interests, and respective reasons but also a counteroffer on short notice. Once the counteroffer is rejected by the SEP owner, the implementer must swiftly provide security for the royalties that the SEP owner can legitimately request, which will not be easy to assess in practice. Without a substantial security, the entire FRAND defense is at risk and, as the present case shows, increasing the security late in the proceedings might not help. The only imaginable safe harbor for the security would be the SEP owner’s last offer.
Given the holistic approach of the FCJ aligning with UPC, Dutch, and UK case law and refusing another referral to the CJEU on this basis makes another referral in another case quite unlikely unless another national court of the EU opens this possibility up. This would, however, require that an implementer successfully bring an appropriate case to such a different national court of the EU (SEP owners would not bring such a case but stick to their usual suspects), and that such a newcomer court be open to diverge, which seems to be a long shot.
As a final point, the decision clarifies that an unwilling licensee regularly has no disproportionality defense which is subject to a case-by-case analysis and does therefore not warrant a referral to the CJEU either.
