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.
