Pay up or lose: Munich Regional Court tightens FRAND requirements for Standard Essential Patent implementers

The Regional Court (Landgericht, LG) Munich continues to shape the German Standard Essential Patent (SEP) litigation landscape. Following its much-discussed “general guidance”  (discussed in our German SEP litigation series Part 1 and Part 2 (August 2025)) the LG Munich has recently applied that guidance in its judgment in Wilus v. ASUS (January 2026) .

This judgement provides further practical clarification of Fair, Reasonable and Non-Discriminatory (FRAND) requirements imposed on implementers of technology protected by SEPs:  in particular the partial payment obligation and the requirement of an additional security deposit. 

Moreover, the decision signals a possible shift of the German courts’ approach to FRAND, away from a formal approach towards consideration of more substantive aspects of the discussions between the SEP owner and implementer - in particular the relevance of comparable licence agreements. 

No willing licensee status without partial payment

In Wilus v. ASUS, the LG Munich referred to the opinion of the Higher Regional Court (Oberlandesgericht, OLG) Munich in VoiceAge EVS v HMD (March 2025) -  that the court will generally only consider the defendant’s FRAND objection if the defendant has provided a sufficiently high security deposit - but went further than the OLG. The LG Munich explicitly required the implementer to not just provide a security deposit, but to also make a partial (final) payment to the SEP owner in order to be considered a willing licensee. 

This obligation to make a partial payment applies when the parties have agreed that the implementer is obliged to take a licence, but the amount of the licence fee is in dispute. In this case, the implementer must make a partial payment to the SEP holder for the “undisputed” amount. This payment must be made non-refundable and directly to the SEP holder - as an advance payment on the future licence agreement. 

The LG Munich has now specified that the “undisputed” amount is based on the implementer’s licence (counter) offer.

Additional security deposit requirements

In VoiceAge EVS v HMD, the OLG Munich had required the implementer to only provide a security deposit but in an amount equal to the SEP holder's licence offer, which would not be available funds for the SEP holder until a licence agreement is concluded and the security is released to the SEP holder (read more). 

The LG Munich's approach in Wilus v. ASUS may initially seem beneficial for the implementer with respect to the amount for the partial payment (because it is based the implementer’s offer instead of the SEP holder's offer). However, the LG went a step further in potentially requiring an additional security deposit for the difference in amount between the implementer’s and the SEP holder’s offer. 

This requirement for an additional security deposit applies when the implementer’s offer is less than 60% of the patent holder's offer and the difference exceeds USD 10 million. In this case, the security deposit amount is equal one year’s licence fees in the case of a lump-sum licence. 

The LG Munich provided the following example: if the patent holder requests a royalty of “100” for a period of 5 years, and the implementer offers only “30”, then the defendant is required to pay an amount of “30” as a partial payment and deposit a further amount equal to “20” (presumably the licence fee for one year) as security (provided the USD 10 million threshold is reached). 

The LG Munich even considered the growing trend for interim licences in the UK. It determined that where a party that has applied for a rate determination in another jurisdiction, it must provide the amount set in those proceedings as an additional security deposit insofar as it exceeds the partial payment, irrespective of whether the opposing party has agreed to the court's proposal. 

Limited relevance of comparable licence agreements for FRAND assessment

In its general guidance the LG Munich outlined that comparable licence agreements were the preferred method for FRAND assessment. It confirmed that approach in Wilus v. ASUS, but it also recognised their potentially limited relevance in practice. 

The court emphasised that licence agreements are considered comparable if they have been concluded recently, and with licensees of comparable company size and product portfolio. If so, such licence agreements carry a strong evidential weight that the rate agreed for such licences falls within the FRAND range. However, the LG Munich also held that the patent holder may decide whether and which comparable licence agreements it discloses in any given litigation - and is not obliged to disclose all agreements in relation to a specific licence subject matter.  The significance of comparable licence agreements may therefore be diminished in practice. 

Although the claimant, Wilus, disclosed several licence agreements, the LG Munich was not able to assess whether these were “comparable", because Wilus had redacted key information e.g. regarding payment amounts and information on sales quantities. The court clarified that solely disclosing the per-unit prices is not sufficient to assess the comparability of concluded licences. It therefore assessed the FRAND compliance by using the top-down approach for both the pool offer and the bilateral offer made by Wilus. 

Given the LG Munich’s detailed application of the top-down approach in the judgement, the decision is worth reading for a deeper dive into this topic (see the official judgment in German from para 133). 

Looking ahead: Clarification by the FCJ? 

Last week, the German Federal Court of Justice (FCJ) has published a decision that dismissed the appeal in the VoiceAge EVS v HMD case previously decided by the Munich courts. 

In view of the diverging approaches taken by the LG Munich and the OLG Munich on the security deposit question, the most pressing question ahead of the awaited FCJ decision was whether the FCJ would take a clear position on the question of security deposit. Namely whether the amount of the security deposit to be provided by the implementer to the patent holder should (1) be based on the patent holder’s licence offer (the OLG Munich position) or (2) whether a final (partial) payment is required - based only on the implementer’s offer -  together with a higher security deposit in certain scenarios (the LG Munich position). 

The FCJ explicitly left this question unanswered. However, the FCJ has given a hint of their view - which we will discuss in a follow up post. 

Also, with regard to the FCJ’s other findings, the judgement is worth reading. It represents only the third decision by Germany’s highest court on FRAND since the landmark ruling of the European Court of Justice in Huawei v. ZTE in 2015.   

Stay tuned to our next blog post on the FCJ ruling.