On 13 August 2026, the 7th Civil Chamber of the Munich Regional Court I published comprehensive FRAND Guidelines, which provide a patent holder-friendly economic assessment of what is FRAND. Most importantly, the court introduces concrete benchmark values for 5G, WiFi and streaming technologies, offering parties a much clearer indication of how future licensing disputes may be assessed.
The numbers given by the court certainly make SEP litigation in Munich’s 7th Chamber more predictable and confirm Munich’s role as a favourite forum for patent holders. Implementers, however, may now require an even more disciplined counterstrategy, developed early and supported by both legal and economic evidence, to challenge the clearly patent holder-friendly economic considerations that form the baseline of the Chamber’s understanding of what is FRAND.
The Guidelines expressly build upon the chamber's recent FRAND case law, most notably ASUS I, ASUS II, Renault and ZTE v Samsung, and seek to synthesise the principles developed in those decisions into a coherent framework for future SEP disputes (Preamble, p.2).
The Guidelines are also noteworthy for their criticism of the European Commission’s (“Commission”) amicus curiae intervention in the case leading to the Federal Court of Justice’s decision in FRAND-Einwand III. The court, in part, accuses the Commission of taking a one-sided approach that does not do justice to the complexity of the underlying issue (mn. 8). This criticism will surely be heard in Brussels and may lead the Commission to look for other avenues to influence FRAND jurisprudence (see also the conclusion below, section V. below).
It remains important to note that the document only reflects the views of the 7th Civil Chamber (Preamble, p.2). This has important overall implications. Munich’s 21st Chamber, the Unified Patent Court, the patent law chambers at the Düsseldorf and Mannheim Regional Courts, competition law chambers in these or other venues and the many international courts active in FRAND proceedings may all come to different conclusions as to what is FRAND, e.g., in a 5G-related case.
Whether the Guidelines help simplify FRAND rate setting or simply create additional complexity in an already highly complex litigation environment thus remains to be seen.
I. How Does the Court Conduct the FRAND Analysis?
Apart from addressing royalty determination, the Guidelines also structure the sequence in which the court intends to address FRAND issues (mn. 25-35).
The court proposes a two-step assessment of, first, an external willingness to license ("äußere Lizenzwilligkeit") and – where necessary –, secondly, an internal willingness to license ("innere Lizenzwilligkeit"). The external willingness to license is generally assumed where the implementer has paid an undisputed portion of the royalty and has – subject to certain conditions – provided qualified security. In doing so, the implementer demonstrates through its conduct that it is genuinely prepared to enter into a licence on FRAND terms in the eyes of the Chamber. Only where the implementer has overcome the threshold of external willingness does the court proceed to examine the patent holder's offer in substance. In this second step, the court asks whether the offer falls within the permissible FRAND range. If the offer lies within the FRAND range and is not accepted by the implementer, the implementer is considered to lack internal willingness to license. The assessment of internal willingness to license therefore contains a comprehensive review of the patent holder’s licensing offer (mn. 27-35).
The structure put forward by the 7th chamber contains several pitfalls to implementers. If the implementer waits too long, offers inadequate security, or fails to engage with the royalty methodology of the chamber, it risks losing access to the court’s material FRAND review. Once the implementer clears the willingness threshold, the SEP holder’s comparable licences, top-down methodology and rate explanations become the main point of contention. To provide fitting strategic advice, litigation counsels on both sides will therefore have to consider the 7th Chamber’s procedural and material requirements from the outset.
II. How Does the Court Determine FRAND Royalties?
The court starts from the general premise that FRAND is not a single rate but rather a range of permissible outcomes (mn. 45).
The primary method for determining that range is then the analysis of the SEP holder’s existing licence agreements as comparables (mn. 45, 48-50). Based on those agreements, the court then determines a benchmark value and establishes a FRAND range. Depending on factors such as volume, timing, licence scope and the parties’ negotiation conduct, the royalty may be adjusted upwards or downwards within that range (mn. 72, 88-94). The Guidelines also reaffirm the court’s well-known 15% rule. Where a comparable licence exists, the patent holder may generally increase that benchmark by up to 15% without violating the non-discrimination requirement (mn. 90-94).
A second pillar of the court’s methodology is the Top-Down Approach. Although the court continues to view comparable licences as the preferred method, the Top-Down analysis serves as an important cross-check and may even become the primary tool where suitable comparable licences are unavailable, as in ZTE v Samsung (mn. 121-123, 163-167). Under this approach, the court first determines an Aggregate Royalty Burden (ARB) for the relevant standard and then allocates a share of that burden to an individual SEP holder based on the size of its portfolio (mn. 124-146). As a benchmark for portfolio valuation, the court breaks this down to the monetary value of a percentage share of the standard (mn. 146).
The framework raises immediate questions: how can the alleged comparability of a license be challenged, can cross-licences be considered, and how should litigation-driven agreements be treated? Can the court more effectively be reasoned with on top-down, which also depends on assumptions, such as about the royalty base, aggregate burden, and the relationship between declared essentiality and actual technical value? These questions illustrate how abstract economic variables from the Guidelines are set to become concrete litigation issues that must be pleaded, supported, and preserved for appeal.
III. The Court’s Royalty Benchmarks under the Top-Down Approach
1. 5G Licensing
The most notable figure in the Guidelines is the court’s valuation of the 5G standard. Using a standardised smartphone value of US$170, the court adopts an Aggregate Royalty Burden of 8% for 5G and all backward-compatible cellular generations. This produces a total royalty burden of US$13.60 per smartphone (US$170 x 8%) (mn. 128, 134-135). The court expressly considers this amount to be an appropriate royalty burden for the lifetime use of 5G technology in a mobile phone (mn. 135). Once the US$13.60 ARB has been established, the value of a 1% share of the 5G standard can be calculated directly. According to the court, each percentage point corresponds to US$0.136 per device (mn. 146). By way of illustration, a portfolio representing 5% of the 5G standard would correspond to a royalty value of approximately US$0.68 per device, while a 10% share would correspond to US$1.36 per device (mn. 146).
This figure is likely to become one of the most frequently cited numbers in future SEP negotiations and litigation. As such, it is equally certain to be challenged. The assumptions underlying the figure — standardised device value, aggregate royalty burden, and portfolio share calculation — are not set in stone, and may be considered differently by other courts, including the Munich Court of Appeal.
2. The Total Royalty Burden for Smartphones
The court emphasises that smartphones typically implement several standard families simultaneously. In addition to cellular technology, WiFi and streaming standards must also be considered. For smartphones, the court allocates (mn. 136-139):
- 8% for cellular technology,
- 5% for WiFi, and
- 5% for streaming technologies.
This results in a combined royalty burden of 18%. Applying this percentage to the court's benchmark smartphone value of US$170 yields a total royalty burden of US$30.60 per smartphone (US$170 x 18%) (mn. 139).
The court suggests that the aggregate value generated by these core standards may exceed current industry royalty payments, which it considers often to remain below the theoretical FRAND potential identified through the Top-Down analysis (mn. 129, 155-156). This observation is commercially highly significant. SEP holders will use it to argue that the market has systematically underpaid for standardised technology, and implementers will face an uphill battle arguing that practiced market rates are much lower.
3. Streaming Services
One of the most innovative sections of the Guidelines addresses “Streaming as a Service”. Because the court considers existing licensing practice for streaming platforms insufficiently developed, it proposes a Top-Down calculation methodology for services such as Netflix and Disney+ (mn. 206-213). The court first deducts two-thirds of subscription revenues to account for content costs and attributes the remaining one-third to the underlying streaming technology. It then applies an aggregate royalty burden of 16% and, for premium subscriptions, adds 25% of the premium-price differential. Using publicly available subscription prices, the court arrives at indicative royalty burdens of (mn. 219, 224-228):
- Netflix Standard: €141.08 annual revenue (excl. VAT) 🡪 one-third attributed to streaming technology (€47.03) 🡪 16% ARB = €7.52 per year / €0.63 per month
- Netflix Premium: Base royalty of €0.63 plus 25% of the premium-price differential (€1.68/month × 25% = €0.42) = €1.05 per month
- Disney+ Standard: €110.82 annual revenue (excl. VAT) 🡪 one-third attributed to streaming technology (€36.94) 🡪 16% ARB = €5.91 per year / €0.49 per month
- Disney+ Premium: Base royalty of €0.49 plus 25% of the premium-price differential (€1.40/month × 25% = €0.35) = €0.84 per month
These figures represent the aggregate royalty pool attributable to streaming standards and would subsequently be allocated among SEP holders according to their respective portfolio shares (mn. 229).
The streaming analysis underscores why the Guidelines, despite giving seemingly clear figures for licensing rates, may rather increase, than decrease the need for litigation counsel. Particularly because the Chamber is hard on the facts, the early involvement of an experienced FRAND litigation counsel may swing the result materially. Parties on either side of the dispute will have to assess, e.g., the revenue base, deduction percentage, aggregate burden, and portfolio allocation early on and align with their litigation counsel on these items to argue their case convincingly and consistently.
IV. How the 7th Chamber’s Views May Be Tested
It is safe to say that the Munich 7th Chamber will expect a disciplined FRAND record from the beginning. For implementers, timely substantive engagement, a reasoned counteroffer, qualified security, and a coherent explanation of why the SEP holder’s offer falls outside the FRAND range are must-have components to any FRAND litigation strategy. Implementers with a different economic understanding of FRAND should not simply reject the Guidelines’ numbers — they should build an affirmative competing model that identifies correct comparable licences, tests the top-down inputs, and creates a convincing case that may succeed, at least, on appellate review.
In any event, it is fair to assume that the Guidelines will be tested in several dimensions. Other German courts hearing FRAND disputes, whether as a defence to an injunction or in an action for a FRAND licence, are free to apply their own understanding of Huawei/ZTE and Federal Supreme Court (“BGH”) case law, and also whether Munich’s 21st Chamber will adopt the same approach remains to be seen. On appeal, the Munich Higher Regional Court may correct both the Guidelines’ general structure and individual rate assumptions or evidentiary presumptions, as may the BGH, when facing the question whether the methodology is consistent with its decision FRAND-Einwand III.
For some parties, challenging the Guidelines may therefore be a recommendable approach; particularly, where it affects the outcome and where appellate clarification could improve their commercial position.
V. Conclusion: A Guideline that Invites Further Litigation – and Office Action?
The Munich FRAND Guidelines are arguably the most detailed judicial statement on SEP royalty determination issued by a European court to date. They confirm the continued importance of comparable licence agreements, provide concrete figures on what the Chamber considers FRAND and develop a sophisticated top-down methodology as a benchmark and control mechanism.
Most important are the concrete economic reference points provided: US$13.60 as the royalty burden for 5G, US$0.136 as the value of a 1% share of the 5G standard, and US$30.60 as the total royalty burden for a smartphone incorporating cellular, WiFi and streaming technologies (mn. 135, 139, 146). Notably, the court expressly states that these figures are not intended to reflect current licensing reality. In its view, many SEP holders do not capture the full value of their portfolios, with actual royalty payments often remaining below the theoretical FRAND potential identified by the Top-Down analysis (mn. 129, 155-156).
Beyond these assessments, the Guidelines leave open critical questions. Will the 21st Chamber and other courts see it the same way? What can parties do when they have a fundamentally different economic understanding of FRAND? How and when should the 7th Chamber’s framework be challenged? Many of these questions remain to be answered on a case-by-case basis, through active litigation.
Finally, it also remains to be seen how the Commission will react to its failed intervention in FRAND-Einwand III and the heavy criticism of its approach by the court contained in the Guidelines. Conceivably, it could look to take up the FRAND issue directly in an investigation under antitrust law (akin to investigations against Motorola under Article 102 TFEU concluded in 2014) in response to a complaint by market participants. Such an approach could (after a possible appeal) ultimately end up before Court of Justice of the European Union (“CJEU”), which would then have the opportunity to weigh in on the correct interpretation of EU antitrust law. This might well be one of the goals pursued by the Commission. After all, it had unsuccessfully requested the German courts in FRAND-Einwand III to involve the CJEU by way of a request for a preliminary ruling to clarify its judgment in Huawei/ZTE.
