In our most recent post we have highlighted the Munich I Regional Court's expectations regarding accounting provisions (Rückstellungen) for SEP use (case no. 7 O 5007/25 – Wilus v ASUS). Before we have highlighted the admissibility of top down calculations for SEP royalties in the post Top-Down Returns: Judicial SEP Royalties vs Economic Reality. Now we want to look at what the court in its parallel decision (case no. 7 O 4102/25 – Nokia v Asus), also referred to as ASUS II, said about the relevance of UK rate setting proceedings.
The court's view on UK rate setting proceedings
The ASUS II decision of the Munich I Regional Court emphasizes two aspects with respect to the parallel interim license rate setting proceedings that took place between the parties in the UK.
First, the court considers whether the issuance of an interim license order by the UK High Court already unfolds the effects of a license, which would exclude injunctive relief for the plaintiff in the Munich proceedings.
Further, the court contemplated how the initiation of rate setting proceedings for an interim license relates to the willingness of the SEP implementer to enter into a FRAND license agreement. Also, the court addresses, which implications a rate-setting proceedings has for the pending German proceedings and the willingness of the implementer to enter into a license agreement, in particular with respect to the partial payment obligation stipulated in the ASUS I decision.
Potential exclusion of injunctive relief in view of the interim license
Regarding the first issue, the Munich I Regional Court determined that the UK proceedings were aimed at the conclusion of a license agreement between the parties. However, the court did not accept the proposed interim license agreement because the plaintiff in the Munich proceedings and defendant in the UK proceedings did not accept it. The Munich I Regional Court deemed this acceptable on the grounds that no party is obligated to submit to worldwide rate-setting before a UK court. The Munich I Regional court further states, that the UK court was aware of the potential issue regarding its lack of competence over a worldwide license agreement between a Taiwanese implementer and a Finnish SEP owner.
According to our understanding, however, the UK court's competence on FRAND rate setting for a global license can be based on a contract claim. This claim can be based on the SEP owners' FRAND declaration for a license under any UK patent (or any EP in effect in the UK) included in the portfolio for which a license is sought. The domicile of the parties involved is not relevant. The UK court's competence over worldwide licenses may be based on the industry practice of worldwide SEP-licensing. The German courts also invoke this industry practice when rejecting counteroffers that are territorially limited as unFRAND. Given that the UK court's competence should not be the subject of concern, the Munich I Regional Court's reasoning appears to conflate the concepts of competence and the applicable law to the mutual claims in dispute. In this respect, the UK court clarified that an interim license is not an antisuit injunction and would not prevent any foreign court from (i) determining for itself whether or not to enforce the property right granted by that country or (ii) determining the effect of an English court ordered license if raised as defence including considerations of ordre public and the appropriate national law (Acer & Ors. al v. Nokia, [2025] EWHC 3331 (Pat), para. 401, with reference to Amazon v. InterDigital [2025] EWHC 3170 (Pat), para. 57).
Relevance of foreign rate-setting proceedings for finding the implementer's willingness to license
With respect to the implementer's willingness to take a FRAND license the Munich I Regional Court appreciated that the UK proceedings were initiated to hinder an injunction in the German proceedings. It is interesting to note that the Munich I Regional Court did not consider this attempt to justify a court- finding of a lack of willingness. This is appropriate because starting rate-setting proceedings in the UK to obtain a license clearly indicates a willingness to take a license at FRAND terms, especially if one considers the high legal costs of such proceedings.
However, the court further held that, to support the willingness to take a license, the defendant in the German proceedings would have to accept the UK rate setting "at face value." This would mean that the UK rate determination would have to be fulfilled.
The court revisits this determination when determining the security payment and direct payments to the patent owner that would have been required for the implementer to confirm its willingness to take a license at FRAND terms. In the event of a rate setting, the potential licensee would be required to secure the set rate from the patent owner to demonstrate their willingness to take a license at FRAND terms, in addition to any amount offered to the SEP owner by its counteroffer. This is somewhat surprising, as this would certainly lead to an excess of security measures. As both the counteroffer and the interim license payment or the final determination by the UK court cover the same patents and territories (if no carve-out applies), this outcome is unexpected. Applying the court's logic correctly, we believe that the court should have concluded that the implementer was required to pay the higher amount as partial payment to the SEP owner. This is because the implementer either offered the higher amount to the SEP owner as a counteroffer, showing that it acknowledges the SEP owner's right to demand at least the offered amount, or submitted to the outcome of the rate-setting by the UK court. By doing so, the implementer acknowledged that it accepts the outcome of such proceedings.
Assessment and key take aways
The decision of the 7th Civil Chamber tries to strike a balance between its doubts about the competence of a foreign court to set FRAND rates for a world-wide license and the acknowledgement of such rate setting for finding a solution with respect to the FRANDness of whatever rates are being discussed between the parties. Thereby, the court stays within the negotiation schedule set by the ECJ in Huawei v. ZTE by holding that a potential licensee has to secure any amount that has been set by a foreign court in rate setting proceedings in addition to a partial payment of the amount offered to the SEP owner and by further holding that initiating foreign rate setting proceedings do not in itself disprove the implementer's willingness to take a license. Therefore, implementers must carefully consider whether initiating rate-setting proceedings with the goal of avoiding injunctions in other countries, such as Germany, is economically feasible. This is because their willingness to take a license and the availability of a FRAND defence depend on their compliance with such foreign decisions, which may trigger high security obligations. Finally, the German court (or the UPC) will reject any interference with its own proceedings. If filing for rate setting and interim license in the UK (or elsewhere) has the sole goal of mitigating the injunction risk in Germany or UPC-land, this goal appears unattainable.
On a side note, one could ascertain a contradiction between the Munich I Regional Court’s findings on the alleged limited international competence of the UK courts on the one hand and its findings with respect to its own competence on the other hand. The Munich I Regional Court finds itself to be competent for findings on the FRANDness of SEP owner’s world-wide license offer encompassing foreign patents in course of the adjudication of a FRAND defence raised by the defendant. If the UK courts are indeed deemed incompetent to hear a rate-setting case encompassing EPs and German patents, and if they are similarly deemed incompetent to grant interim worldwide licenses pending the outcome of a rate-setting case, then the basis for the German courts' competence to determine the FRANDness of an offer with respect to foreign patents that are subject to a FRAND declaration is called into question as well.
We therefore believe that the question of competence is not the right one to raise. Once competence is established, as it appears to be in the UK proceedings, the court would have the authority to determine FRAND rates for a worldwide license. However, the determination of the FRAND rate may require the application of the law of each country for which protection is sought by any of the patents included in the portfolio to be licensed. That, at least, applies if the defendant party (the SEP owner) invokes that law and denies that for specific foreign patents (from a UK perspective) such contract claim exists. German courts (as well as the UPC) do not acknowledge the contract claim nature of FRAND obligations. Instead, they base the obligations under a FRAND declaration merely on antitrust law. Thus, the patent owner's violation of the antitrust law is a prerequisite for the implementer's claim towards the SEP owner to enter into a license agreement on certain (FRAND) terms and conditions which deviate from the SEP owners (allegedly unFRAND offer). However, according to German case law, this claim does not include a claim to a determination by a third party without the other party's consent. If the UK court applied the relevant material law applicable to EP under the jurisdiction of
German courts (or the UPC), it would have to reject the determination of FRAND rates based on a contract claim for these patents. Instead, the UK court would need to carve out EPs for which German courts or the UPC claim competence, if not both parties agreed to the determination of worldwide FRAND rates by the UK court.
Vice versa, assuming that the German courts' qualification of the FRAND defence and claims based thereon for EP and German patents is correct, and it has competence over the FRAND defence with respect to all patents included in the portfolio at issue, on what basis could the German court reject application of foreign law to the foreign patents included in the portfolio in dispute when adjudicating the FRAND defence and apply only its own law?
We believe that the German court as well had to apply the foreign law with respect to foreign patents when adjudicating on the FRAND defence, as objections against a claim generally are to be adjudicated applying the law applicable to the claim against which the objection is raised. One might object that the claim in dispute before a German court is based only on the patent in dispute, i.e. a German Patent or EP in effect in Germany. Nevertheless, the secondary obligation of the implementer to make a worldwide FRAND offer during the negotiation process requires a corresponding claim by the patentee based on the use of the foreign patent. This is because the patentee cannot claim a license agreement under a patent that is not used, i.e. not infringed. When applied correctly, we believe that the German court was required to exclude foreign patents from its assessment of the FRAND defence and a potential FRAND counteroffer by the implementer, provided that the implementer invokes a contract claim regarding the foreign patents and asserts that claim in a foreign court.
