April 6, 2026
Introduction
On 27 January 2026, the German Federal Court of Justice (Bundesgerichtshof, “BGH”) handed down its landmark decision in FRAND-Einwand III (Case No. KZR 10/25). This ruling is the third major judgment by the BGH’s Antitrust Division on the so-called FRAND defence — the argument that a holder of a standard-essential patent (“SEP”) abuses its dominant market position by enforcing injunctive relief against an implementer who is willing to take a licence on fair, reasonable and non-discriminatory terms .
The decision significantly strengthens the hand of SEP holders across Europe. It clarifies several issues that had remained open after the earlier FRAND-Einwand I and FRAND-Einwand II decisions, particularly regarding the ongoing duty of an implementer to demonstrate genuine willingness to license, the obligation to post adequate security, and the limits of the proportionality defence under German patent law. For patent proprietors engaged in or contemplating SEP litigation, this judgment provides welcome clarity and a more favourable enforcement landscape.
Background
The case involved a patent declared essential for the EVS (Enhanced Voice Services) standard, whose proprietor had committed to ETSI to license it on FRAND terms. The defendant, a manufacturer of mobile handsets implementing the EVS standard, raised the FRAND defence to resist claims for injunction, recall, destruction, damages, and disclosure .
The dispute had been ongoing since October 2019. The patent proprietor first filed suit seeking disclosure, accounting, and a declaration of liability for damages. Only in February 2021 did it extend its claims to include injunctive relief, recall, and destruction. Both the Munich Regional Court (LG München I) and the Munich Higher Regional Court (OLG München) ruled in favour of the proprietor. The BGH dismissed the defendant’s appeal in its entirety .
Key Points from the Decision
1. Willingness to License Is a Continuing Obligation
The BGH held that the implementer’s willingness to take a FRAND licence must persist throughout the entire negotiation process. It is not enough to declare willingness at the outset and then fail to engage constructively. The court stated clearly: the ongoing willingness to license is an indispensable prerequisite for a successful licence negotiation — and thus also for the allegation that the patent holder abused its market power when negotiations fail .
This principle applies even after the patent holder has submitted a licence offer. In other words, the implementer cannot hide behind the procedural steps of the Huawei/ZTE framework while simultaneously dragging its feet .
2. No Strict Sequential Test — Substance Over Form
The defendant argued that the CJEU’s Huawei/ZTE decision prescribes a rigid sequence of steps that must be followed in strict order. The BGH rejected this. The court held that the steps outlined by the CJEU are guidelines aimed at facilitating fair negotiations, not formalistic checkboxes .
Accordingly, courts need not first determine whether the patent holder’s offer was fully FRAND-compliant before assessing the implementer’s conduct. If the implementer’s behaviour shows a lack of genuine willingness to license, the FRAND defence fails regardless of whether the proprietor’s offer met every FRAND criterion .
3. Prompt and Adequate Security Is Essential
The BGH confirmed that once the implementer’s counter-offer is rejected by the patent holder, the implementer must promptly provide adequate security. The defendant in this case initially deposited only €10,000 — a fraction of what would have been required even under its own counter-offer. A later increase to USD 1 million, made only after the close of oral proceedings before the appellate court in late 2024, was deemed both too little and too late .
The court emphasised that providing security is not optional. It demonstrates that the implementer is genuinely interested in a licence agreement rather than seeking to delay payment for technology it has already been using without authorisation .
4. Delay Tactics Destroy the FRAND Defence
The BGH identified several concrete indicators of delay tactics that undermined the implementer’s credibility: taking nearly five months to respond to the first licence offer; waiting over three months to respond to subsequent offers; delaying eight months before reacting to a proposed confidentiality agreement; and switching positions on the preferred payment structure (lump sum versus running royalties) without apparent commercial justification .
This granular analysis serves as a practical catalogue of behaviours that courts will likely treat as red flags in future cases.
5. No Proportionality Defence for Unwilling Implementers
The defendant also argued that the injunction should be excluded under § 139(1) sentence 3 of the German Patent Act, which allows courts to deny injunctive relief where enforcement would create a disproportionate hardship. The BGH held that an implementer who uses a standard-essential patent but demonstrates through its conduct that it is unwilling to take a licence cannot, as a rule, invoke this proportionality defence .
The court noted that the implementer had itself developed a workaround and was already selling devices without EVS functionality since February 2022. Any remaining commercial disadvantage was attributable to its own failure to negotiate in good faith .
6. European Consensus
Notably, the BGH observed that its interpretation aligns with the jurisprudence of other European courts: the Court of Appeal of The Hague, the Dutch Supreme Court (Hoge Raad), the High Court of England and Wales, the UK Supreme Court, and — importantly — the Unified Patent Court’s local divisions in both Mannheim and Munich. All have taken the position that the Huawei/ZTE steps are not to be applied mechanically but in light of the parties’ overall conduct .
Implications for Patent Proprietors
Enforcement confidence. The decision provides SEP holders with a clear signal: German courts will not allow the FRAND defence to be weaponised by implementers who are not genuinely willing to negotiate. This significantly reduces the risk that a patent proprietor will invest in years of litigation only to see its injunction denied on competition law grounds at the last moment.
Reduced litigation complexity. By holding that courts need not conduct a full FRAND assessment of the proprietor’s offer before evaluating the implementer’s conduct, the BGH removes a major source of delay and expense. Patent proprietors no longer face the prospect of lengthy judicial analysis of complex portfolio licence terms as a prerequisite to obtaining an injunction.
Leverage in negotiations. The ruling increases the pressure on implementers to engage early, respond quickly, and provide meaningful security. An implementer who fails to do so risks losing the FRAND defence entirely — including the proportionality argument. This shifts the negotiation dynamic in favour of the patent holder.
Portfolio licensing validated. The decision confirms the earlier BGH position that demanding a worldwide portfolio licence is, in principle, not objectionable from a competition law perspective. Patent holders with global SEP portfolios can continue to structure their offers accordingly.
Alignment across Europe. The explicit references to decisions of the UPC, the Dutch and English courts create a degree of predictability across jurisdictions. Patent proprietors can plan their European enforcement strategy with greater confidence that courts will apply broadly consistent standards.
Strategic Takeaways
- Document the implementer’s behaviour meticulously. The BGH’s detailed analysis of response times, shifts in negotiation positions, and inadequate security payments shows that a well-documented record of the implementer’s conduct can be decisive.
- Offer a complete licence agreement early. While the proprietor’s offer need not be perfectly FRAND-compliant in every respect, it should be substantially complete and accompanied by an explanation of the licence fee calculation.
- Propose a confidentiality agreement promptly. The implementer’s delay in responding to such a proposal was treated as an indicator of unwillingness. This means patent proprietors should make these proposals early and track responses.
- Ensure the infringement notice is clear. The BGH accepted a complaint for damages, disclosure, and accounting as a sufficient infringement notice, even though injunctive claims were added later. Nevertheless, a formal, pre-litigation infringement notice remains best practice.
- Do not rely solely on damages. The BGH rejected the view that patent holders should be content with damages claims. The injunctive remedy remains the primary tool for enforcing SEPs, and courts will protect it.
Conclusion
The FRAND-Einwand III decision marks a significant consolidation of the law governing SEP enforcement in Germany and, by extension, across Europe. The BGH has made clear that the FRAND framework is not a shield for implementers who lack genuine willingness to negotiate. Patent proprietors who follow the established negotiation steps, document the process, and present a substantive licence offer are in a strong position to obtain and defend an injunction. The convergence between the BGH and other European courts — including the Unified Patent Court — suggests that this proprietor-friendly approach is becoming the settled European standard.