The 7th Civil Chamber of the Munich District Court has published extensive FRAND Guidelines (the “Guidelines”) in which it consolidates its recent decisions in ASUS I (8 January 2026, Case No. 7 O 5007/25), ASUS II (22 January 2026, Case No. 7 O 4102/25), Renault (5 February 2026, Case No. 7 O 7655/25), and ZTE/Samsung (30 April 2026, Case No. 7 O 64/25). The Guidelines go beyond a summary of those decisions. They add further clarification and provide more detailed guidance on issues that have arisen in other FRAND proceedings before the Chamber. For anyone following the evolving SEP/FRAND landscape, the Guidelines are essential reading!
The Guidelines reflect the position of the 7th Civil Chamber only and are not binding on the Munich District Court’s other patent chamber, the 21st Civil Chamber, the Munich Court of Appeal, other German courts, or the UPC. As parties cannot influence the allocation of cases between Munich’s two patent chambers, it will not be known in advance which Chamber will hear a particular case.
Nevertheless, the Guidelines are highly relevant in practice. They provide unusually detailed guidance on key FRAND issues, including licensing willingness, partial payment and security, comparable license agreements, FRAND range determination, top-down analysis, geographic adjustments, and foreign rate-setting proceedings. They also demonstrate the 7th Civil Chamber’s intention to make FRAND proceedings more predictable and to focus the parties’ submissions on the issues it considers decisive.
I. The Two-Stage Test for Willingness
As already known from the Chamber’s decisions earlier this year (see, for example, Renault, 5 February 2026, Case No. 7 O 7655/25), the 7th Civil Chamber distinguishes between “outer willingness” and “inner willingness” to take a license.
Outer willingness is the first step of the analysis. It concerns whether the implementer is genuinely seeking to conclude a license agreement or is engaged in obvious holdout. The Chamber looks not only at the implementer’s initial declaration of willingness, but at its conduct throughout the negotiations.
Payment and security play a central role in this assessment. As a rule, the implementer must pay the undisputed portion of the royalty – which will normally correspond to its own latest offer – to the SEP holder for permanent retention. Merely providing security for that amount is insufficient.
Depending on the gap between the parties’ positions, additional security may be required. According to the Guidelines, where the implementer’s offer is below 60% of the SEP holder’s demand and the difference exceeds USD 10 million, the implementer may have to provide security corresponding to one year of royalties under the SEP holder’s offer.
Foreign rate-setting or interim-license proceedings may also be relevant to this assessment. While foreign determinations are not binding on the German courts, the Chamber expects the implementer’s payment and security position in Munich to reflect relevant foreign interim arrangements. An implementer may therefore not be able to rely on a foreign interim-license proceeding while maintaining a materially less protective financial position in Germany.
Only if outer willingness is established will the Chamber proceed to review the SEP holder’s offer. If the Court concludes that the SEP holder’s offer falls within the applicable FRAND range, the analysis moves to inner willingness: the implementer must then be prepared to accept that offer. A refusal to do so may establish a lack of inner willingness.
The distinction therefore has an important procedural consequence: the Chamber will not conduct a full substantive review of the SEP holder’s royalty demand in every case. An implementer must first demonstrate outer willingness – including, where required, through appropriate payment and security – before the Court will assess whether the SEP holder’s offer is FRAND.
II. No Formal Safe Harbor – but a FRAND FIRST Hearing
The Guidelines also address whether an implementer should be able to obtain formal protection from injunctive relief by committing to binding arbitration for the determination of FRAND terms. The Chamber considered such a “safe harbor” concept, also in light of the UPC’s establishment of the Patent Mediation and Arbitration Centre (PMAC) in June 2026, but ultimately rejected it.
In the Chamber’s view, SEP holders cannot generally be expected to accept further delay, and the availability of the PMAC does not fundamentally change the existing alternative dispute resolution landscape. Parties have long been able to resort to specialized mediation and established arbitration mechanisms, including ICC arbitration. A formal safe harbor would, according to the Chamber, place an undue burden on SEP holders and carry too great a risk of abuse.
Instead, the Guidelines introduce the possibility of a “FRAND FIRST” hearing as a local specific. Either party may request such a hearing, which is dedicated exclusively to FRAND issues and may take place shortly after the infringement action is filed. Written submissions are limited to 25 pages plus exhibits.
The procedure allows the parties and the Court to address the decisive FRAND issues at an early stage, without first litigating infringement, validity, and damages. Importantly, the Chamber also considers requesting a FRAND FIRST hearing a relatively straightforward way for an implementer to demonstrate its genuine intention to resolve outstanding licensing issues.
III. Reviewing the SEP Holder’s FRAND Offer
Once outer willingness has been established, the Chamber will assess whether the SEP holder’s operative offer at the end of the oral hearing is FRAND. Superseded earlier offers are not reviewed. The initial offer itself does not need to be FRAND-compliant as it is the start of the negotiations according to the Chamber.
The Guidelines confirm a clear hierarchy between the two principal valuation methods: the Chamber will primarily seek to determine the FRAND range based on comparable license agreements, while a top-down analysis generally serves as a plausibility check and assumes greater importance where suitable comparables are unavailable.
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Comparable License Agreements
1.1 Criteria for Comparability
The Guidelines provide detailed guidance on which agreements may serve as meaningful comparables. Relevant factors include the date and commercial context of the agreement, the portfolio and standards covered, expected unit volumes, duration, cross-license components, treatment of past use, and the parties’ negotiation conduct.
The Chamber sets some relatively clear boundaries. Agreements older than five years will generally not be suitable comparables. Multi-standard licenses may be difficult to use for assessing a single-standard license where the economic contribution of the individual standards cannot reliably be separated. Similar concerns arise with cross-licenses where the value of the reciprocal license cannot be determined.
Pool licenses are generally not suitable as direct comparables for bilateral licenses because of their different contractual and economic structures. Pool rates may, however, be relevant as a plausibility check or in a top-down analysis and do not necessarily constitute a ceiling for bilateral rates.
The Chamber also expects SEP holders, where possible, to submit several comparable agreements. While a single agreement may in principle suffice, a broader set of licenses will generally provide stronger evidence of an established licensing practice.
1.2 Differences Between Comparable Agreements
Comparability does not require identical commercial circumstances. The Guidelines recognize that differences between licensees and agreements may justify different royalty rates. In particular, high unit volumes may justify discounts of up to 30%. A higher rate charged to a smaller licensee therefore does not necessarily constitute discrimination merely because a high-volume licensee obtained more favorable terms.
Geographic differences likewise do not generally prevent an agreement from serving as a comparable. The Chamber views royalties as compensation for the SEP holder’s contribution to the standard rather than as a mere aggregation of individual national patent rights. Geographic adjustments may nevertheless be appropriate in exceptional cases where the portfolio lacks sufficient coverage at the relevant component-production location. The relevant location will generally be where the standard-implementing components—typically chipsets—are produced, rather than where the final product is assembled.
For lump-sum agreements, the Chamber derives a per-unit equivalent based on the sales forecasts existing when the agreement was concluded. The Guidelines also contemplate a discount compared with a pure per-unit license, reflecting the advantages of immediate payment and reduced reporting and calculation efforts.
1.3 Determining the FRAND Range
The Guidelines reiterate that FRAND is a range rather than a single correct rate. Where the SEP holder has an established and largely uniform licensing program, the rate established by that program may itself serve as the reference value. Where the relevant agreements differ materially, the Court may instead determine an abstract reference value based on a hypothetical comparable agreement.
Less closely comparable agreements may still be relevant as a cross-check, for example where they indicate that the closest comparable reflects unusually favorable terms rather than the broader licensing practice.
Around the relevant reference value, the Chamber generally applies a range of ±50%. This does not, however, mean that a SEP holder may freely select any rate within that range. The position of its offer must still be justified by the circumstances of the case, including factors such as volume, duration, and negotiation conduct.
The Guidelines distinguish this general range from the 15% rule applicable where a directly comparable agreement exists with a similarly situated competitor and comparable products. In that situation, an increase will generally be limited to 15%. Such increases cannot be chained: an already increased rate cannot simply become the reference point for another 15% increase, unless the higher rate has subsequently become established through a consistent licensing practice.
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Top-Down Analysis
2.1 Role of the Top-Down Approach
Where suitable comparable agreements exist, the Chamber generally uses a top-down analysis as a plausibility check rather than the primary valuation method. It may, however, become the principal valuation method where suitable comparables are unavailable or a royalty rate is being determined for the first time.
Importantly, a lower top-down result does not automatically override an established and genuinely comparable licensing practice. Where the rate derived from comparable agreements materially exceeds the top-down result, however, the Chamber expects closer scrutiny of the comparables relied upon.
2.2 Determining the Royalty
The top-down approach starts by determining an appropriate aggregate royalty burden for use of the relevant standard in a particular product category. The Chamber uses standardized reference values rather than the implementer’s actual sales prices, seeking to isolate the value attributable to the standardized functionality from value generated by branding, design, or other non-standard product features.
The aggregate royalty burden is then allocated according to the SEP holder’s share of the relevant standard. Importantly, the Chamber requires the methodology used to determine that share to be applied consistently to both the overall relevant patent population and the SEP holder’s own portfolio. Any adjustment made to the SEP holder’s portfolio must therefore also be reflected in the overall reference base.
Implementer-specific adjustments may nevertheless be appropriate. High volumes may justify a discount, while conduct causing excessive delay or additional costs for the SEP holder may justify an uplift.
Outlook
The Guidelines represent a substantial effort by the 7th Civil Chamber to make SEP and FRAND litigation in Munich more predictable and structured. At the same time, they go well beyond the issues discussed above and provide indications of how the Chamber may approach a number of questions that have not yet featured prominently in its published decisions.
Among other things, the Guidelines address streaming-as-a-service, including indicative royalty calculations and patent exhaustion, the treatment of Chinese patent portfolios in a top-down analysis, Avanci 5G rates, and the treatment of past release. The Chamber also takes a clear position on expert evidence: it considers the determination of an appropriate FRAND rate a legal question and therefore sees no need for the appointment of a court expert.
The Guidelines thus offer considerably more than a consolidation of the Chamber’s recent case law. They provide a roadmap for future FRAND proceedings and an indication of how the 7th Civil Chamber intends to approach issues that may arise in upcoming cases.
How far this approach will be followed by other courts – including Munich’s 21st Civil Chamber, the Munich Court of Appeal and the UPC – remains to be seen.
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