The decision explicitly disagrees with the UK FRAND judgment and warns against the risk of “secondary contractual victimization” in the form of perpetually sub-FRAND royalties.
Context: In the standard-essential patent (SEP) licensing dispute between ZTE and Samsung, three courts made decisions toward the end of last week:
- The Munich I Regional Court granted ZTE (and denied Samsung on FRAND (fair, reasonable, and non-discriminatory) licensing grounds) a SEP injunction (April 30, 2026 ip fray article).
- The High Court of Justice for England and Wales (EWHC), whose last two FRAND rates underwent major upwards adjustments on appeal, made a $392M determination public (May 1, 2026 ip fray article).
- The Chongqing Intermediate People’s Court found that ZTE’s offer of $731M for a six-year license was FRAND (May 2, 2026 ip fray article). For the five-year term on which the UK decision was based, that would still be well over $600M.
What’s new: In response to ip fray‘s request, he Munich court has provided a copy of its detailed judgment. These are the key figures revealed by it:
- Coming from a top-down royalty calculation of $1.1B for the five-year term from 2024 to 2028 and applying a 30% volume discount, but also a 10% increase due to Samsung’s hold-out1, $860M would be the midpoint for a license from ZTE to Samsung, from which the court deducts an undisputed2 amount of $134M for ZTE’s license to Samsung’s patents, arriving at $726M as the midpoint value of a five-year cross-license.
- Samsung has already advanced $277M. While far below the court’s midpoint result, that fact is held in Samsung’s favor when determining that the upper end of the FRAND range should only be 10% above the midpoint, thus $798.6M. ZTE’s offer (which is known from proceedings in other jurisdictions to be $731M for a six-year license, and $600M+ for the five-year term that is relevant in Munich) is therefore comfortably below the upper end of the FRAND range. As a result, Samsung has no FRAND defense in Munich.
- The court, presumably for the first time ever, states its position on the terms on which it believes the parties should settle. In that scenario, the court proposes a risk adjustment for the divergence on two questions of contract law3 between the UK and German courts, despite standing by its assessment. It furthermore reduces the value of Samsung’s license to ZTE by 20%. The result is then downrounded to $640M. that is what the court, if it had to set a FRAND point as opposed to a range, would tell the parties to agree upon. Note that this is for a license until the end of 2028, while the $731M figure from Chongqing covers everything until the end of 2029. The Munich figure is therefore not below the Chongqing figure if adjusted for the one-year difference; it is likely a little bit higher.
Direct impact: The availability of the full written reasons means that Samsung cannot argue that ZTE has to delay enforcement (apart from what was discussed in open court last Thursday, which was that ZTE extended a settlement offer until the end of this current week). It also means that Samsung has the documents it needs to write its statement of appeal and to seek an enforcement stay and an increase of the security amount (from the current value of €7.5M) in the Munich Higher Regional Court.
Wider ramifications:
- To the best of our knowledge, no German court has ever provided the written reasons for a SEP decision so quickly after a hearing. It demonstrates the court’s efforts to contribute to a settlement.
- We also believe that this is the first time that a German court goes beyond the Huawei v. ZTE call of duty and determines not only the upper end of the FRAND range, but proposes a specific point as the basis for a settlement.
- In the absence of any suitable comparable license agreement, the Munich court performed a top-down analysis (determining an aggregate royalty burden (ARB) and a specific share thereof) consistent with the principles in a recent Nokia v. ASUS decision (February 3, 2026 ip fray article). In that decision, the court had also explained why coerced interim licenses are generally illegitimate.
- The decision explains not only the substantive disagreements with the UK court4 but also the issues caused when a court engages in global FRAND rate-setting over the objection of a party.5 In that context, the ZTE v. Samsung judgment quotes a passage from the recent Nokia v. Geely anti-antisuit injunction (AASI) (the Munich court granted one as did the UPC’s Mannheim LD; April 22, 2026 ip fray article), of which the court has not made a public redacted version available yet. The voluntary nature of arbitration (see our previous article on Ericsson’s statement on arbitration and interim licenses) and the growing importance of Brazilian and Indian courts to SEP enforcement are also mentioned in the Munich judgment.
This is a landmark judgment with many interesting aspects. The fact that the EWHC had already made various numbers available has presumably reduced the need for redactions of this judgment.
The Munich court was also aware of the Chinese outcome, referring to media reports.
After the commercially most relevant numbers shown above, the following sentences from para. 119 are noteworthy as they explain how a party’s temporary weakness ( which was the case here) or initial lack of experience (which was not the case, but might apply in other cases) could lead to forever sub-FRAND royalties:
Deutlich wird dies anhand der Überlegung, dass es ansonsten möglich wäre, dass eine unerfahrene Partei von einer erfahrenen Partei in einen übermäßig günstigen Lizenzvertrag gedrängt wird. Soweit man annehmen würe, dass dieser Vefrtrag dann für die Zukunft eine Bindung erzeuge, würden sich die ungünstigen Bedingungen perpetuieren. Es würde eine sekundäre Vertrags-Viktimisierung stattinfden, was dem Gedanken der wechselseitigen Rücksichtnahme bei Vertragsschlüssen widerspricht.
Manually edited machine translation:
This becomes clear when considering that otherwise, an inexperienced party could be pressured by an experienced party into an excessively undervalued licensing agreement. If one were to assume that this agreement would then create a binding obligation for the future, the unfavorable terms would perpetuate themselves. This would result in secondary contractual victimization, which contradicts the principle of mutual consideration in contract negotiations.
The Munich court looked at the potential comparables. ZTE was within its rights to choose which of its license agreements with other parties to present. The older ZTE-Samsung license was also available to Samsung, but ineligible here. The UK court relied on it, but the Munich court warned against secondary contractual victimization as quoted above. It calls the 2021 ZTE-Samsung contract an “atypical initial license agreement”.
ZTE’s license deals with vivo, OPPO, and Xiaomi were not considered either. The judgment notes that intra-Chinese agreements and potential governmental influence over them are too difficult for a Western judge to understand. The related passage is not sinophobic, however, as it recognizes China’s remarkable economic success.
License agreements with parties far smaller than Samsung were also ruled out as comparables. For lack of comparables, the court then performed a top-down analysis. We understand that the Chongqing court also focused on a top-down analysis.
Samsung’s argument that ZTE holds a disproportionate percentage of its 5G SEPs in China did not move the needle other than the court performing the usual regional adjustments. Focusing on jurisdictions where enforcement is reasonably possible (as in the other event parties would be penalized for wasting money on patent filings in jurisdictions where they would not be able to meaningfully enforce them anyway), the court looks at how many patents the plaintiff holds versus the wider landscape. In some cases, that may lead to an adjustment, but not so here.
The fact that Samsung manufactures in South Korea makes it an outlier, but ZTE holds more than 400 patents even there, ensuring sufficient protection in that jurisdiction. Most other companies manufacture in China, where ZTE holds more patents. The Munich court focuses on whether there is a sufficient patent portfolio size for enforcement purposes at the place of manufacture (here, South Korea) and/or a relevant target market.
The Munich stance on the geographic distribution of SEPs is that the SEP royalty should adequately compensate the innovator for its contributions to the standard. The contribution to the state of the art is prioritized over the geographic allocation of the related patent filings.
The Munich court assumes an average selling price of $170 for smartphones and tablets, but Samsung’s actual selling prices are higher. ZTE proposed a cap of $400 per device (a number that Qualcomm has publicly mentioned since 2018).
The court declined to stay the case. Samsung proposed three different reasons for a stay, but
- in a non-binding preliminary opinion, the Federal Patent Court of Germany deemed two ZTE patent claims (claims 13 and 15, the second of which was relevant to the infringement case) to be valid;
- Samsung had lost the Frankfurt Regional Court case over FRAND; and
- Samsung’s counterclaim was thrown out by the UPC’s Mannheim LD.
Therefore, there was no reason not to hold the trial and decide.
Court and counsel
Panel (7th Civil Chamber): Presiding Judge Dr. Oliver Schoen (“Schön”), Judge Katalin Tözsér, and Judge Dr. Florian Schweyer.
ZTE is being represented by Taliens’s Dr. Thomas Lynker and Vossius’s Dr. Georg Andreas Rauh.
Samsung is being represented by A&O Shearman’s Dr. Jan Ebersohl.
- The decision does not say “hold-out”, but criticizes Samsung’s “negotiating conduct”, which involved a variety of tactics. ↩︎
- It is unusual for parties to a FRAND dispute to agree on any monetary amount. In this case, however, it could be that Samsung did not seek the maximum amount it could have tried to defend as this would have contradicted its own lowball FRAND arguments. ↩︎
- Those questions relate to the treatment of 5G-capable products sold before 2024 and of the year 2024. ↩︎
- While the bench ruling came down ahead of the UK and Chongqing decisions, the written reasons were apparently developed over a long (Friday was Labor Day in Germany) weekend. ↩︎
- The traditional European perspective is that the only forum where a decision extending beyond the respective jurisdiction may be legitimate is the defendant’s home forum. ↩︎