UPC Mannheim: Panasonic v Oppo and FRAND

What Panasonic v Oppo decided

Panasonic v Oppo is the first decision of the Unified Patent Court (UPC) on a FRAND defence in a dispute over a standard essential patent (SEP). In its decision of 22 November 2024 (UPC_CFI_210/2023), the Mannheim local division found that Oppo and its German distributor had infringed European patent EP 2 568 724, which relates to uplink sounding reference signals in the LTE standard, and granted an injunction for Germany, France, Italy, the Netherlands and Sweden.

The court ordered recall, removal and destruction, information and accounts, declared liability for damages and awarded provisional damages of EUR 250,000. Oppo's FRAND defence failed because it had not negotiated as a willing licensee, and the court found Panasonic's last offer to be FRAND-compliant.

The decision is also significant procedurally. The Mannheim local division held that Oppo's counterclaim for a determination of FRAND licence terms was admissible under the UPC Agreement, although it dismissed it on the merits. And it engaged with an amicus curiae letter from the European Commission on the interpretation of Huawei v ZTE, declining to follow the Commission's view on some points and refusing to refer questions to the Court of Justice of the EU. Panasonic v Oppo therefore shapes how SEP disputes are litigated at the UPC, in close parallel with German national practice.

Background of the dispute

Panasonic holds patents declared essential to mobile communication standards and had been negotiating a licence with Oppo, a Chinese smartphone manufacturer, for several years without reaching agreement on the terms. After the negotiations failed, Panasonic brought infringement proceedings, including at the UPC. At the UPC, Panasonic sued Oppo and its German distribution company before the Mannheim local division, and Oppo counterclaimed for revocation of the patent and for a determination of FRAND terms.

Infringement and validity

The court dismissed Oppo's revocation counterclaim and held the patent valid as construed. On claim construction, it interpreted the claim's reference to "transmission bandwidth" as the bandwidth between the control channels, not the span covered by the reference signals, and treated the narrowband bandwidth as fixed within a small tolerance. On that basis, it found that devices using the LTE standard, such as certain smartphones and smartwatches, infringed claim 1 directly and the method claim 13 indirectly. The infringement findings were possible without extensive dispute about essentiality because the products implemented the standard features covered by the claims.

The FRAND defence in Panasonic v Oppo

The court treated the framework of the CJEU's judgment in Huawei v ZTE (C-170/13) as binding and applied it step by step. It accepted that Oppo's initial declaration of willingness to take a licence was sufficient to trigger the negotiation process.

However, it held that Oppo did not subsequently negotiate as a willing licensee would. In particular, Oppo did not disclose its actual sales data and relied on third-party market estimates instead; it raised objections to Panasonic's claim charts only at the oral hearing; it offered inadequate security; and it did not respond substantively to Panasonic's offers. Oppo's counter-offer was not FRAND-compliant, partly because it was calculated on market estimates rather than Oppo's own sales.

The court also examined Panasonic's offer and found its last offer FRAND-compliant. It described FRAND as a range or corridor, within which the SEP holder may choose among several compliant structures; it is not obliged to offer the cheapest possible terms. Because Panasonic had made a FRAND offer and Oppo had not behaved as a willing licensee, the injunction claim was not an abuse of a dominant position.

Security and sales data after Panasonic v Oppo

Two practical issues stand out in Panasonic v Oppo. First, security: under Huawei v ZTE, an implementer that uses the patent before a licence is agreed must provide appropriate security once its counter-offer is rejected. The Mannheim local division considered Oppo's security inadequate, among other reasons because the form offered could leave the patent holder exposed to a total loss in an insolvency. Implementers should therefore offer security in a form and amount that fully protects the SEP holder, such as a deposit or a guarantee from a first-class bank that is not vulnerable in the implementer's insolvency, calculated on a realistic basis.

Second, sales data: a FRAND royalty depends on the volume of licensed products, and the court expected Oppo to disclose its own sales figures rather than rely on third-party market estimates. Implementers are often reluctant to disclose such data, but confidentiality arrangements, including those available under the UPC Rules of Procedure, can address that concern. Refusing to provide data is likely to be held against the implementer in the court's overall assessment of its willingness to take a licence.

Multi-country injunctions and enforcement

The injunction granted in Panasonic v Oppo covered five UPC Member States in a single decision, illustrating the UPC's main attraction for patent holders. The court set a penalty of EUR 1,000 per infringing item for breaches, reducing the amount requested as sufficient and appropriate, and made enforcement subject to security by the claimant. In SEP cases, a multi-country injunction increases the pressure on implementers to conclude a licence, which is why the assessment of willingness and FRAND compliance is so consequential for both parties.

Enforcement of UPC decisions takes place under the UPC's rules and the national enforcement law of the Member State concerned. Patent holders must provide the security ordered by the court before enforcing a decision that is not yet final, and they bear the risk of compensation if the decision is later set aside on appeal. Both sides should therefore plan for the appeal phase, including the possibility of applications for suspensive effect.

Strategic choices for SEP holders and implementers

For SEP holders, the decision supports the UPC as a forum for SEP enforcement, provided that their offers are well documented and within the FRAND range, and that they engage with the implementer's arguments. For implementers, the decision shows that procedural tactics such as delaying technical objections or withholding information can be decisive against them. Both sides should keep in mind that courts in other jurisdictions may take different approaches to global rate setting and anti-suit relief, so a coordinated multi-jurisdictional strategy is essential in major SEP disputes. Early decisions about where to sue or be sued, which claims to bring and how to present the negotiation history can shape the outcome long before any court decides on the merits.

For companies that are not themselves in SEP disputes but rely on standardised technologies, such as manufacturers of connected devices, vehicles or industrial equipment, the decision is a reminder to address SEP licensing in supply agreements. Indemnities, licence warranties and cooperation obligations between component suppliers and device makers determine who bears the risk of an injunction.

The FRAND counterclaim

A notable feature of Panasonic v Oppo is the treatment of Oppo's counterclaim asking the court to determine FRAND terms. The court held that it had jurisdiction and that the counterclaim was admissible under Article 32(1)(a) of the UPC Agreement, as a counterclaim concerning licences. It then dismissed the counterclaim as unfounded: requests limited to the territories of the UPC or the EPC were not FRAND-compliant, because a FRAND licence for a global portfolio would normally be worldwide; requests for abstract declarations lacked a legal interest; and some requests were too vague to be enforced.

The admissibility holding opens a path for implementers, and potentially SEP holders, to ask the UPC to determine FRAND terms, at least as a counterclaim in infringement proceedings. Whether the UPC will in future set a global rate, as courts in some other jurisdictions have done, remains to be seen. The decision suggests that any such request must be carefully framed, cover the appropriate scope and be specific enough to be enforceable.

The European Commission's amicus letter

The European Commission submitted an amicus curiae letter setting out its view of Huawei v ZTE, in particular that the SEP holder must give formal notice of infringement before other steps, and that the implementer's willingness should be assessed mainly on the basis of its declaration, with the SEP holder's offer examined first.

The Mannheim local division considered the letter but did not follow it on these points. It described the Commission's approach to notice as formalistic, held that a declaration of willingness alone is not a sufficient indicator, and stated that the Commission's views could be taken into account but were not binding. It declined to refer questions to the CJEU, considering the issues specific to the case.

Significance for SEP litigation

Panasonic v Oppo aligns the UPC's approach with the German case law developed in the BGH's Sisvel v Haier judgments, which emphasise the implementer's conduct throughout negotiations. Combined with the UPC's ability to grant injunctions covering several countries in a single proceeding, this makes the UPC an attractive forum for SEP holders. For implementers, the decision underlines that procedural and negotiating discipline is essential. The debate about the correct interpretation of Huawei v ZTE, and the possibility that the CJEU will eventually address it again, means that the law in this area is not settled.

The decision can be viewed in the UPC's decisions database. Parties should also monitor developments in later UPC FRAND cases and any appeal decisions, which may refine or correct the approach taken by the local division in Mannheim.

How TRW & Co helps

We advise SEP holders and implementers on FRAND negotiations and litigation before the Unified Patent Court and German courts. We assess negotiation conduct, prepare offers and counter-offers, advise on security and confidentiality arrangements for sales data and represent clients in infringement and FRAND proceedings. Our work connects with our Unified Patent Court and patent litigation practices; see also our notes on Sisvel v Haier and SEP and FRAND disputes. Please contact us to discuss your matter. This briefing is general information, not legal advice.