Dolby International AB v. Beko Germany GmbH / Arcelik A.S. – Court of First Instance – Dusseldorf Local Chamber, 18 March 2026, Case no. UPC_CFI_135/2024 & UPC_CFI_477/2024
UPC Düsseldorf Local Division affirms Huawei v. ZTE FRAND defence and negotiation framework, and considers requirements of a willing licensee and dominant market position.
The Unified Patent Court (UPC), Dusseldorf Local Division, has issued the decision in the infringement and validity proceedings between Dolby and Beko/Arcelik, which also importantly considered the FRAND negotiation framework laid out in Huawei v ZTE and commented on the requirements of a willing licensee and dominant market position.
The Court held that Dolby’s audio decoding patent was valid and infringed. The Court also ruled against the defendant’s FRAND defence, aligning with previous decisions of the German local divisions of the UPC, and held that Beko/Arcelik did not give express willingness to license in a sufficiently timely manner after Dolby notified them of infringement. The Court lastly confirmed that a patent covering a widely used standard may confer market dominance, holding that a dominant position may exist when a manufacturer cannot offer products compatible with a widely used industry standard without a licence to the asserted patent; consumer expectation was a decisive factor in this decision.
This decision clarifies the practical considerations and steps that implementers and SEP holders must taking during licence negotiations should they seek a FRAND determination at the UPC. This case also highlights under what conditions the UPC court will consider whether an offer is FRAND, as well as when a patent holder may have a market dominant position.
Background
The applicants (Dolby) alleged patent infringement against the defendants (Beko and Arcelik) in relation to their patent EP 3 605 534 (the “Patent”). The Patent, entitled ‘Audio Decoding with Selective Post-filtering’ is to a decoder system for decoding a bit stream signal as an audio time signal (i.e. a chain of digital signal processing that takes compressed / uncompressed audio data and reconstructs this into sound waveform that can be heard). Dolby asserted both a device claim (claim 1) and a process claim (claim 6) of the Patent as infringed by the defendants. Dolby also considered the Patent was essential to the Opus Audio Codec technical standard (the “Opus standard”), and the Patent was part of a patent pool for which licences were offered for the use of the patents essential to the Opus standard through a single licence agreement. Dolby alleged that Beko and Arçelik’s smart televisions running Android TV decoded files compliant with the Opus standard, thus practising the claimed invention.
In advance of the proceedings being issued, Dolby wrote to the defendants by letter dated 21 April 2023 with a patent list and notice of the Patent, which also presented the license program of the Opus patent pool and explained the license fees of the pool. Following further communications, Dolby sent the defendants on 31 January 2024 claim charts, which included the Patent, and the draft of a licence agreement. Communications from the defendants were limited, and no reply was made to the final letter before Dolby commenced proceedings on 5 April 2024.
The defendants responded to Dolby’s infringement allegation by challenging validity of the Patent and disputing essentiality. They also raised a FRAND defence (i.e. the offer made by Dolby in relation to the royalty rate for the Opus standard was not FRAND) and asserted that Dolby was abusing its dominant position and infringing Art 102(1) TFEU and Article 101 TFEU.
In respect of the FRAND defence, Dolby argued that, as it did not submit a FRAND declaration in the course of the standardisation of the Opus standard, the negotiating programme developed by the CJEU in Huawei v ZTE could not be applied in this case in an unmodified form, and it was up to the defendants to make the first offer. The defendants’ position was that the absence of a FRAND declaration does not relieve Dolby of conduct in accordance with Art 102 TFEU.
Decision
In relation to infringement and invalidity, the Court ruled in Dolby’s favour, holding that that the Patent was valid, and was infringed by the defendant’s given their smart TVs and devices implemented the patented technology and worked according to the Opus standard. The Court issued an injunction against Beko and Arçelik for infringing the Patent.
In respect of the defendant’s FRAND defence the Court considered the application of the FRAND negotiation framework established in Huawei v. ZTE. In that case, the CJEU established a negotiating programme which sets out the parties respective obligations in the context of negotiations for a licence of a SEP that confers a dominant position on the patent holder. A central concern of the decision is to establish a negotiation programme with reciprocal obligations, which also serves to assess the question of whether the enforcement of the prohibition and recall rights under the patent is subject to restrictions under antitrust law. The determination of a FRAND licence rate, if any, is only one component of this programme of obligations. This framework is binding on the courts of the Member States and enables the courts to assess the conduct of the parties on the way to a licence.
In the current decision, the Dusseldorf Local Division aligned itself with earlier UPC decisions from Mannheim (Panasonic v. OPPO, 22 Nov 2024) and Munich (Huawei v. Netgear, 18 Dec 2024), confirming that the Huawei v. ZTE negotiation steps govern how FRAND objections are to be assessed. Although Dolby was not involved in the development and standardisation of the Opus standard, so did not undertake through a standardisation organisation to grant licenses for the Patent on FRAND terms, the Court held that the Huawei v ZTE negotiation steps nonetheless governed assessment of their FRAND obligations. The Court noted that any nuances or differences between the earlier decisions were considered irrelevant for this case.
Therefore, under the Huawei v. ZTE framework, the Court make the following findings:
- Step 1: Under this step, the patent holder (Dolby) was required to notify the implementer of the alleged infringement, which must designate the SEP in question and indicate in what way it is alleged to be infringed. It is established case law that the sending of claim charts is sufficient for this purpose. Therefore the Court held that Dolby’s letter of 24 January 2024 was sufficient in this circumstance to satisfy this step.
- Step 2: Under this step, the implementer (Beko/Arçelik) must promptly give a clear and unambiguous declaration of willingness to conclude a license agreement on FRAND terms, and must subsequently participate in the licence negotiations in a targeted manner. Failure to comply with this step cannot be remedied after an application for an injunction has been filed. The Court held that Beko and Arçelik failed to make this initial declaration of willingness. As this step was missing, the FRAND analysis was held to legally end at this point. As a result, the court did not need to examine whether Dolby’s licence offer itself complied with FRAND terms (the third step).
Because the Court held that the defendants did not satisfy the required procedural conduct under the FRAND negotiation programme, their FRAND objection could not succeed.
In relation to the dominant position argument raised by the defendants, Article 102 TFEU refers to a dominant position of economic power of an undertaking which enables it to prevent the maintenance of effective competition on the relevant market which enables it to behave to an appreciable extent independently of its competitors and customers.
On the basis of Article 102 TFEU the Court found that Dolby did have a dominant position on the relevant product licensing market, as without a license to the Patent no products compatible with the Opus standard can be offered. A decisive factor in this decision was consumer expectation: purchasers anticipate that smart TVs will decode all common audio and video codecs used by service providers, and thus a dominant market position may exist when a manufacturer cannot offer products (smart TVs) compatible with a widely used industry standard without a licence to the asserted patent. This expectation meant Dolby’s SEP conferred economic power enabling behaviour independent of competitors and customers.
Takeaways from decision and practical implications
This decision provides clarity on two critical issues for SEP litigation in the UPC:
1. Strict adherence to Huawei v ZTE framework
The decision reiterates the strict expectations on both patent holders and implementers in following the FRAND negotiation steps set out in Huawei v ZTE prior to initiating proceedings, and the implications should they not do so. Of particular note is the reiteration that implementers must express timely willingness to license, and delays will jeopardize any FRAND defence they may raise. Even without a formal FRAND declaration, the framework applies and will be enforced rigorously if the implementer does not meet its procedural obligations.
2. Market dominance is shaped by consumer technological expectations
The decision also confirms that where implementers cannot viably compete without supporting a technical standard, an SEP owner may hold a dominant position, even absent their participation in the standard setting process. This finding underscores that a dominant position may arise from the market necessity of supporting particular technologies.
Practical considerations as a result of the decision for implementers includes the requirement that they must act promptly following notice letters; any delay or silence following a detailed infringement notice may be fatal to a FRAND defence, particularly given that lack of declaring willingness cannot be cured later in litigation. This willingness must also be expressed clearly and unambiguously – the implementer cannot merely engage in “some” communication but should make an explicit, early statement of willingness to license on FRAND terms.
In respect of patentees and SEP holders, this decision clarifies the requirements of any notice letter – claim charts and detailed explanations of infringement will likely the first step of the Huawei v ZTE framework. Patentees should be alive to the fact that they may still be found to have dominance even without a FRAND declaration – where consumer expectations render compatibility with a standard mandatory, the SEP holder may be found dominant regardless of its participation in standardisation.
Last, this decision also highlights that consistency within the German local division continues, with the Düsseldorf decision closely mirroring the Mannheim and Munich approaches. It also reaffirms the procedural discipline that the UPC Courts will prefer to follow – the Court continues to consider the structured Huawei v ZTE framework as a behavioural code, not merely an optional negotiation guide.
The order (in German) can be read here.
