Royalty rate of Standard Essential Patents (SEP) infringement in Germany

Hubertus SHACHT Judge Regional Court Munich I Germany

The 2020 International IP Court Conference an international exchange event of the professionals in the IP field consisting of five sessions which are status of international trials high technology and patent eligibility major issues in design litigation cross-border patent infringement and mock trials has been ended successfully on November 12.

In the first session which is the first program of the conference the speakers from the U.K. Germany Australia China and Korea shared their opinion about the procedure for the international cases in each country and specific operational forms.

Hubertus SHACHT attending the conference as a speaker is Judge of Regional Court Munich 1 of Germany. In 2000 he began working as a legal intern in New York the United States and completed legal intern and training in Cologne Düsseldorf Munich and Mumbai India by 2008.

He served as a district attorney for Munich from 2008 to 2012 and in 2014 he was commissioned as a judge in Munichs First District Court and served as a construction judge until 2017. In addition from 2017 to 2019 he served as a judge of the Trademark Copyright Design and Unfair Trade Act at the First District Court of Munich and he is working as the deputy judge of the Patent Copyright and Design Rights Act at the same court since 2019.

On 11st November 2020 we met him at the 2020 International IP Court Conference.

Q : If there are SEP holder’s previous license agreements setting out royalty rates with other licensees would it be possible to successfully argue either (i) that an implementer should be provided the most favorable royalty rate among the similar licensees or (ii) that the previous royalty rates are unfairly and unreasonably high in the sense that the rates are for the consumer products rather than relevant components to which the SEP applied and thus the amount of damages must be set at a royalty rate lower than the previous rates?

A : At first sight it seems to be rather difficult from a antitrust-law-perspective that a SEP-holder has different license agreements with different conditions.

But if the branches/industry sectors are different it would be difficult for the SEP-holder to argue his offer is FRAND simply because another company from another branch/industry sector has already signed the same contract. Similarly a manufacturer could argue that the offer is not FRAND because the royalty rate offered is appropriate for OEM only.

However if the SEP-holder can show that another manufacturer from the same industry sector has already signed the offer the sued manufacturer could lose the case. However I would doubt whether the example in the question B (2) appears in real life.

Since when the SEP-holder has already licensed the OEM his motivation to license the manufacturers too would be rather low because he will get the highest royalty rate from the OEM already. Even if he will license a manufacturer the main issue would not be the royalty rate but he possibility/legal right of the manufacturer to tell his buyer/OEM that he has bought a license in order to avoid so called double dipping.


2020 International IP court conference commemorative photo
This conference held on November 12 2020 was held at the Grand Hyatt Hotel in Seoul under the theme of Court IP and Globalization with the method using parallel online and offline to prevent the spread out of COVID-19.

Focusing on IP5 which are United States China Japan and Germany about 300 IP related professionals from 8 nations around the world participated online and offline to share and progress IP issues with various cases.

The 2020 International IP Court Conference was ended in great success raising the status of the IP international trial in Korea covering five sessions and mock trials.

Hubertus SHACHT Judge Regional Court Munich I Germany giving a presentation at the 2020 International IP Court Conference

2020 International IP court conference commemorative photo

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