UPC and FRAND: How Europe's New Patent Court Is Reshaping Rate-Setting

In June 2023, the Unified Patent Court (UPC) opened its doors — and European standard essential patent (SEP) litigation has not been the same since. For the first time, a SEP holder can seek a single injunction that simultaneously blocks an implementer's products across more than 17 EU member states. For implementers, a single adverse ruling now carries exposure across the continent's entire market.

The UPC is young. Its FRAND jurisprudence is still forming. But the decisions already on record — particularly its first appellate ruling on SEP enforcement — signal the direction of travel. Understanding what the UPC has decided, how it compares to the established UK and German approaches, and what it means in practice is now essential reading for anyone involved in SEP licensing negotiations.

What Is the UPC and Why Does It Matter for FRAND?

The UPC is an international court jointly established by 17+ EU member states to hear cases involving European patents (including the new Unitary Patent). Before the UPC, a SEP holder pursuing an injunction across Europe had to litigate separately in each national court — filing in Germany, France, the Netherlands, Italy, and so on — with inconsistent outcomes and significant duplication of effort and cost.

The UPC collapses that into a single proceeding. A SEP holder who wins at the UPC can enforce a pan-European injunction with one judgment. An implementer who loses faces coordinated market lockout across the EU's largest economies simultaneously. This dramatically raises the stakes of every UPC FRAND dispute compared to any prior national proceeding.

The court operates through a network of Local Divisions (in individual member states), Regional Divisions, and a Central Division (split between Paris and Munich). Appeals go to the Court of Appeal in Luxembourg. For SEP matters, the Local Divisions in Germany — Munich and Düsseldorf — and the Paris Central Division are expected to handle the heaviest dockets, given their established patent litigation infrastructure.

The First UPC FRAND Decisions: What They Decided

The UPC's first significant SEP ruling came in Panasonic v Oppo (UPC Court of Appeal, 2024). This was not a full FRAND rate-setting trial — the court was not asked to determine what royalty rate was FRAND. Instead, it addressed whether the UPC had jurisdiction to grant a pan-European interim injunction where an implementer had refused to engage seriously with a SEP holder's licensing offer.

The Court of Appeal's answer was yes. The court affirmed that where an implementer fails to behave as a "willing licensee" under the Huawei v ZTE (CJEU, 2015) framework, the UPC can grant injunctive relief without first completing a full FRAND rate determination. This is a significant signal: the UPC will not automatically require a rate trial before enforcement. An implementer who stalls or stonewalls in negotiations risks an immediate pan-European injunction.

Equally significant is what the court left open. In Panasonic v Oppo, the court explicitly deferred the question of whether Panasonic's offer was itself FRAND — finding that the merits of the rate were not yet before it. A full FRAND rate-setting trial at the UPC, where the court actually determines a FRAND royalty, has not yet occurred as of April 2026 but is widely expected in the 2025–2026 docket window.

Several additional UPC first-instance proceedings in Munich and Paris have advanced through the case management phases, with FRAND-related arguments filed in matters involving Nokia, Ericsson, InterDigital, and major smartphone OEMs. The full rate-setting precedent, when it arrives, will be the most consequential new SEP ruling in European law in a decade.

How the UPC Compares to UK and German Approaches

Practitioners used to UK or German SEP litigation will find the UPC familiar in framework but distinct in reach and procedural rhythm. The table below compares the three regimes across the dimensions that matter most for FRAND disputes.

The most important structural difference is the bifurcation question. German courts have historically separated infringement proceedings (which proceed to judgment quickly and can result in injunction) from FRAND rate determinations (which happen later, if at all). This created the so-called "injunction gap" — where implementers faced an immediate injunction before any court had determined whether the asserted royalty was actually FRAND.

UK courts closed this gap through the Unwired Planet v Huawei (UK Supreme Court, 2020) approach: the court determines a FRAND rate, and the implementer gets a license at that rate. No rate determination, no injunction. This makes the UK more defendant-friendly in one sense (no premature injunction) but more powerful for plaintiffs in another (the court will actually set a binding global rate).

The UPC's Panasonic v Oppo ruling suggests a middle path: injunction is available where the implementer fails the willing-licensee test, but the court will scrutinize whether the SEP holder's own conduct meets the Huawei v ZTE behavioral requirements. This is closer to the German approach than the UK's, but with pan-European stakes.

Impact on Implementers vs. Patent Holders

The UPC changes the calculus materially for both sides of the negotiating table.

For SEP holders, the UPC is a powerful new tool. A single filing can threaten injunctive relief across the EU's major markets simultaneously. The litigation cost per country-of-coverage drops dramatically compared to parallel national filings. For SEP holders with strong portfolios and clear evidence of infringement — particularly those in the mobile, Wi-Fi, or automotive connectivity space — the UPC represents a significant leverage upgrade.

There is, however, a countervailing risk. The UPC's centralized validity proceedings mean that a successful invalidity challenge at the UPC can knock out a European patent across all member states in one stroke. Under the national filing regime, invalidity in Germany did not affect France or Italy. At the UPC, a single revocation action before the Central Division (Paris or Munich) can eliminate a patent's European scope entirely.

For implementers, the UPC raises the risk of a single adverse ruling far above what any national proceeding could deliver. An implementer that loses a UPC infringement action and is found not to be a willing licensee faces market lockout across 17+ jurisdictions — not just Germany or France. For consumer electronics companies, automotive OEMs, and IoT manufacturers whose European sales are material, this exposure is existential.

The practical effect is asymmetric pressure to settle. Implementers facing a credible UPC FRAND claim have stronger incentives to engage seriously with licensing negotiations than they did when the only alternative was parallel national proceedings. This likely shifts FRAND negotiation dynamics toward earlier settlements, potentially at rates closer to what SEP holders demand.

Jurisdiction Shopping: UPC vs. UK vs. Germany

With three major European FRAND forums now active — the UPC, the UK courts, and the German national courts — sophisticated parties are already making careful forum selection decisions.

• UK remains the preferred venue for global rate-setting. The UK courts' track record of actually determining binding FRAND rates — and doing so on a global portfolio basis — makes them the most powerful forum for resolving the underlying economic dispute. An implementer that wants certainty about what it owes worldwide still benefits from a UK proceeding.
• Germany (and the UPC's German divisions) favors quick injunctions. For SEP holders who want leverage through speed — securing an injunction before the implementer can mount a full FRAND defense — the German-style approach at UPC Local Divisions in Munich and Düsseldorf remains attractive.
• The UPC's pan-European scope is its defining advantage. For large-scale disputes where the SEP holder needs Europe-wide coverage, the UPC eliminates the coordination cost of parallel national proceedings. As the UPC's FRAND jurisprudence matures, it is likely to become the default forum for major European SEP disputes.

Note that filing at the UPC does not preclude parallel UK proceedings for UK patents — the two systems are entirely separate. Expect major SEP disputes to run simultaneously at the UPC and the UK courts, each forum informing (but not binding) the other.

What to Expect in 2025–2026

The UPC's first full FRAND rate-setting trial is expected to conclude in the 2025–2026 window. When it does, it will establish the UPC's methodology preferences — comparable licenses, top-down, SSPPU, or some European hybrid — and set the benchmark for FRAND negotiations involving European patents for years to come.

Several questions remain open. Will the UPC adopt the UK's global-rate approach, setting royalties that govern a worldwide portfolio in a single proceeding? Or will it follow a narrower European-only scope? How will the court handle FRAND offers that pre-date the UPC's existence — where negotiations were conducted under the assumption that only national courts could enforce? These questions will determine whether the UPC becomes a venue of first choice or a secondary lever in the global SEP litigation toolkit.

Regardless of how these questions resolve, one thing is clear: the UPC has permanently changed the risk profile of European SEP disputes. Any company manufacturing, distributing, or selling products in the EU that implement wireless or connectivity standards needs to understand its UPC exposure now — before the first major rate-setting judgment lands.