UPC Weekly - What SEP?

UPC Weekly brings you timely, thoughtful and joined-up insight into the evolving landscape of patent litigation at the Unified Patent Court.

2026 Week 25

The highest value cases at the UPC fall squarely into two camps – life sciences litigation and standard essential patent (SEP) litigation. Not a lot of crossover between these. But for the FRAND-curious, this week we have a nice way in to understand SEP cases by looking at InterDigital v. Disney (UPC LD Mannheim, 16 June 2026). This was not one of those cases where substantive patent law seems to be left at the door of the court to look after itself, with the parties just arguing about royalty rates. Instead, infringement and validity turned on claim interpretation and the court assessed essentiality in addition to considering the licensing stance of the parties.

A quick explainer

This is highly simplified, but we need to understand some background to get a handle on the dance moves of the patentee and the alleged infringer (implementer).

In some technologies, standardisation is necessary, so that different manufacturers can make devices that are compatible with each other and with an overall ecosystem. The original SEP cases were all about mobile telecoms, but there are newer cases about streaming video or other tech. Where a party has a patent that is essential to the implementation of a technical standard, that patent owner will undertake to licence the patent to “implementers”. And those licensing terms are to be fair, reasonable and non-discriminatory (FRAND). By extension, the patent owner is saying that they will not seek injunctive relief or recall/removal as a remedy for patent infringement.

But where big money is at stake, both sides want to push the envelope. The patent owner has much more leverage if in fact an injunction is in play. The implementer may want to delay taking a licence for as long as possible.

If the patent owner comes to court seeking an injunction (and/or recall or removal), the implementer can raise a FRAND defence (i.e. that they can escape the injunction by taking a licence on FRAND terms). But how should the court assess whether an injunction is available to the patent owner?

CJEU framework

CJEU set out its expectations for the parties when negotiating SEP licences, in Huawei v. ZTE (CJEU, 16 July 2015). In effect, this made safe harbours available for each side.

Before seeking an injunction, the patent owner must:

(i) notify the implementer of the specific SEP and how it is infringed;

(ii) after the implementer expresses willingness to licence, make a specific written FRAND offer with a calculated royalty.

Without these steps, when requesting an injunction, the patent owner risks being found to be abusing their dominant position within the meaning of EU competition law.

To be safe against an injunction, the implementer must:

(i) genuinely and unambiguously express willingness to take a FRAND licence;

(ii) respond diligently and in good faith, without delaying tactics;

(iii) if rejecting the offer, make a specific written FRAND counter-offer promptly; and

(iv) deposit appropriate security for past use from the point its counter-offer is rejected.

Without following this approach, the implementer may not be able to avoid an injunction if the patent is valid and infringed.

The patent, the standard and the alleged infringement

We won’t go deep into the technology here. But the patent (EP 2465265 B1) defines video codec technology, relevant to the HEVC (H.265) standard. As an example of an alleged infringement on the Disney+ streaming service, InterDigital based their arguments on a bitstream format of the 1937 movie Snow White and the Seven Dwarfs.

InterDigital’s legal predecessor had submitted a FRAND licensing declaration to the ITU (the standard-setting organisation for the HEVC standard) on 5 February 2017. However, InterDigital’s primary position was that this patent did not fall within the scope of the HEVC standard on the ground that standard does not cover the encoding process, and the claims of the patent cover the encoding process rather than the decoding process.

Therefore, in the jargon, the patent owner was saying that the patent is not standard-essential.

The moves and counter-moves under wraps

InterDigital had contacted Disney in July 2022, offering to licence the patent. Disney did not make a counteroffer for a year and a half, and then argued that InterDigital’s offer was not FRAND.

However, the actual terms of the offer and counteroffer were under an NDA and were not disclosed to the court. InterDigital proposed making the substance of the offer and counter-offer available to the court under conditions of confidentiality but agreement on this point was not reached. The court therefore could not assess whether the terms offered by either side were FRAND.

The UPC proceedings

In reply to the UPC infringement proceedings, Disney raised a FRAND defence (i.e. that they would be entitled to a FRAND licence if the patent was infringed, and protection from an injunction) and argued non-infringement and invalidity.

The FRAND defence relied on an argument that the patent was standard-essential. Disney argued that while the claim covered coding, it also imposed limitations on the encoded bitstream syntax, and in any event there would not be any technical difference between encoding and decoding. As the court put it in their decision, the argument was that the relevant claims were at least de facto standard-essential.

Claim interpretation – the “own lexicon” effect

The court had to decide whether some features of the claim must be interpreted more narrowly than an apparent available broader, literal interpretation.

Relying on the guidance of the UPC Court of Appeal (CoA) in Hefei v. Grundfos (UPC CoA, 27 May 2026), the Mannheim LD said that the claims must be interpreted based on an understanding that is consistent with the explanations in the description. As the CoA put it:

Patent specifications constitute their own lexicon in terms of the terminology used therein.

This narrower-than-literal interpretation of the claims was decisive for the Mannheim LD to conclude that the claims were novel and inventive over the prior art.

The court also decided that there was infringement.

The FRAND defence

The court actually did not consider the patent to be standard-essential. However, they assessed the potential FRAND defence on an assumption (for the sake of argument) that the independent claims were at least de facto standard-essential and conferred a dominant market position on InterDigital.

This allowed the court to assess whether the behaviour of the parties complied with the negotiation framework set out by the CJEU in Huawei v. ZTE.

In this case, the court’s view was that Disney’s behaviour during negotiations was as an unwilling licensee. This was in part due to the 1.5 year delay in proposing the counter-offer. Also, due to the NDA, the court could not assess whether the terms initially offered by InterDigital, or the counter-offer by Disney, were FRAND. The court blamed this squarely on Disney for not engaging in a confidentiality regime that would allow disclosure of these facts to the court, saying:

Effectively, Defendants use the previous confidentiality regime to prevent Claimant from fully explaining the licence negotiations during the written procedure of these proceedings, in particular regarding Defendants' engagement and Claimant's explanations about its patent portfolios and its licence offer. In view of these specific circumstances, it is irrelevant in the present case that Claimant did not/could not set out the details of its licence offer.
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Consequently, Defendants are to be considered as unwilling licensees due to their refusal to cooperate properly in amending the previous confidentiality regime, thereby effectively preventing the disclosure of the entire history of the negotiations, and due to their insufficient reaction on Claimant’s licence offer.

The remedies

As a result, the court ordered an injunction, recall and removal, and various other remedies. However, the enforceability of the injunction and the recall/removal order was made contingent on InterDigital providing a significant security of €8m.

Of course, this UPC case is not the only game in town. Litigation is ongoing elsewhere and so the ultimate outcome will probably depend on many factors. What this case provides is a clear insight into the UPC’s thinking on how it will apply the CJEU framework from Huawei v. ZTE but we await the outcome of different cases to see how the UPC will approach the assessment and determination of FRAND licensing terms.