Published: 1/1/14
In this case, the Tokyo High Court established a FRAND royalty for patents essential to the Universal Mobile Telecommunications System (“UMTS”) standard. The court determined that the aggregate royalty stack for licenses to UMTS SEPs should not exceed 5% based on its understanding that many SEP holders under that standard had agreed to a 5% maximum royalty stack. The court also took into account that the W-CDMA platform, a patent pool for UMTS SEPs, used the maximum aggregate royalty rate of 5% to determine specific royalties for individual SEP holders. The appellate court concluded that the appropriate royalty rate for FRAND-encumbered SEPs should be based on (i) the contribution ratio of the UMTS standard to the sales turnover of the infringing products multiplied by (ii) the contribution of infringed SEPs to all other SEPs for that standard and (iii) the aggregate royalty rate of 5%.