UPC rules against HMD in Fraunhofer AAC patent infringement case

This decision establishes a critical precedent for standard essential patent licensing by preventing implementers from using bilateral negotiation demands as a stalling tactic. For the streaming ecosystem, it reinforces the legitimacy of patent pools like Via LA, ensuring that technology contributors can enforce their IP without being forced into endless individual negotiations. The ruling signals that the Unified Patent Court will prioritize efficient licensing over procedural objections unless an implementer can prove a specific need for a custom agreement. Watch for whether HMD Global attempts to appeal this to the UPC Court of Appeal or if other pool members now move to accelerate their own enforcement actions against non-signatories.

The Unified Patent Court has rapidly established itself as the primary venue for standard essential patent disputes in Europe since its June 2023 launch. In the AAC codec space specifically, Via LA administers a patent pool covering more than 2,000 patents essential to AAC and HE-AAC standards, with licensors including Fraunhofer, Dolby, and Sony. The pool's per-unit royalty rate for mobile handsets has been set at $0.98 per device, a figure that has drawn scrutiny from implementers who argue bilateral terms might be lower. HMD Global, which manufactures Nokia-branded phones under a licensing agreement with Nokia, had been one of the few major device makers not signed onto the Via LA AAC pool license, making this enforcement action part of a broader campaign to bring holdout implementers into the pool structure. The Hamburg ruling arrives amid a wider European policy debate over SEP enforcement and FRAND obligations. In February 2025, the European Commission published a draft regulation on standard essential patents that would create a mandatory FRAND determination mechanism before litigation could proceed, though the proposal has faced opposition from patent holders who argue it would delay enforcement and reduce incentives for innovation. The UPC's willingness to grant injunctions in SEP cases, as demonstrated in the Disney+ patent injunction or the Fraunhofer v. HMD decision, contrasts with the Commission's proposed framework and signals that courts may move faster than legislators. Nokia's own SEP enforcement campaign against multiple smartphone makers, including actions at the UPC, resulted in settlements with Apple and Samsung in 2024, reinforcing the trend of pool-backed licensors using the new court system to pressure holdouts. On the technical side, AAC remains the dominant audio codec across streaming platforms, broadcast television, and mobile devices. Fraunhofer IIS, which co-developed AAC with Dolby and AT&T, reported in its 2024 annual review that the codec family is used in over 9 billion devices worldwide, spanning profiles from AAC-LC to xHE-AAC. The codec's ubiquity means that any licensing precedent affecting AAC enforcement has outsized implications for device manufacturers and streaming service providers alike. The Moving Picture Experts Group finalized the MPEG-4 AAC standard in 2000, and subsequent extensions including HE-AAC v2 and xHE-AAC have been adopted by DVB, ATSC 3.0, and 3GPP specifications, making the patent pool structure essential for mass-market compliance. The Hamburg decision effectively confirms that implementers cannot avoid pool licensing by demanding bilateral negotiations when a FRAND-compliant pool offer is already on the table.