InterDigital v Disney

UPC_CFI_86/2025, decision 16 June 2026 

InterDigital and Disney are in wide dispute over Disney’s alleged use of InterDigital’s video compression technology for their Disney+ streaming service. This particular case relates to one of four infringement actions brought by InterDigital against Disney at the UPC so far.

The LD Mannheim found InterDigital’s patent, EP 2 465 265 B1, to be valid – having read additional limitations into the claims in light of the description which supported its novelty and inventiveness – and infringed by Disney. Disney’s FRAND defence was also unsuccessful. The LD ruled that InterDigital did not have a dominant market position in any relevant market, and also that the claims asserted by InterDigital were not de jure standard-essential and hence not FRAND-encumbered. Even if, for the sake of argument, the asserted claims were assumed to be de facto standard-essential and to confer a dominant market position for InterDigital, the LD considered Disney an unwilling licensee in the pre-action FRAND-licensing negotiations.

Background

InterDigital’s patent, EP’265, relates to digital encoding and decoding of video data using intra prediction chroma coding of blocks of pixels within a picture. Some of the independent claims were directed to encoding of picture data, whilst others were directed to decoding of picture data.

InterDigital’s legal predecessor submitted a FRAND-licensing declaration, which included the patent in suit, to the relevant standard organisation concerning the High Efficiency Video Coding (HEVC) standard in 2017. The HEVC standard specifies the structure of a HEVC bitstream and how it is to be decoded. How a HEVC bitstream is encoded is not specified in the HEVC standard.

Disney+ provides users with on-demand access to video content by sending video data to end users in a continuous bitstream. The bitstream can be provided in various formats, including a format conforming to the HEVC standard.
InterDigital contacted Disney in July 2022, seeking a licensing agreement in regard to InterDigital’s video patent portfolio. An NDA between the parties was concluded in November 2022, and InterDigital offered Disney a licence covering the claims of the patent. At Disney’s request, the NDA included a clause excluding the substance of any offers or counteroffers being used ‘as evidence regarding willingness to license or the lack thereof.’

Disney did not make a counteroffer for a year and a half. They were also of the opinion that InterDigital’s offer was made on a discriminatory basis and not on reasonable terms and conditions.

InterDigital terminated the NDA in January 2025, before bringing an infringement claim against Disney at the LD Mannheim in February 2025. InterDigital claimed that claims 1 and 15 of the patent, which are related to a method of encoding picture data in a video encoder and a signal comprising video data generated by encoding picture data respectively, are infringed by Disney’s Disney+ streaming service. They also argued that claims 1 and 15 were not standard-essential and hence not FRAND-encumbered. Disney responded by denying that claims 1 and 15 were infringed, by counterclaiming for invalidity, and by raising a FRAND defence.

Claim interpretation – ‘the description may represent a patent’s own lexicon’

According to the plain wording of the claims asserted by InterDigital, ‘a set of multiple chroma partition types’ and ‘a set of multiple luma partition types’ were supported for the encoding of the picture data. Although the claims did not in any way state that the set of chroma partition types and the set of luma partition types differed from one another, the LD Mannheim ruled that the skilled person would clearly understand these sets of partition types to differ from one another in light of the description.

In support of their reasoning, the LD cited the recently-issued decision of the CoA in Hefei v Grundfos , in which the CoA reasoned that ‘Patent specifications constitute their own lexicon in terms of the terminology used therein’. The LD further commented that taking the description to represent a patent’s own lexicon ‘may lead to a narrower interpretation of a feature in contrast to a possible broader general usage/technical understanding. Even if terms defined in the patent deviate from a general usage/technical understanding, it may therefore be that ultimately the meaning of the terms resulting from the patent specification is authoritative.’

Applying these principles, the LD considered that the disclosure in para. [0025] – which stated that ‘Additionally, as used herein, the phrase “multiple partition types are supported for intra chroma coding” refers to the case where… the set of multiple partition types for intra chroma coding differs from a set of multiple partition types for intra luma coding that is also available for coding’ – must be exceptionally read into the claims as a binding definition. This definition was also consistent with its usage throughout the description.

The interpretation arrived at for these claim features supported the claims being found novel and inventive over the prior art relied upon by Disney. The asserted claims were then ultimately deemed infringed by the attacked embodiments of the Disney+ streaming service.

FRAND defence – no SEP and an unwilling licensee

Having found the patent to be valid and infringed, the LD Mannheim considered Disney’s FRAND defence against the potential injunction, recall and removal of the attacked embodiments of the Disney+ streaming service. Disney’s FRAND defence argued that since InterDigital had not adhered to the negotiation framework established by the CJEU in Huawei v ZTE , InterDigital’s request for injunction, removal and recall would amount to an abuse of InterDigital’s dominant position within the internal market according to Art. 102 of the Treaty of the Functioning of the European Union (TFEU). The LD elaborated significantly on the FRAND defence framework in their decision.
The LD firstly considered whether InterDigital had a dominant position in the internal market within the meaning of Art. 102 TFEU. The burden of presenting facts and – if necessary – proof regarding the patent holder’s dominant position lay with the implementer. In the absence of such facts presented by Disney, it was concluded that InterDigital did not hold a dominant position in any relevant market.

The LD secondly considered whether the claims asserted by InterDigital were FRAND-encumbered. The encoding process of a HEVC bitstream is clearly defined as not being part of the HEVC standard, and so Disney argued that there was no technical difference between the decoding and encoding process. The LD did not find this argument convincing, stating that how to provide an encoded signal that could be decoded according to HEVC specifications is not determined by the HEVC standard. As such, the claims asserted by InterDigital were not de jure standard-essential and hence not bound by the FRAND-licensing declaration submitted by InterDigital’s legal predecessor. (In connection with assessing whether InterDigital held a dominant position, the LD also held that even if the patent was part of a de jure standard, this would not “automatically” confer a dominant position in a relevant licensing market.)

On this basis, it can be reasoned that Disney’s FRAND defence would not be applicable in the present case.

Nevertheless, to assess Disney’s FRAND defence for the sake of argument alone, the LD assumed that InterDigital’s asserted claims were at least de facto standard-essential and conferred a dominant market position for InterDigital. They also assumed that the negotiation framework established in Huawei v ZTE would still apply despite the differing legal facts between the two cases: Huawei v ZTE concerned a de jure formally-declared SEP with a corresponding FRAND-licence obligation, rather than a de facto SEP as assumed here for the present case.

Even taking all these assumptions in Disney’s favour, the LD found Disney’s FRAND defence unsuccessful because Disney were considered an unwilling licensee.

As mentioned above, the licence negotiations between InterDigital and Disney were subject of an NDA preventing either party from disclosing details from the negotiations as evidence that they were a willing licensor/licensee, respectively. Immediately after Disney raised their FRAND defence, InterDigital asked Disney if the parties could mutually agree to present the full negotiating history in the proceedings alongside filing motions of confidentiality as to their contents, so that InterDigital could show they were willing to license.

Disney’s response to this request was deemed to be clear in its pretext of delaying an agreement to disclose the contents of the negotiations, and the LD considered Disney to be using the NDA to prevent InterDigital from fully explaining the licence negotiations during the written procedure. The LD ultimately decided that ‘[Disney] 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’.

Enforcement security

Disney requested that, with particular regard to the territorial scope of the potential decision (they were facing an injunction in 11 countries if InterDigital’s claim was successful), the LD set the enforcement security at EUR 500 million to cover lost revenue within one year should InterDigital enforce the first instance decision.
The LD ultimately set the enforcement security at EUR 8 million, arguing that Disney had not sufficiently demonstrated that they would be unable to operate their streaming service in a commercially viable manner if they could not use the teaching of the asserted claims.

Comments

Notwithstanding that Disney were taking various facts as a given when raising their FRAND defence, their obstructiveness when responding to InterDigital’s request to disclose the contents of the licensing negotiations ultimately sunk them.

The LD was concerned that an NDA preventing the willing party from disclosing the negotiations when seeking to demonstrate that the party acted within the Huawei v ZTE framework could breach EU antitrust laws; however, they also recognised that the willing party would not have been obliged to disclose the contents of the negotiations should a breach of the NDA have ramifications for the party in other jurisdictions . The LD’s solution therefore seems a just one which should deter parties from taking the same approach as Disney in the future, when the UPC needs to assess the parties’ compliance with the Huawei v ZTE negotiation framework.

What’s more, InterDigital only being set an enforcement security of EUR 8 million means that InterDigital could be more likely to enforce the first-instance injunction and removal and recall against the attacked embodiments of the Disney+ streaming service. Low enforcement securities for injunctions effective in multiple countries could make the UPC a more attractive forum for SEP/FRAND disputes as compared to the national courts.
Lastly, Disney raised numerous arguments for the first time during the oral hearing. All of these arguments were ultimately rejected notwithstanding their admissibility, and even if they were not ultimately rejected, it is unlikely they would have been admitted. Although the LD appears to have entertained these new arguments to some degree in their decision by not simply dismissing them, parties should remain mindful of the “front-loaded” nature of UPC proceedings.

References:

[1] https://www.unifiedpatentcourt.org/en/node/161066

[2] Huawei v ZTE, CJEU judgment of 16 July 2015, C-170/13, ECLI:EU:C:2015:477