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Munich Court Proposes €1.05 Monthly Codec Royalty for Netflix Premium Subscribers
Jan Ozer
August 20, 2026<br>Articles
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The 7th Civil Chamber of the Munich I Regional Court just published detailed FRAND guidelines addressing standard-essential patent licensing. The guidelines include an analysis of how the court might calculate video codec royalties for streaming services, with Netflix and Disney+ as examples.
This was not a decision involving either company. In fact, the court noted that it has not yet issued a decision in a streaming licensing case. The calculations are non-binding, depend on additional factual submissions, and represent the court’s current thinking rather than royalties that Netflix or Disney+ has been ordered to pay.
Still, the numbers are substantial. The court calculated an aggregate royalty of €0.63 per month for a standard Netflix subscriber and €1.05 for a premium subscriber. For Disney+, the corresponding figures were €0.49 and €0.84.
Applied mechanically to the companies’ latest reported subscriber totals, those rates would produce aggregate codec royalties ranging from €2.46 billion to €4.10 billion annually for Netflix and €776 million to €1.33 billion for Disney+. Assuming an even split between standard and premium subscriptions, the combined annual royalty would be approximately €4.33 billion.
Table 1: Indicative Annual Aggregate Royalties Based on Latest Reported Subscribers<br>Now the caveats. These calculations assume that the proposed rates apply to every global subscriber. Neither company reports its standard-premium subscriber mix, and the court has not determined how broadly the rates would apply.
As you’ll read further below, these are aggregate royalties for all relevant video codec SEPs. They are not rates for a single codec, patent owner, or pool.
Also noteworthy: The guidelines put to bed, at least before the Munich court’s 7th Civil Chamber, the broader argument that streaming services are not independently royalty-bearing. The court’s calculation assumes they are. The remaining questions concern which patents apply, how much is owed, and how that amount should be divided.
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Why Device Licenses May Not Protect Streaming Services
Streaming services have argued that they should not owe royalties when the devices used to play their content are already licensed. The court rejected that argument, finding that providing a device capable of streaming and operating a streaming service are different uses of the patented technology. For this reason, a license covering the device doesn’t exhaust the patent owner’s rights against the streaming provider.
Why the Court Did Not Use Pool Rates
The court also rejected the argument that patent-pool rates provide an appropriate benchmark for bilateral licenses, reasoning that pools combine different types of patent owners and portfolios. Some owners join pools because they would have little chance of enforcing their patents independently. Bilateral licensors that remain outside a pool and are willing to enforce their patents may hold stronger portfolios and pursue a different licensing strategy.
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The court also concluded that no established licensing practice currently exists for streaming services. Avanci Video and Access Advance’s Video Distribution Patent Pool both have limited licensor coverage and relatively few economically significant licensees. They also charge different rates. Since there were no reliable comparable licenses, the court used a top-down calculation.
Why the Court Used Netflix and Disney+
The court used Netflix and Disney+ as examples because all or most of their streaming revenue comes directly from subscriptions, which simplifies identifying the revenue...