SEPs Licensing: A Pro-Competitive Determination of Frand Royalties

Abstract

Although Courts, policy makers, academics and Standard Setting Organizations (SSOs) have been attempting for more than a decade to substantiate the concept of fair, reasonable and non-discriminatory (FRAND) royalty terms for standard-essential patents (SEPs), so far no general organic set of basic common principles has been agreed upon. This despite the clear need of uniformity and harmonization in the standard-setting context, international by nature and participated by SSOs and stake holders from all over the world. Satisfying such need would translate in preempting risks of conflicting approaches in different regions of the world, stemming from ‘technical’ grounds (given the variety and diverse characteristics of both legal orders and SSOs’ statutes), or fuelled by geopolitical divisions. A three-step elastic framework of (cumulative) criteria is submitted. Its rationale is to foster dynamic competition while ensuring appropriate compensation for the innovators whose technical contributions have been declared standard-essential. This implies the acknowledgement of the superior constitutional rank of the pro-competition objective, of primarily collective interest, vis-a-vis the owners’ compensation, of primarily private interest. In turn, this should ultimately lead to avoid raising licensees’ (implementers’) costs to the point that it becomes too difficult for them to effectively compete in the market.