Standard-Setting Organizations and FRAND Licensing

Abstract

This chapter reviews the law and policy relating to Standard Setting Organizations (SSOs) and the FRAND commitment. To improve interoperability, we need technology standards, and to create them, we need industry members to work together in standard-setting organizations (SSOs). To ensure that the technology standards can be broadly adopted, the SSOs often need patent owners to promise to make standard-essential patents (SEPs) available to all manufacturers for a fair, reasonable, and non-discriminatory (FRAND) royalty. The legal effect of such FRAND commitments is not yet settled, leading to a considerable amount of litigation in the United States and around the world. This lack of clarity is especially problematic when the dispute is international because jurisdictions may view these commitments very differently. There are many issues relating to FRAND commitments, including: (1) what makes a patent 'essential' to a standard; (2) whether the FRAND obligation transfers to subsequent assignees of the patent; (3) whether FRAND commitments should apply to patents acquired after making the FRAND commitment (i.e., after-acquired patents); (4) whether nonmembers of the SSO should have the same standing as SSO members to enforce FRAND commitments; and (5) whether the FRAND commitment should impact remedies available in patent litigation, either from the perspective of the patent owner or the beneficiary of the FRAND commitment. As the law surrounding FRAND commitments develops, the legal community should be wary of abuses on both sides. While patent owners should not be permitted to abuse the added leverage that owning a SEP provides, the FRAND commitment must not be abused by standard adopters who take advantage of the fact that a SEP owner cannot simply deny a license. To be meaningful, a FRAND commitment should be enforceable against a SEP owner’s successor-in-interest, and injunctions for SEP infringement should be issued under limited circumstances. Ultimately, policy concerns require the balancing of many different interests in order to ensure a healthy market for technology.