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contributes to the standard. The development of a patented technology typically requires significant investment in research, and contributing that technology to a standard is not the only option by which a patent holder can recoup that investment and thus monetize its invention. For example, a patent holder has the option to monetize that invention through exclusive use or exclusive licensing. Technology owners might have insufficient incentives to contribute their technologies to a standard-setting organization without the promise of an adequate royalty. The promise of a F/RAND royalty address that problem: the patent holder will typically agree to contribute its technology to the standard, thus forgoing the exclusive use or the exclusive licensing of its technology, in exchange for the assurance that it will receive adequate compensation in reasonable royalties.
322:; fair terms means terms which are not anti-competitive and that would not be considered unlawful if imposed by a dominant firm in their relative market. Examples of terms that would breach this commitment are: requiring licensees to buy licenses for products that they do not want in order to get a license for the products they do want or requiring licensees to take licenses to certain unwanted or unneeded patents to obtain licenses to other desired patents (bundling); requiring licensees to license their own IP to the licensor for free (free grant backs); and including restrictive conditions on licensees' dealings with competitors (mandatory exclusivity).
251:
standard. So, it will often request that a patent holder clarify its willingness to offer to license its standard-essential patents on FRAND terms. If the patent holder refuses upon request to license a patent that has become essential to a standard, then the standard-setting organization must exclude that technology. When viewed in this light, the FRAND commitment serves to harmonize the private interests of patent holders and the public interests of standard-setting organizations. Many scholars have written about these topics, as well as a variety of other legal and economic issues concerning licensing on F/RAND terms.
353:
among many; there is a good argument that a license price that captures that additional value is not "reasonable" because it does not reflect the intrinsic value of the technology being licensed. On the other hand, the adoption of the standard may signal that the adopted technology is valuable, and the patent holder should be rewarded accordingly. That is particularly relevant when the value of the patent is not clearly known before the adoption of the standard.
268:. One of the most common policies is to require a patent holder that voluntarily agrees to include its patented technology in the standard to license that technology on "reasonable and non-discriminatory terms" (RAND) or on "fair, reasonable, and non-discriminatory terms" (FRAND). The two terms are generally interchangeable; FRAND seems to be preferred in Europe and RAND in the U.S.
349:
the licensee. However it does mean that the underlying licensing condition included in a licensing agreement must be the same regardless of the licensee. This obligation is included in order to maintain a level playing field with respect to existing competitors and to ensure that potential new entrants are free to enter the market on the same basis.
348:
relates to both the terms and the rates included in licensing agreements. As the name suggests this commitment requires that licensors treat each individual licensee in a similar manner. This does not mean that the rates and payment terms cannot change dependent on the volume and creditworthiness of
390:
Related to RAND licenses are RAND-Z (RAND with zero royalty) or RAND-RF (RAND Royalty Free) licensing, in which a company promises to license the technology at no charge, but implementers still have to get the licenser's permission to implement. The licenser may not make money off the deal but can
365:
RAND terms exclude intangible goods which the producer may decide to distribute at no cost and where third parties may make further copies. Take for example a software package that is distributed at no cost and to which the developer wants to add support for a video format which requires a patent
352:
The most controversial issue in RAND licensing is whether the "reasonable" license price should include the value contributed by the standard-setting organization's decision to adopt the standard. A technology is often more valuable after it has been widely adopted than when it is one alternative
341:
in future time periods. A licensor which has several different licensing packages might be tempted to have both reasonable and unreasonable packages. However having a reasonable "bundled" rate does not excuse having unreasonable licensing rates for smaller unbundled packages. All licensing rates
246:
A standard-setting organization is an industry group that sets common standards for its particular industry to ensure compatibility and interoperability of devices manufactured by different companies. A patent becomes standard-essential when a standard-setting organization sets a standard that
332:
if all licensees were charged a similar rate. According to this view, aggregate rates that would significantly increase the cost to the industry and make the industry uncompetitive are unreasonable. Similarly, a reasonable licensing rate must reward the licensor with adequate compensation for
288:
On the other hand, commentators stress that the FRAND commitment also serves to ensure that the holder of a patent that becomes essential to the standard will receive royalties from users of the standard that adequately compensate the patent holder for the incremental value that its technology
250:
Because a patent, under most countries' legal regimes, grants its owner an exclusive right to exclude others from making, using, selling, or importing the invention, a standard-setting organization generally must obtain permission from the patent holder to include a patented technology in its
356:
Some interpretations of "non-discriminatory" can include time-oriented licensing terms such as an "early bird" license offered by a licensor where terms of a RAND license are better for initial licensees or for licensees who sign a license within the first year of its availability.
280:
rights (IPR) included in the industry standards. Once an organization is offering a FRAND license they are required to offer that license to anyone (wishing to access the standard), not necessarily only members of the organization. Without such commitment, members could use
271:
Some commentators argue that standard-setting organizations include the FRAND obligation in their bylaws primarily as a means of enhancing the pro-competitive character of their industry. They are intended to prevent members from engaging in licensing abuse based on the
641:
Mariniello, Mario (2011) Fair, Reasonable and Non
Discriminatory (FRAND) Terms: A Challenge for Competition Authorities - Journal of Competition Law and Economics, Oxford University Press, Vol. 7, n. 3; Tim W. Dornis, J. EUR. COMP. L. & PRACT. 11 (2020), 575
366:
licence. If there is a licence which requires a tiny per-copy fee, the software project will not be able to avail of the licence. The licence may be called "(F)RAND", but the modalities discriminate against a whole category of intangible goods such as
239:. U.S. courts, as well as courts in other jurisdictions, have found that, in appropriate circumstances, the implementer of a standard—that is, a firm or entity that uses a standard to render a service or manufacture a product—is an intended
263:
that apply to the standards they adopt (the patent policy). In the United States, the patent holder's agreement to adhere by the patent policy creates a legally binding contract, as the Court of
Appeals for the Ninth Circuit ruled in
377:
This form of discrimination can be similarly caused by common licence terms such as only applying to complete implementations of the licensed standard, limiting use to particular fields, or restricting redistribution. The
583:
Memorandum from J. Gregory Sidak, Chairman, Criterion
Economics LLC to the Ministry of Commerce & Industry, Department of Industrial Policy & Promotion of India (Mar. 30, 2016),
815:
285:
power inherent in a standard to impose unfair, unreasonable and discriminatory licensing terms that would damage competition and inflate their own relative position.
405:
The negotiating process for FRAND licenses places requirements on the patent owner and the envisioned patentee. The terms for these negotiations were set in German
309:
199:
328:
refers mainly to the licensing rates. According to some, a reasonable licensing rate is a rate charged on licenses which would not result in an unreasonable
300:
While there are no legal precedents to spell out specifically what the actual terms mean, it can be interpreted from the testimony of people like
Professor
869:
459:
810:
870:"Why Can't They Be FRANDs? Concerns About The International Trade Commission (ITC's) Approach to Standard-Essential Patent Cases Are Unwarranted"
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571:
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to a standard. Compensation is adequate if it provides the licensor with the incentive to continue investing and contributing to the
116:
630:
391:
still stop some type of products or require some type of reciprocity or do more subtle things like drag out the licensing process.
231:
often request from the owner of an intellectual property right (usually a patent) that is, or may become, essential to practice a
495:"ICT Standards, standardization, GSM, TETRA, NFV, GPRS, 3GPP, ITS, UMTS, UTRAN, M2M, MEC, Mobile, IoT, Security, standardisation"
265:
861:
523:
235:. Put differently, a F/RAND commitment is a voluntary agreement between the standard-setting organization and the holder of
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121:
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848:
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suggests the term "uniform fee only" (UFO) to reflect that such "(F)RAND" licenses are inherently discriminatory.
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84:
422:
240:
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17:
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In 2013, court decisions and scholarly articles cited FRAND commitments 10 times more often than in 2003.
228:
572:
https://www.criterioneconomics.com/apportionment-frand-royalties-comparable-licenses-ericsson-dlink.html
484:
Innovatio IP Ventures, LLC Patent Litig., MDL No. 2303, 2013 WL 5593609, at *4 (N.D. Ill. Oct. 3, 2013).
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89:
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534:, 28 BERKELEY TECH. L.J. 1135 (2013); Tim W. Dornis, J. EUR. COMP. L. & PRACT. 11 (2020), 575 ff.
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400:
585:
https://www.criterioneconomics.com/standard-essential-patents-indian-ministry-commerce-industry.html
460:"Pricing Patents for Licensing in Standard-Setting Organizations: Making Sense of FRAND Commitments"
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910:
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131:
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of the FRAND agreement, and, as such, is entitled to certain rights conferred by that agreement.
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http://www.criterioneconomics.com/meaning-of-frand-royalties-for-standard-essential-patents.html
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https://www.criterioneconomics.com/a-frand-contracts-intended-third-party-beneficiary.html
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Standard-setting organizations commonly adopt policies that govern the ownership of
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Apportionment, FRAND Royalties, and
Comparable Licenses After Ericsson v. D-Link
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A Simple
Approach to Setting Reasonable Royalties for Standard-Essential Patents
301:
136:
849:"Everything You Always Wanted to Know About FRAND (But didn't know who to ask)"
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Comparative Law and
Economics of Standard-Essential Patents and FRAND Royalties
771:"The European Court of Justice on enforcement of FRAND patents: Huawei v. ZTE"
175:
126:
100:
881:
701:
546:"Formulas for fair, reasonable and non-discriminatory royalty determination"
530:, 22 TEX. INTELL. PROP. L.J. 311 (2013); Mark A. Lemley & Carl Shapiro,
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relates mainly to the underlying licensing terms. Drawing from anti-trust/
413:, and these terms are often used in licensing negotiations. In 2015, the
406:
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Standardization
Feedback for the National Science and Technology Council
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35:
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Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 884 (9th Cir. 2012);
598:"" FRAND ": statistical comparison between cases and research papers"
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171:
39:
458:
Layne-Farrar, Anne; Padilla, A. Jorge; Schmalensee, Richard (2007).
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788:; Tim W. Dornis, J. EUR. COMP. L. & PRACT. 11 (2020), 575 ff.
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Fighting the
Smartphone Patent War with RAND-Encumbered Patents
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FRANDly fire: are industry standards doing more harm than good?
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805:", for late 2020 developments in the FRAND landscape in Europe
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Patenting methodology intended to produce a technical standard
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724:"Patent Licensing Assurances in Standards Organizations"
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Schaumberg, Tom M.; Emi Ito Ortiz (February 25, 2013).
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significantly diverging from the Orange-Book-Standard.
626:, 9 J. COMPETITION L. & ECON. 931, 989–90 (2013),
227:) terms, denote a voluntary licensing commitment that
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451:
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A FRAND Contract's Intended Third-Party Beneficiary
312:that the individual terms are defined as follows:
276:advantage generated as a result of having their
310:United States Senate Committee on the Judiciary
864:, Vol. 12, Annual Review, pages 209–240, 2012.
247:adopts the technology that the patent covers.
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8:
18:Reasonable and Non Discriminatory Licensing
417:interpreted FRAND licensing terms in case
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851:by Andy Updegrove, dated 26 February 2012
221:fair, reasonable, and non-discriminatory
95:Fair, reasonable, and non-discriminatory
624:The Meaning of FRAND, Part I: Royalties
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361:Excluding costless distribution schemes
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570:, 2016 U. ILL. L. REV. (forthcoming),
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800:Pat Treacy and Sophie Lawrance, "
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808:Pat Treacy and Sophie Lawrance, "
213:Reasonable and non-discriminatory
862:Berkeley Technology Law Journal
548:. Munich Personal RePEc Archive
702:"A Buyer's Guide to Standards"
654:Free Software Foundation, 2012
1:
604:(in French). January 27, 2014
122:Defensive patent aggregation
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845:Note dated 24 January 2002
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237:standard-essential patents
155:Clauses in patent licenses
831:, the licensing body for
415:European Court of Justice
602:Concurrentialiste Review
544:Salant, David J (2007).
409:in a case regarding the
380:Free Software Foundation
85:Defensive Patent License
874:The National Law Review
839:Current Patent Practice
241:third-party beneficiary
229:standards organizations
219:) terms, also known as
163:Field-of-use limitation
464:Antitrust Law Journal
399:Further information:
278:intellectual property
266:Microsoft v. Motorola
90:Defensive termination
824:10.1093/jiplp/jpm212
704:. September 20, 2002
669:End Software Patents
526:; Thomas F. Cotter,
411:Orange-Book-Standard
401:Orange-Book-Standard
342:must be reasonable.
255:F/RAND as a contract
75:Compulsory licensing
652:"FRAND" is a FRAUD
522:, 69 FLA. L. REV.,
395:Negotiating process
306:Stanford University
132:Patent monetization
622:J. Gregory Sidak,
566:J. Gregory Sidak,
518:J. Gregory Sidak,
423:ECLI:EU:C:2015:477
346:Non-discriminatory
308:, in front of the
233:technical standard
335:essential patents
333:contributing its
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441:References
421:(C170/13,
326:Reasonable
176:Patent law
127:Patentleft
109:Strategies
101:Shop right
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882:2161-3362
782:August 4,
59:Royalties
54:Licensing
46:Overviews
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818:, 2007,
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429:See also
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372:freeware
339:standard
283:monopoly
835:patents
756:May 23,
730:May 23,
708:May 23,
691:gnu.org
665:"FRAND"
172:Patents
40:patents
880:
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435:EU law
833:WCDMA
751:(PDF)
482:In re
304:from
225:FRAND
67:Types
889:2013
878:ISSN
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784:2015
758:2011
732:2011
710:2011
676:2016
610:2019
554:2011
506:2019
499:ETSI
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316:Fair
217:RAND
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