The Problem with FRAND: How the Licensing Commitments of Standard-Setting Organizations Result in the Misvaluing of Patents

Authors

David Arsego

Abstract

Standard-setting organizations (SSOs) are bodies that oversee the development of technical standards. Technical standards are common technological designs that are used across a variety of platforms, for instance LTE, which is utilized throughout the mobile phone industry. Members of SSOs contribute different pieces of technology to an ultimate design, and if a patent covers the technology, it is called a standard-essential patent (SEP). SSOs require their members to license these patents to each other on fair, reasonable, and nondiscriminatory (FRAND) terms. This Note analyzes the FRAND requirement and the different ways that courts and private parties interpret it. The ambiguity of FRAND, combined with little guidance from SSOs, has led to patent licensing agreements that greatly misvalue these patents, as well as rampant uncertainty in technological industries about the value of this form of intellectual property. This Note suggests that SSOs assume a larger role in the analysis of SEPs by determining, at the very least, whether the patents declared as “essential” are truly essential to the standardized technology. If SSOs begin to implement patent valuation techniques into their review of SEPs, then members can get a fair return on their intellectual property, and some of the confusion surrounding FRAND can be allayed.

Recommended Citation

David Arsego, The Problem with FRAND: How the Licensing Commitments of Standard-Setting Organizations Result in the Misvaluing of Patents, 41 Brook. J. Int'l L. (2015).
Available at: https://brooklynworks.brooklaw.edu/bjil/vol41/iss1/5