FRAND, which is the acronym for fair, reasonable, and nondiscriminatory, is a term commonly used in the context of licensing of intellectual property, particularly in the telecommunications industry, which relies on standardization to ensure compatibility between devices and networks. FRAND refers to the obligation of patent holders to license their patents on terms that are fair, reasonable, and nondiscriminatory to anyone who wants to use the patented technology.
Patent holders declare their patents as being essential for a specific standard to the respective standard-setting organization, by which they also agree to offer licenses on FRAND terms. The overall aim is to guarantee a fair balance between the interests of those who contribute to the standard-setting process of the respective technology and the interests of those who are dictated by the market to rely on the standard. FRAND terms ensure that the patented technology can be used by others to create interoperable products and services, promoting competition and innovation in the market. Failing or refusing to license intellectual property rights on FRAND terms can be an infringement of the European Union (EU) antitrust rules. Here is an opinion piece we found of interest relating to FRAND.
FRAND Is in the Eye of the Beholder
In an opinion piece “FRAND is in the eye of the beholder” for IAM Media, Richard Vary, Partner, Bird & Bird, discusses the issue of FRAND licensing of standard-essential patents (SEPs) in the context of the automotive and telecommunications industry. He examines two of the recent FRAND court cases in the UK—Interdigital vs. Lenovo and Optis vs. Apple—and the potential impact the decisions may have for SEP owners. A feature of both cases has been that large implementers tend to get better deals. Vary notes that small implementers view this precedent as evidence that SEP owners are treating them unfairly as they must pay a royalty based on the same benchmark as established large entities.
Vary points out the difference between the automotive and telecom industries. In the telecom industry, the tradition has been for patent owners to offer licenses to end user product makers. Those licenses include provisions so that the entire supply chain is licensed. In the automotive industry, the end user product maker asks its Tier 1 suppliers to procure licenses. The automakers were worried that royalties would be charged based on the entire vehicle price, while SEP owners were concerned the suppliers did not have enough margin on their products. By 2022, almost all of the major vehicle makers had signed up to Avanci, which is now $20 per license, to cover themselves and their supply chains. Vary notes that from a legal perspective, there is no problem with the telecom industry licensing model being offered in the automotive industry. Read the full article on IAM Media.
The Fatty Fish Editorial Team includes a diverse group of industry analysts, researchers, and advisors who spend most of their days diving into the most important topics impacting the future of the technology sector. Our team focuses on the potential impact of tech-related IP policy, legislation, regulation, and litigation, along with critical global and geostrategic trends — and delivers content that makes it easier for journalists, lobbyists, and policy makers to understand these issues.
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