FRAND terms are implemented to ensure that intellectual property right owners provide licenses to organizations requiring use of a standard-essential patent [SEP] on ‘fair, reasonable, and non-discriminatory’ grounds. With technology developing faster than ever, it is no surprise that licensing of SEPs is being requested more frequently, correlating with an increase in FRAND litigation. But what is fair, reasonable, and non-discriminatory to one may not be so for another – so how is FRAND applied in different jurisdictions?
The Patent Lawyer asked SEP experts in three jurisdictions to provide an overview.
At present, the U.S. Court of Appeals for the Ninth Circuit has held that a Standard Essential Patent (SEP) holder’s FRAND commitment to a Standard Setting Organization (SSO) creates a legally binding contract that standard implementers can seek to enforce as third-party beneficiaries. Microsoft v. Motorola, 696 F.3d 872 (9th Cir. 2015). The issue, however, has yet to be addressed by a court that can bind all other U.S. courts. Some legal commentators, for example, have suggested that a unifying decision should consider enforcement of FRAND obligations under the theory of an implied license or on the basis promissory estoppel.
In most cases, resolution of a FRAND dispute between an SEP holder and a standard implementor involves the court ordering the parties to enter into a license on terms judged to be “fair, reasonable, and non-discriminatory.” There is no formal definition of what constitutes FRAND terms but at least one court has stated that a licensee must be offered a license on the same terms as similarly situated prior licensees. There are two reasons for this remedy: first, standard implementers are entitled (as third-party beneficiaries) to a license on the same terms that members of the SSO would get; and second, without a license, standard implementers remain under threat of patent infringement claims.
Read the full article here. (See Page 9)
