It’s A Mad, Mad, Mad, FRAND World

Early Determinations of Fair, Reasonable, and Non-Discriminatory License Payments Have Been Anything but Consistent

When an invention claimed in a patent is essential to complying with a technical operating standard—say, for a device to connect to Wi-Fi or a 3G wireless network—it is considered a Standard Essential Patent, or SEP.

Under the rules of many standard-setting organizations, the holders of such patents must agree to license them to others at a rate that's considered FRAND: fair, reasonable, and non-discriminatory.

But when the parties can't agree on what's FRAND, the dispute can end up in court.

The past two years have brought the first few FRAND determinations by U.S. courts, and the results have hardly been uniform. Key factors in determining a FRAND royalty are the importance of the patent or patents to the operating standard as well as the standard's importance to the product at issue. Courts have also taken into account the royalties paid by