Standard-Essential Patents and FRAND Licensing—At the Crossroads of Economic Theory and Legal Practice

Standard-Essential Patents and FRAND Licensing—At the Crossroads of Economic Theory and Legal Practice

Tim W Dornis

 

• The Huawei v. ZTE judgment provides the framework for efficient party negotiations. This doctrine not only establishes a court-guided system of offer-and-counter-offer structures but also requires the court—when negotiations have failed—to scrutinise and determine concrete FRAND conditions.

• In cases of a ‘double FRAND stalemate’ (i.e., when both sides have submitted a FRAND offer but no agreement has been reached), courts must analyse each offer in light of its capacity to enable a negotiated agreement. Rule of thumb: the more flexible and open to compromise the offer, the higher its chances of being FRAND.

• The FRAND commitment also implies the use of a royalty base in accordance with the so-called SSPPU rule. Furthermore, SEP owners are obliged to enter into good-faith licensing negotiation with any actor at any market level or level in the supply chain (license-to-all approach).