Q&As

How do regulators decide if licensing is according to FRAND terms?

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Published on LexisPSL on 21/11/2013

The following Competition Q&A provides comprehensive and up to date legal information covering:

  • How do regulators decide if licensing is according to FRAND terms?
  • Purpose of FRAND terms
  • Licensing according to FRAND terms

How do regulators decide if licensing is according to FRAND terms?

Purpose of FRAND terms

Occasionally, companies involved in high-tech industries co-operate to devise common standards. For example, mobile telephone operators co-operate on issues such as ensuring interoperability, like GSM, 3G and 4G, often through an agency like the European Telecommunications Standards Institute.

Where a company contributes its patented technology to a common standard, it must agree in return to license the relevant patents to competitors on FRAND terms (ie terms which are fair, reasonable and non-discriminatory). However, there is scope for dispute.

FRAND terms are designed to ensure that essential protected technology incorporated in a standard is accessible to all the users of that standard on fair, reasonable and non-discriminatory terms and conditions. In particular, FRAND terms can prevent intellectual property rights holders from making the implementation of a standard difficult by refusing to license or by requesting unfair or unreasonable fees

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