Standards-Essential Patents: A Prolegomena

Abstract

A large variety of technology standards are encumbered by patents. Standard-setting organizations (SSOs) through their intellectual property policies require patent holders to disclose standards-essential patents (SEPs), along with a requirement to commit to Fair/Reasonable and Non-Discriminatory (FRAND) terms of licensing. However, the contractual and commercial aspects of FRAND are unclear at the time of formation of standards. An additional market demand may be created purely by virtue of the particular patented product being declared as a SEP leading to a certain kind of opportunism by patent holders who demand ‘unreasonable’ royalties, or alternatively, engage in patent hold-ups. Primarily, the disagreement on what FRAND actually means does not only pertain to the issue of fixation of royalties alone; there is strong disagreement over the very nature of a contractual FRAND commitment, and whether or not FRAND operates as a waiver for injunctive relief. Competition/antitrust authorities across jurisdictions have also launched investigations into possible abuses by patent holders in the SEP context. From a global economic law perspective, the World Trade Organization’s trade based regime (TRIPS and TBT Agreements) also have a role to play in providing long-term solutions to resolve issues concerning SEPs.