Ask Patents is a question and answer site for people interested in improving and participating in the patent system. It only takes a minute to sign up.
Sign up to join this community
Trials involving Google, Motorola, Microsoft and Apple about patents and especially FRAND patents are hitting the news everyday. But who decides a patent has to be offered under FRAND terms?
Obviously, the owner of the patent can decide it himself, for example under the pressure of standard organizations, but can anybody else impose it to him? For example a court?
A US court (sorry not knowledgeable about EU antitrust) may impose (F)RAND licensing if the holder of the patent typically licenses the patents under a (F)RAND scheme but blows the ND (non-discriminatory) part .
For example, if Phillips typically licenses all its DVD patents under (F)RAND terms to DVD reader manufacturers, but then suddenly decides to charge Apple 100% more to make their own DVD reader drives, a court may force Phillips to license those patents to Apple under terms that are less discriminatory.
This is a gross simplification, but hopefully it's helpful. US courts don't force FRAND terms out of the blue. A patent, at it's heart, is a right to exclude and forcing a company to license that right (when they have made no commitment to do so) isn't part of the patent bargain.
This (quick scan by me) looks like a great overview of current (F)RAND policy and pretty up to date with recent litigation/regulation.
[update] DOJ just released a position paper on these licensing schemes yesterday. Interesting reading: http://www.justice.gov/atr/public/guidelines/290994.pdf
[Another update for posterity...] On April 25, 2013, Judge James Robart in the Western District of Washington issued an 207-page decision that marks the first time a federal judge has tried to define what constitutes a fair, reasonable, and nondiscriminatory (FRAND) royalty rate for standard-essential patents. The decision provides a rigorous factual and legal analysis for determining a FRAND rate by modifying the factors traditionally used to determine reasonable royalty calculations in patent infringement suits and adapting that framework for the circumstances presented by patents that are essential to industry standards.
Patents are subject to RAND/FRAND commitments if the patent holder is part of a standards-development organization (SDO) that imposes this requirement on its participants. Such SDOs are typically voluntary membership organizations that any interested party can join, so long as they agree to the SDO's policies (including its FRAND policy).
A FRAND commitment usually applies to any patents that are "essential" to implementing a particular standard. The term "essential" generally means technically necessary to implement the standard, but some SDOs have also experimented with including in this term other patents that are commercially essential to products implementing the standards.
One big question is who decides whether a patent is "essential" to a standard. Generally, the patent holder is required to declare what patents are essential to the SDO. This disclosure is voluntary, and is not double-checked by the SDO. However, there are significant risks associated with NOT disclosing all essential patents when an SDO's rules require such disclosure (e.g., possible unenforceability of patents under the theories established in the FTC's consent order with Dell (1998), and cases involving Rambus and Qualcomm).
For a brief discussion of these issues in the context of how some major companies have interpreted FRAND you can see: http://www.patentlyo.com/patent/2012/03/february-of-frand.html
