Implementing the FRAND Commitment

For many years, standard-setting organizations (SSOs) have required members to commit to license standard-essential patents (SEPs) on Fair, Reasonable and Non-discriminatory (FRAND) terms. How FRAND terms can and should be interpreted has been the subject of extensive debate (as well as litigation in many jurisdictions). While we acknowledge other objectives behind these commitments, we focus here on their role as constraints on the ability of the holders of the SEPs to hold up implementers of such FRAND-encumbered patents, with potential anticompetitive effects. In this article, we explain why, from a practitioner’s perspective and given the economic goals of FRAND terms, a mere commitment to license on FRAND terms does not ensure that the ex-post negotiations will invariably satisfy the FRAND principles. We then describe when and how we believe FRAND commitments should be enforced to achieve the economic goals of FRAND terms and avoid anticompetitive effects.