A group of companies launched the Fair Standards Alliance this week in Brussels, aimed at ensuring licensing of standard-essential patents is done on fair, reasonable and non-discriminatory (FRAND) terms. This reflects an industry trend toward clarifying the meaning of FRAND to help boost use of patents included in standards.
The member companies, which include global firms such as BMW, Cisco, Dell, HP, Intel and Lenovo, had a combined turnover of more than 430 billion euros in 2014, according to a press release.
“We are friends of FRAND,” announces the Fair Standards Alliance website.
The perceived problem, which governments and others have sought to address, is the wide range of interpretations of what constitutes FRAND terms for licensing, making it difficult for businesses seeking to use patented technologies within a standard.
“FSA brings together leading global and European companies to advocate for continued reform to make the use of standards more transparent and predictable,” Mark Chandler, Cisco senior vice president and general counsel, said in the release.
The new alliance offered a definition of FRAND to at minimum include:
- A license for an SEP should be available at any and every point in the value chain where the standard is implemented, and the important terms of those licenses should be transparent to other companies implementing the same standards;
- A FRAND royalty should be based on the smallest device that implements those patents, and should take into account the overall royalty that could be reasonably charged for all patents that are essential to that standard;
- Injunctions and similar legal threats should be a last resort;
- A FRAND commitment made in respect of an SEP should not fall away simply because the SEP is sold to another company.
Earlier this year, the IEEE (Institute of Electrical and Electronics Engineers) Standards Association developed a definition along these lines, despite strong pushback from some companies (for example, see story here).