The Basic Interplay Between SEPs and FRAND | 1/7/24

Standard Essential Patents (“SEP”) and Fair, Reasonable, and Non-Discriminatory (“FRAND”) terms are key concepts in the context of standardization and technology development. SEPs are patents essential for implementing an industry or technology standards established by standard-setting organizations (“SSO”). SEPs ensure interoperability and compatibility among various technologies.

FRAND, by contrast, is a set of licensing terms to which SEP holders generally must commit when licensing their patents (and often in exchange for the SSO including their patent as part of the standard). And failing to comply with a FRAND obligation may lead to the the SSO to remove the technology from the standard. Courts employ various approaches, including competition law/dominance and contract approaches, to assess whether a SEP holders' licensing practices are FRAND-compliant. The cases addressing FRAND have generally adjudicated negotiation rules and the availability of injunctions against unwilling licensees.

In short, SEPs and FRAND licensing form the foundation of standardization. As the legal landscape continues to evolve, parties must navigate the complexities of licensing processes, consider leveraging patent pools, and engage in good-faith negotiations to balance compensation for the value-add of a SEP to and promoting incentives to innovate and rely on the standard.