A Brief History of FRAND: Analyzing Current Debates in Standard Setting and Antitrust Through a Historical Lens
82 Pages Posted: 29 Jan 2014 Last revised: 16 Jul 2015
Date Written: January 15, 2015
Much has been written about the commitments that firms participating in standards-setting make to license their patents on terms that are “fair, reasonable and non-discriminatory” (FRAND). These discussions pay little attention, however, to more than a hundred remedial patent licensing decrees issued by federal courts from the 1940s through 1970s that outwardly resemble FRAND commitments in all but the rationale for their imposition. These early decrees shed light on questions only now re-emerging as key to the FRAND debate: the meaning of the non-discrimination prong of the FRAND commitment, the degree to which courts should intervene in the determination of reasonable royalty rates, the use of arbitration as a means for resolving licensing disputes, the factors to consider in determining a reasonable royalty rate, the extent to which royalty-free licensing may be “reasonable”, the effects of a potential licensee’s refusal to accept a patent holder’s license offer (so-called “reverse hold-up” or “hold-out”), the acceptability of a patent holder’s demand for reciprocal licenses from its licensees, and means for ensuring that such commitments survive the transfer of underlying patents. This article offers the first historical analysis of the patent licensing decrees issued from the 1940s through the 1970s and assesses their relationship to the FRAND commitments of today. It concludes that these historical patent licensing decrees are, in fact, the direct lineal predecessors of contemporary FRAND commitments, and that despite their differences, the historical interpretation and analysis of these remedial orders by courts, enforcement agencies and private litigants offer essential insight into the interpretation of FRAND commitments today.
Keywords: standards, antitrust, FRAND, RAND, patent, compulsory licensing, misuse
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