Frand Royalties and Injunctions for Standard Essential Patents

Abstract

I develop a stylized model of court procedures that resolve disputes concerning FRAND-encumbered standard essential patents (SEPs). I analyze the effects of injunctions and potential court-imposed FRAND rates on negotiated royalty rates. The SEP-holders’ ability to hold-up is constrained by the prospect of the court-imposed license terms in case of disputes, but is not completely eliminated. Possible mechanisms to address the residual hold-up power of the SEP-holders are discussed.

Keywords: standard essential patents, FRAND, injunctions. hold-up, patent litigation

JEL Classification: K41, L24, O30