Standardizing the Smallest-Functional Unit: A Tier-Stacking Approach to Frand Royalty Rates

32 Pages Posted: 1 Feb 2018

Date Written: January 15, 2018

Abstract

Apple's recent fight with Qualcomm, alleging that Qualcomm is overcharging apple to license Qualcomm's FRAND-encumbered standard essential patents (SEPs), raises an interesting issue regarding patent hold-up: whether a FRAND royalty rate should limit an SEP holder’s ability to extract larger royalties from end-product manufacturers — resulting from that manufacturer's increased sales prices due to unrelated, end-product advancements. This Paper advocates that uniformly assessing all FRAND-encumbered licenses against the smallest-functional unit would ameliorate this concern, and it further provides two methods for achieving this end while also avoiding issues of excessive royalty stacking.

Keywords: Antitrust; Patent; Royalty Stacking; Patent Hold-Up; Standard Essential Patents; FRAND; RAND; Licensing

Suggested Citation

Coots, Zachary, Standardizing the Smallest-Functional Unit: A Tier-Stacking Approach to Frand Royalty Rates (January 15, 2018). Available at SSRN: https://ssrn.com/abstract=3105756 or http://dx.doi.org/10.2139/ssrn.3105756

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