Disentangling the FRAND Conundrum

DEEP-IN Research Paper, 2019

54 Pages Posted: 29 Dec 2019

See all articles by Oscar Borgogno

Oscar Borgogno

Eurosystem (Central Bank of Italy)

Giuseppe Colangelo

University of Basilicata, Department of Mathematics, Computer Science and Economics; Stanford Law School; LUISS Guido Carli, Department of Business and Management

Date Written: December 5, 2019


Courts, antitrust authorities, and policy makers across the world have been over concerned by holdup risks involving the strategic use of standard essential patents (SEPs). In order to avoid or at least mitigate holdup problems, it has been adopted the view that a fair, reasonable, and non-discriminatory (FRAND) commitment implies a waiver of the right to seek injunctions against infringers. However, contrary to the mainstream belief, there is no empirical evidence of structural and systematic problems of holdup and royalty stacking affecting SEPs licensing. Therefore, there is no convincing reason for laying down an exceptional antitrust treatment for FRAND-encumbered patents.

Problems afflicting SEP licensing stems from the lack of contractual or organizational solutions provided by standard setting organizations (SSOs) which exacerbates the risk of strategic behaviors. First and foremost, SSOs should require all SEP owners involved in a standardization process to disclose, ahead of the standard adoption, the most restrictive licensing terms. Secondly, since holdup and royalty stacking problems increase proportionally with the number of SEPs and many patents declared essential by SSOs lack this characteristic, essentiality checks carried out by independent third parties should be imposed to mitigate the risk of over-declaration.

Keywords: Standard essential patents, FRAND licenses, Antitrust, Injunctions

JEL Classification: K21, L15, L40, O30

Suggested Citation

Borgogno, Oscar and Colangelo, Giuseppe, Disentangling the FRAND Conundrum (December 5, 2019). DEEP-IN Research Paper, 2019, Available at SSRN: https://ssrn.com/abstract=3498995 or http://dx.doi.org/10.2139/ssrn.3498995

Oscar Borgogno

Eurosystem (Central Bank of Italy) ( email )

Via Nazionale 91
00184 Roma

Giuseppe Colangelo (Contact Author)

University of Basilicata, Department of Mathematics, Computer Science and Economics ( email )

Via dell'Ateneo Lucano 10

HOME PAGE: http://sites.google.com/site/giuseppecolangelouni/home

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

HOME PAGE: http://law.stanford.edu/transatlantic-technology-law-forum/

LUISS Guido Carli, Department of Business and Management ( email )

Viale Romania 32
Rome, Roma 00197

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