Judicial determination of FRAND royalties in the ICT sector: should courts determine FRAND royalties and, if so, how? Principles, methods and challenges
Connectivity plays a key role in today’s economy and increasingly so as the Internet of Things (IoT) develops. Standards, as enablers of connectivity, are central to this development. The fifth generation technology standard for cellular networks (5G) is pushing new industries to consider access to standards, including the licensing of standard-essenal patents (SEPs), which are patents that need to be accessed for a product to comply with a standard. A predictable and efficient licensing environment is therefore key for companies’ strategies worldwide, particularly so for small and medium-sized enterprises (SMEs) who may not be familiar with SEP licensing pracces. To ensure accessibility to standards, some standard se0ng organizations require SEP holders to commit to license on fair, reasonable and non-discriminatory (FRAND) terms. These terms are subject to different interpretation, which gives rise to legal uncertainty and increased litigation. And whilst court decisions have helped clarify the meaning of these terms, judicial FRAND determination has been rare in Europe, where courts tend to shy away from determining FRAND royalties.