Frand Compliance And Standard-Essential Patent Disputes.
FRAND Compliance and Standard-Essential Patent (SEP) Disputes
Standard-Essential Patents are patents that claim technology necessary to comply with a technical standard (e.g., 4G, 5G, Wi-Fi). FRAND commitments are made by SEP holders to license these patents on fair, reasonable, and non-discriminatory terms to prevent abuse of market power. Disputes often arise over:
FRAND royalty rates
Injunctions against implementers
Cross-border enforcement
Antitrust and competition law compliance
1. Microsoft v. Motorola (USA, 2012–2015)
Facts:
Motorola held SEPs for video compression and Wi-Fi standards and offered licenses to Microsoft for FRAND terms. Microsoft argued that Motorola demanded excessive royalties, violating FRAND commitments.
Issues:
Determination of FRAND royalty rates
Injunction threats by SEP holders
Ruling:
U.S. District Court (Western District of Washington) ruled that Motorola’s proposed royalties were not FRAND-compliant.
Court set royalty rates significantly lower than Motorola demanded.
Implications:
SEP holders cannot demand excessive royalties or threaten injunctions against willing licensees.
Courts can intervene to set FRAND terms.
2. Huawei v. ZTE (CJEU, 2015, Europe)
Facts:
Huawei alleged ZTE infringed its SEPs. ZTE argued Huawei did not follow proper FRAND procedures before seeking injunctions.
Issues:
Conditions for seeking injunctions for SEPs under EU competition law
FRAND compliance obligations of SEP holders
Ruling:
Court of Justice of the European Union (CJEU) established that SEP holders must notify potential licensees and offer FRAND terms before seeking injunctions.
Licensees must respond diligently to negotiate FRAND terms.
Implications:
Provides a procedural framework for FRAND compliance in Europe.
Reduces abuse of SEP rights to block competition.
3. Ericsson v. D-Link (USA, 2014–2016)
Facts:
Ericsson, a holder of SEPs for LTE and Wi-Fi, sued D-Link for infringement. D-Link claimed Ericsson’s licensing rates exceeded FRAND obligations.
Issues:
Determination of FRAND-compliant royalty rates
Whether seeking injunctions violates FRAND
Ruling:
U.S. District Court (Eastern District of Texas) held that Ericsson must license SEPs on FRAND terms, but injunctions could be granted only if a licensee refuses reasonable terms.
Court provided guidance on calculating FRAND royalties using comparable licenses.
Implications:
Courts are increasingly willing to quantify FRAND terms using real-world comparable licenses.
Helps clarify licensing strategies for SEP holders and implementers.
4. TCL Communication v. Ericsson (USA/China, 2017–2019)
Facts:
TCL challenged Ericsson’s FRAND rates for SEPs essential to mobile standards. Dispute spanned U.S. and Chinese jurisdictions.
Issues:
Reasonableness of FRAND royalty rates
Cross-border enforcement of SEP obligations
Ruling:
U.S. courts held Ericsson’s proposed rates exceeded FRAND, awarding TCL a lower royalty.
Chinese courts later issued parallel rulings reinforcing FRAND principles.
Implications:
FRAND disputes can involve multi-jurisdictional litigation.
SEP holders must maintain consistent licensing policies across markets.
5. Unwired Planet v. Huawei (UK, 2017–2020)
Facts:
Unwired Planet, SEP holder for mobile standards, sued Huawei for patent infringement and sought worldwide FRAND royalties.
Issues:
Can a UK court set global FRAND rates?
Proper calculation methodology for FRAND royalties
Ruling:
UK Supreme Court ruled that courts can set global FRAND terms, considering worldwide licenses and comparable deals.
Huawei was ordered to take a license under FRAND terms.
Implications:
UK courts established a model for global FRAND royalty enforcement.
Encourages uniformity and predictability in SEP licensing.
6. Sisvel v. Haier (EU, 2019)
Facts:
Sisvel, a holder of Wi-Fi SEPs, sued Haier for infringement. Haier argued Sisvel’s licensing terms were discriminatory and excessive.
Issues:
FRAND compliance
Anti-competitive behavior in SEP licensing
Ruling:
European courts emphasized that SEP holders must treat licensees equitably.
Sisvel was required to revise royalty rates to comply with FRAND.
Implications:
Reinforces the non-discriminatory component of FRAND.
Courts actively supervise SEP licensing practices to prevent abuse.
7. Samsung v. Apple (US & Europe, 2012–2016)
Facts:
Apple alleged Samsung used SEPs (wireless and cellular standards) unfairly. Samsung claimed Apple refused FRAND licensing for Samsung’s SEPs.
Issues:
Negotiation of FRAND royalties
Injunctions against SEP implementers
Ruling:
U.S. courts and EU regulators emphasized FRAND compliance.
SEP holders must offer reasonable terms and negotiate in good faith before seeking injunctive relief.
Implications:
Highlights the intersection of IP law and competition law in SEP disputes.
Good faith negotiation is legally required in FRAND licensing.
Key Takeaways Across Cases
FRAND Principles: SEP holders must offer fair, reasonable, and non-discriminatory licensing terms.
Injunction Limitations: Courts often restrict injunctions unless licensees refuse FRAND-compliant offers.
Global Consistency: Multinational SEP holders must apply FRAND consistently across jurisdictions.
Royalty Calculation: FRAND royalties are usually benchmarked against comparable licenses and market standards.
Good Faith Negotiation: Both SEP holders and implementers have a legal duty to negotiate diligently.
Competition Law Intersection: Abusing SEP dominance can violate antitrust and competition laws in multiple regions.
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