Determining the FRAND Rate: U.S. Perspectives on Huawei v. InterDigital

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Fei Deng, Su Sun, Feb 11, 2014

Standards have become part of our life in this world of rapid technological progress. Antitrust policy makers and practitioners have long realized the important benefits standards bring to social welfare: higher product quality and lower costs for manufacturers that result from the widespread adoption of advanced technologies and the benefits from network externalities and scale economies. However, in recent years, developments in technology licensing involving standard essential patents have drawn many into heated discussions as to whether owners of SEPs who, as members of the relevant standard-setting organization, promised to license their SEPs on fair, reasonable, and non-discriminatory terms may have abused the market power they possess simply by virtue of their technologies being included in the standard, and whether the rates they seek are inconsistent with their FRAND obligations.

Antitrust enforcement agencies in the United States and in the European Union have shown great concern over licensing practices of SEP owners with FRAND obligations. A general consensus seems to have emerged that SEP owners should be limited by their FRAND commitments, and that seeking injunctions against willing licensees may be considered an antitrust violation. In several cases, putative licensees have requested that a court determine the FRAND rate and assess whether the SEP owner behave…

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