For years, telecommunications companies have grappled with the meaning of FRAND. These are the Fair, Reasonable And Non-Discriminatory terms on which a patentee commits to grant a licence in return for involvement in a standard-setting process.
Earlier this year, Justice Birss delivered a landmark decision in the Patents Court of England and Wales, effectively setting the terms of what would be become a worldwide FRAND licence between Unwired Planet (the claimant) and Huawei (the defendant). Unwired Planet had previously acquired a number of patents from Ericsson, who had entered into a FRAND obligation as part of their involvement in the setting of the Long Term Evolution and other standards.
The decision is too long and complicated to summarize in a short article (Birss himself could only reduce his summary to 13 separate conclusions on the law, and 21 on the facts!). For those involved in the licensing of standard-essential patents, however, it is essential reading. Some of the conclusions are set out below:
- There is only one set of FRAND terms in a given set of circumstances.
- An implementer who refuses to take a licence on terms which are found to be FRAND can be subject to a final injunction.
- FRAND also characterizes the process by which a licence is negotiated; both licensee and licensor must negotiate in a FRAND manner.
- On the facts of this case, a licence for Unwired Planet's global portfolio was FRAND. Huawei's insistence on a licence covering only the UK was not FRAND, as reasonable parties negotiating a licence for LTE and other telecommunications standards would do so on a worldwide basis.
- FRAND does not require "hard-edged" non-discrimination such that a licensee can demand similar terms as had previously been given to a different but similarly situated licensee.
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