FRAND: Cycle of Innovation
Cellular standards are developed through open collaboration among numerous stakeholders from industry, universities, and public institutions. Their remarkable success is attributed to the virtuous cycle of innovation, as explained in the following video.
R&D
Each new generation of cellular technology has relied on numerous inventions from a handful of innovators worldwide. To carry out their expensive and high-risk R&D efforts, these innovators employ thousands of engineers across various countries. Through their dedication to R&D, they consistently provide groundbreaking innovations to the cellular industry, fueling the advancement of standards.
Voluntary contribution
The process of developing standards involves stakeholders voluntarily contributing their patented technologies to help solve technical challenges. Establishing global connectivity standards requires years of collaboration among hundreds of stakeholders, with some sharing the outcomes of their significant R&D investments.
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SEPs
A standard-essential patent (SEP) is a patented invention incorporated into a standard, which is necessarily used when implementing the standard. SEPs are crucial in the collaborative ecosystem, enabling the sharing of innovative ideas while allowing patent owners to receive fair compensation for their contributions through reasonable fees.
Licensing / FRAND compensation
Standard Development Organizations (SDOs) typically require participants in the standard-development process to inform the organisation if it owns a patent (or patent application) that may be essential to its implementation (essentiality disclosure). To promote broad adoption, SEP owners are encouraged to offer access to their essential patents under fair, reasonable, and non-discriminatory (FRAND) terms and conditions. This ensures that implementers can secure permission to use these protected technologies through FRAND licensing agreements, either directly or indirectly.
Absent a FRAND commitment, the SDO will seek an alternative technical solution to incorporate into the standard.
In essence, the FRAND commitment strikes a vital balance between contributors sharing their technologies to build the standard and implementers leveraging those technologies. Implementers gain immediate access to advanced technology under reasonable terms, enabling them to compete in global markets from the outset. Meanwhile, licensing revenues incentivize companies and research institutions to continue investing in the development of new technology to contribute to the next generation of the standard.More broadly, society benefits from innovative solutions and a wider choice of products and services at affordable prices. Imagine this as a cycle of innovation.