#12 FRAND Licensing New Policy Proposal

I read through the articles posted on http://www.fosspatents.com/ and one story caught my eye. On Tuesday March 5^th, 2013 an article called Chief economists of EU Commission and FTC make proposals for FRAND dispute resolution, discusses how three European economics professors, “believe their proposed reforms to the IP policies of leading SSOs ‘would greatly improve efficiency in patent licensing’ and help address the ‘holdup’ problem (SEP holders seeking supra-FRAND royalties at the threat of injunctions).”

FRAND is a legal term that stands for “Fair, Reasonable, and Non-Discriminatory” and is used to describe patent licensing terms. Companies often have to agree to license a patent under FRAND terms before it is fully approved. For example, Qualcomm’s WCDMA, Wideband Code Division Multiple Access which is the 3G technology, uses many core CDMA, code division multiple access, technologies created by Qualcomm. As I understand it this licensing agreement had to adhere to FRAND standards in order to be legally sound.

In case all of this sounds like gibberish to you…. This site is really helpful it defines all of these technical terms in greater detail. http://www.mobileburn.com/definition.jsp?term=UMTS

Going back to the point of the article, the CPI (Competition Policy International) has published a paper that is hoping to help solve the patent licensing problem. The views are not shared by the European Commission, Department of Justice, or the FTC. However, the ideas of these three professors has resonated due to the large amount of power and influence they maintain within each of their institutions.

FRAND licensing is continuously a core problem of pending litigations. But the professors argue that SSO can and should do more about the problem. SSO, Structure, sequence and organization, is a term used to compare one software to another in order to determine if any parts infringe on the copyright protection of a software. The term was introduced in the case of Whelan v. Jaslow in 1986. The method of comparing the SSO of two software products has since evolved in attempts to avoid the extremes of over-protection and under-protection, both of which discourage innovation. More recently, the concept has been used in a major case brought against Google by Oracle. The professors argue that the membership of SSOs are divided on the questions of SEP enforcement: “SSOs typically specify very little as to the meaning of 'fair' or 'reasonable,' perhaps partially because there is heterogeneity among the firms, technologies, and products within a given SSO."

SSOs should bring people together and unite them to agree unanimously on policy so that a serious proposal for improvement can be reached. The professors shed light on the issue and advocate for more meaningful FRAND rules inside SSOs. Experts even believe that their logic may be referenced in future FRAND-related cases as it warns against awarding excess amounts of money that exceeds the value of the technology itself. I think this has the potential to eliminate patent trolls entirely as their business model runs on the revenue they collect from suing other companies. If the financial reward one could get was low, it would completely deter people from wasting their time and money on litigations.