FRAND Licensing Sought for Patents

In Feb. 2012, Microsoft reiterated its support for fair, reasonable, and nondiscriminatory (FRAND) licensing of standards-essential patents. The company published details of its commitment to FRAND licensing and filed an antitrust action against Motorola Mobility for not offering FRAND terms for key video patents. Standards are critical for network interoperability, in particular for the operation of the Internet, and without FRAND terms, mobile devices and computers would be significantly more expensive. But not all patents are standards-essential patents, and without agreement as to what the terms “fair” and “reasonable” mean, any support for FRAND may be meaningless.

Standards-Essential Patents

Standards are developed by various interested parties, including governments, manufacturers, and nonprofit organizations, to ensure interoperability between hardware and software used in networked devices, such as computers and smartphones. For example, many devices use a video compression standard called H.264/MPEG-4 Part 10 or Advanced Video Coding (AVC) so that a user can watch a video on a device without having to locate specialized software or a particular version of the video that is compatible. Some standards are simply technologies that have succeeded in the marketplace (sometimes called de facto standards), but others are defined by formal standards bodies organized by governments or vendors, such as the American National Standards Institute (ANSI) or the World Wide Web Consortium (W3C).