Standard Essential Patents (SEPs) & FRAND Licencing
Standard Essential Patents
A standard essential patent (SEP) is a patent which can be properly mapped onto a mandatory industry standard, such that a product which conforms to that standard infringes the patent. SEPs are common in the mobile telephony and telecommunications industry, a sector which is highly standardised due mainly to the need for interoperability between mobile devices.
SEPs, if truly “essential” to the standard, are difficult to avoid and are particularly powerful patents. For this reason, they are subject to the special licensing rules, FRAND rules (see separate section), but are nevertheless the subject of many patent disputes, the so-called “patent wars”. SEPs may be registered (“declared”) by their owners at ETSI (European Telecommunications Standard Institute) or other institutions, as appropriate.
Angel IP has extensive experience in SEPs and IP in the telecommunications sector, and has advised both SEP owners and manufacturers (SEP licensees).
If a patent is declared essential to a standard (ie as an SEP) the owner agrees that the patent be subject to the FRAND declaration, ie that licenses to the SEP will be granted on a Fair, Reasonable And Non-Discriminatory basis. Generally speaking license offers are to a portfolio of SEPs and state a license fee for use of the patents in the portfolio.
There is no definition per se of FRAND or what is fair, reasonable and non-discriminatory, sometimes leading to disagreements between owners and potential licensees about whether license offers made by the patent owner are indeed FRAND. Differences frequently relate to whether the patents are indeed SEPs (ie whether they correctly map on to the relevant standard) or the computation of the license fees is disputed.
SEPs and FRAND are cross-jurisdictional issues and the case law originates in a variety of different jurisdictions including the CJEU, US federal courts, UK courts and German courts.
At Angel IP we have considerable experience in FRAND licensing matters, from both licensor and licensee perspectives, with cases before UK courts and in arbitration. We have led FRAND negotiations (written and oral) on behalf of clients and have developed a number of strategies and tools for the conduct of such negotiations.