FRAND Access to Open Standards and the Patent Exclusivity: Restating the Principles

When technical standards are to be defined pursuant to the claims of a patent and, therefore, the use of the standard will necessarily infringe that standard-essential patent (SEP), the proprietor may commit to granting all users a license at fair, reasonable and non-discriminatory (FRAND) conditions as a way to promote acceptance of the standard by the market. However, the relationship between such FRAND licensing commitment and a patentee’s right to seek and obtain injunctive relief from patent infringement by standard implementers not (yet) having entered into a license agreement remains controversial. In Huawei Technologies v. ZTE, the Court of Justice of the EU has shown a way to overcome the tension between the protection of patents by prohibitory orders and open access to innovative standards that has its origin in general principles of commercial law rather than in competition law. In view of this new approach, the paper restates the legal principles that, as a matter of public policy, govern the interaction of patent protection and open standardization in the EU. These principles are the free choice of patent protection and of a standard setting organization pursuing a particular IPR policy, and the self-regulatory organization of open, innovative standard setting on the one hand, and, on the other, the complementary functioning of patent protection and institutionalized open standard setting as a way to promote innovation and its dissemination. That principled framework regulation of dynamic markets also calls for holding all market actors concerned responsible for exercising their freedom in conformity with rules of fairness so that, ultimately, the complementary public policies underlying patent protection and innovative standardization, respectively, will be satisfied. While competition law reinforces the rules for such responsible conduct, they rest on and need to be implemented by reference to the legal framework of open innovative standardization itself. By way of conclusion, the EU’s negotiation approach to determining the meaning of FRAND in a particular case is put in contrast to quasi-regulatory approaches that by assimilating a standard to an essential facility subject SEPs to a mandatory licensing rule and, therefore, also to determination of FRAND terms by administrative or judicial decision