Tuesday, August 06, 2013

w/o FRAND, standards essential patents = license to steal

When an industry goes with a standard, all players in that industry are under heavy pressure to comply with it.

As the effort to settle on an important standard nears its conclusion, there'll frequently be a race among those in a position to do so to stake out claims to the technologies that are necessary to the implementation of that standard, combined with lobbying of the committee charged with shaping the standard to go with a version that makes use of their patented technologies essential.

This isn't supposed to be a windfall, nor a club that companies can use to beat down competitors through high royalties. On a per piece basis, the income a company has a right to expect from royalties on standards-essential patents is modest. It is only as that income is multiplied by millions of pieces that it amounts to something significant.

When companies forget that their patents were made valuable by the decision of a committee, choosing to use their technology instead of someone else's, they endanger the ability of companies in general to agree upon standards, and the royalties they demand amount to blackmail.

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