Solutions to Patent Hold-up beyond FRAND: An SOS to SSOs

Abstract

While standard setting has well-recognized benefits to industry and consumers alike, the process is also subject to possible abuse by owners of standard essential patents (SEPS), who may through patent hold-up frustrate the efficient implementation of the standard. Even when a standard-setting organization (SSO) requires covenants to license on fair, reasonable and nondiscriminatory (FRAND) terms, threats of injunctions and other tactics by SEP owners have potential anticompetitive effects. SSOS may play a useful role, beyond securing FRAND commitments, in further reducing the prospect of patent hold-up. While some policymakers and SSOS have embraced ex ante licensing negotiations as a means to prevent hold-up, there are also other, nonmonetary solutions to consider. This article suggests a number of nonmonetary solutions, including limits on injunctive relief, increased disclosure of prior licensing rates, and mandatory ADR, that SSOS may adopt to streamline the licensing of FRAND-encumbered patents and thus reduce hold-up.