Fostering worldwide interoperabilityGeneva, 13-16 July 2009

Recommendations on FRAND Principle in IPR Policy

CCSA

Global Standards Collaboration (GSC) 14

DOCUMENT #: GSC14-IPR-006

FOR: Presentation or Information

SOURCE: CCSA

AGENDA ITEM: IPR WG Agenda Item 6 and Item 7

CONTACT(S): Congxing Ouyang

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Existing IPR Policy

For most of SDOs, the current existing IPR Polices:

Require members to disclose as earlier as possible potential

essential patents during the process of standardization.

For the disclosed patents, require the relevant patent holders to

provide licensing declaration, such as declaration of royalty-free

license, FRAND license or refusal to license. Most patent holders

will choose the option of FRAND license .

The existing IPR Polices, especially the FRAND principle

thereof, have produced positive effects on the making and

implementation of standards.

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Vagueness exists in the concept of FRAND

However, FRAND licensing declaration without specific

terms is vague, and is helpless to avoid the IPR-blocking

risk

Licensors and licensees have different expectations to what

is FRAND, and such different expectations have resulted in

many disputes in practical licensing negotiation, and thus

discouraged the implementation of standard, and hurt the

healthy development of the industry.

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Recommendations

As is well known, a reasonable royalty for a patented

invention should be based on the value attributable to the

invention’s contribution over the prior art. For a

standardized technology, reasonable royalties should be

based on the value contributed by the technology.

Therefore, we recommend to make some clarification to the

definition of FRAND as to include the following items:

Royalty rate should be based on the value of module, which

indicates the substantially contribution of a standardized

technology.

Royalty for one patented invention can only be charged at one link,

rather than two or more links, in the industrial chain.

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Effects of the Recommendations

If the recommendations are accepted and abided by

in licensing practices, the following beneficial effects

can be achieved:

The determination on the reasonability of the royalty rate

will become more intuitionistic, and thus improve the

predictability and transparency of IPR cost with respect to

implementation of standards, ensure the healthy and

continuing development of the industry, and finally promote

the contribution of the standardized technologies to social

progress and consumer welfare.

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Thank you for your attentions!