WHAT HAVE YOU DONE FOR ME LATELY? How the ‘Value of a Standard’ Should be Apportioned in FRAND Licensing Royalties

A note by Matt Pham

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Although well-intentioned to mitigate patent holdup risks, recent case law on Standard Essential Patents and FRAND Licensing misses the mark on how a standard adds value to a technology and vice versa. Considering that technologies are not arbitrarily selected, the value of a standard is likely enriched by the inherent properties of its adopted technologies, justifying its inclusion within the relevant royalties. The inclusion of a standard’s value thus does not necessarily factor in any wrongful holdup value and would, to the contrary, mitigate any patent holdout concerns.  This note will explain how technologies contribute to the value of a standard and justify the standard’s inclusion in a FRAND royalty rate. This note will also show how the actual contribution of SSOs to a standard’s value can be distinguished in order to justify a lower FRAND royalty rate.