29 November 2019. Amicus curiae Fair Standards Alliance a.s.b.l. (“FSA”) respectfully submits this brief to support the district court’s application of Appellant’s FRAND obligations to require licensing to all
applicants, including rivals. Moreover, the FSA sees no merit in arguments that proper enforcement of antitrust laws would somehow harm standardization.
This case addresses whether a SEP owner may obtain and maintain market power by disregarding its own voluntary FRAND commitment to license all-comers, including rivals. The district court correctly held that a FRAND commitment does not include unstated exclusions restricting the availability of
licenses for some applicants.
Because the standard setting process involves groups of competitors coming together to select technologies over competing alternatives, it inherently involves anticompetitive risks. The law has long recognized these risks, and requires that standard setting organizations (“SSOs”) provide effective safeguards so as to facilitate standardization’s procompetitive benefits.
One tool that SSOs use to prevent abuse of market power and safeguard the procompetitive benefits of standard setting is the FRAND commitment, whereby patent owners claiming ownership of SEPs commit to licensing SEPs on FRAND terms. The SEP owner, in return, obtains the benefits (e.g., increased licensing opportunities) of having its patented technology adopted into a standard.
If the FRAND commitment did not require SEP owners to license all-comers, including rivals, SEP owners would be able to exert unearned market power, including the ability to exclude rivals from the market solely by fiat of specific technologies being chosen for the standard. Understanding the important role that FRAND commitments play in easing the antitrust concerns around the standard setting exercise, and protecting its procompetitive benefits, helps to explain why violations of the FRAND commitment – such as by refusing to license competitors – can, in addition to creating liability for breach of contract, also function to impede competition in violation of the antitrust laws.
Effective antitrust enforcement of the FRAND commitment supports standard setting efforts and innovation by providing industry participants the confidence that they will not, after the fact, be driven from the market by competitors who own SEPs. With confidence that the FRAND commitment will be effectively upheld, stakeholders are more willing to participate in standard setting efforts and invest in follow-on innovations to differentiate their products.
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