Patent licensing and FRAND: setting the rate and terms

In April and June two notable judgments in the Unwired Planet litigation emerged from the High Court dealing with FRAND (fair reasonable and non-discriminatory) patent licensing of standard essential patents.

The case:

• clarifies and supplements recent European case law on the meaning of FRAND; and
• provides detailed guidance on the method for concluding a FRAND licence and a pragmatic approach to calculating FRAND royalties
• marks the first time that an English court has made a FRAND determination and set a FRAND royalty rate as well as granted a new “FRAND injunction”
• indicates that competition law issues may be of decreasing importance in patent licensing.

In our second of two articles on this landmark case, we look in detail at the methods involved in arriving at a FRAND royalty rate, a review of what other types of clauses are likely to be regarded as FRAND and the remedies available to patent owners if negotiations fail. The case includes some interesting comments that are likely to be relevant to the calculation of royalties for patent damages in a wide variety of cases and on the sort of terms a court is likely to be sympathetic to in patent licences.

Our article considering the significance and wider implications of the case, including the impact of the judgment on competition law defences can be found here.