Published: 12/19/13
This article discusses the hold-up problem and uses data from adjudicated FRAND determinations to illustrate the royalty stacking problem. The article endorses the ex ante approach to FRAND royalty setting, citing evidence that SSOs typically choose from among multiple technologies that offer alternative approaches to solving each technological issue addressed by a standard. The article also discusses the voluntary nature of FRAND commitments, which patent holders make in order to gain the ability to influence the development of standards and advocate for the inclusion of their own technologies in a standard. It explains that “in exchange for constraints on the financial exploitation of patents for which a commercial market might not have existed absent the standard, SEP holders that make FRAND commitments gain the ability to obtain reasonable royalties from a large body of standard implementers.”