A Brief History of Frand

Jorge L. Contreras

1/29/2014
(Original Publish Date: 1/27/2014)

Much has been written lately about commitments that participants in standards-setting activities make to license their patents on terms that are “fair, reasonable and non-discriminatory” (FRAND). These discussions pay little attention, however, to a long series of remedial patent licensing decrees issued by federal courts from the 1940s through 1970s that outwardly resemble FRAND commitments in all but the rationale for their imposition. These early decrees shed light on questions only now re-emerging as pertinent to the FRAND debate: the meaning of the non-discrimination prong of the FRAND commitment, the degree to which courts should intervene in the determination of reasonable royalty rates, the use of arbitration as a means for resolving licensing disputes, the extent to which royalty-free licensing may be “reasonable”, the effects of a potential licensee’s refusal to accept a patent holder’s license offer, the acceptability of a patent holder’s demand for reciprocal licenses from its licensees, and means for ensuring that such commitments survive the transfer of underlying patents. This article offers the first historical analysis of the patent licensing decrees issued from the 1940s through the 1970s in view of their relationship to FRAND commitments made in the standards-setting context. It concludes that these historical patent licensing orders are, in fact, the direct lineal predecessors of today’s FRAND commitments, and that despite their differences, the interpretation and analysis of these remedial orders by courts, enforcement agencies and private firms offer essential insight into the interpretation of FRAND commitments today.