An appropriate base to determine a fair return on investment: a legal and economic perspective on FRAND

Abstract

This paper aims to contribute to the discussion regarding Fair, Reasonable and Non-Discriminatory (FRAND) licenses in the telecom industry. Although there are many topics to debate, this paper focuses solely on the royalty base. Currently, there are two royalty bases favored by industry players: the Entire Market Value Rule (EMVR) and the Smallest Salable Patent Practicing Unit (SSPPU). With examples from a case study on the Intellectual Property Right (IPR) Policy governing the Wi-Fi standardization process, this article analyses which model is more likely to have a positive impact on technology creation and diffusion in the telecom industry when used as a royalty base by the patent holder and implementer in their bilateral FRAND negotiations.