The European Commission’s Competition Commissioner has called for changes in the law to prevent the misuse of standard patents. Standard patents are often agreed to allow a single technology to be used across an industry (for example, the mobile phone industry), so that, across manufacturers, products are interoperable. At present, most of the organisations that set standards demand that, for companies to play a part in setting the standards, they have to agree to licence any essential patents on “fair, reasonable and non-discriminatory” terms (known as “FRAND”). This is to prevent abuse of the market by big players, leaving smaller businesses at a competitive disadvantage.
The Competition Commissioner has said that the FRAND system should be extended to make sure that the standardisation system operates properly, setting out three principles to guide any extension:
1) standards should be set and adopted in an open and transparent manner at all times to make sure smaller players in the market can keep a foothold as times change;
2) companies that are developing standard patents should disclose and give access to them on FRAND terms; and
3) the FRAND terms and how they should be negotiated should be clarified.
The Commissioner set out that the aim of the recommendations was to ensure competition in the marketplace and make sure consumers do not have to pay over-the-odds for products where either FRAND terms cannot be agreed or where legal action is taken for patent infringement or abuse, the costs of which would inevitably find their way into the hands of consumers.