Antitrust Issues for Standard Essential Patents

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I. Introduction

Technical solutions adopted by standard setting organizations (SSOs) are

often covered by patents. Companies benefit from having their patented

technology incorporated into the standard and, oftentimes, in exchange for

the incorporation of a contributor’s intellectual property into an industry

standard, the holders of those standard essential patents (SEPs) will agree

to license those patents to implementors of the standard on fair, reason-

able, and nondiscriminatory (FRAND) terms.1

Recent litigation has brought to light the complex legal issues con-

fronted when patented technology is standardized. Well-known standard

setting organizations such as the European Telecommunications Stan-

dards Institute (ETSI), International Telecommunications Union (ITU),

and the Institute of Electrical and Electronics Engineers (IEEE) have

been proposing and setting rules to help alleviate conflicts that arise with

respect to the open access dichotomy that exists between a patent monop-

oly and open standards that incorporate patented technology.2 A patent

normally grants a monopoly for 20 years to its owner to exclude others

from practicing the claimed technology. However, incorporating such pat-

ented technology into a standard is meant to provide open, but not free,

1. It should be noted that FRAND commitments may also be referred to as reasonable

and nondiscriminatory (RAND) commitments or as F/RAND commitments, and the terms

may be interchangeably used.

2. J. Contreras & D. Newman, Developing a Framework for Arbitrating Standard Essen-

tial Patent (SEP) Disputes,2014

J. DISP. RESOL

. 2–3.

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Antitrust Issues for Standard

Essential Patents

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CHAPTER 6

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access to the technology for all users and implementers. The courts have

been construing SSO rules designed to bridge this dichotomy with more

frequency. This chapter will address important legal precedent at the

intersection of standards, patent law, and antitrust law.

II. Private Actions Related to Standard

EssentialPatents

6.1 FRAND Commitments

Participants in standard setting organizations are often required by the

SSO to declare any patents essential to the standard and to pledge to

offer a license to any such SEPs on FRAND terms. Courts in recent years

have grappled with several issues surrounding the respective rights and

obligations of SEP holders and implementors when it comes to FRAND

commitments. The question of what constitutes a fair, reasonable, and

nondiscriminatory offer to license an SEP has been the subject of much

debate and will continue to be so as we move into the 5G world. There is

currently no universal framework for determining FRAND, and courts fac-

ing the issue have used significantly different methodologies for analyzing

whether an SEP holder has complied with its FRAND obligations. The

question of who owes a FRAND obligation, who benefits from the FRAND

commitment, what constitutes a FRAND rate, how a FRAND rate should

be determined, and which implementors are entitled to a FRAND license

have been vigorously litigated and many remain open questions in the

United States.

One significant SEP-FRAND litigation in recent years is the FTC’s

lawsuit against Qualcomm, in which the FTC challenged Qualcomm’s

practice of refusing to license its standard essential patents to its com-

petitors.3 The FTC had claimed that Qualcomm violated both its FRAND

commitments and an antitrust duty to deal by refusing to license its SEPs

to rival chipmakers. In response, the Ninth Circuit held that no antitrust

duty required Qualcomm to license its SEPs to rival chipmakers.4 The

court held that the Aspen Skiing doctrine—the “one, limited exception” to

the long-standing rule that there is “no antitrust duty to deal” imposed

by federal law—did not apply. The court emphasized that the exception

applies “in rare circumstances.” Even the FTC agreed that the district

court erred by applying Aspen Skiing.5

3. F.T.C. v. Qualcomm, No. 19-16122 (9th Cir. Aug. 11, 2020) (Callahan, J.) (Op.).

4. Id. at *33.

5. Id. at *32–*33.

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