FRAND Is Broken: Time To Bin It [Updated]

I've written many times about why FRAND licensing is not an option for open source projects, and should therefore be replaced by Royalty/Restriction-Free (RF) terms when it comes to defining open standards to create a level playing field. That's simply a fact arising from the nature of free software licences. But it turns out that FRAND is fundamentally flawed anyway, for reasons the following press release from the European Commission, on its "Statement of Objections to Motorola Mobility on potential misuse of mobile phone standard-essential patents", makes clear:

Standards bodies generally require members to commit to license on FRAND terms the patents that they have declared essential for a standard. This commitment is designed to ensure effective access to a standard for all market players and to prevent "hold-up" by a single SEP [standard-essential patent] holder. Indeed, access to those patents which are standard-essential is a precondition for any company to sell interoperable products in the market. Such access allows consumers to have a wider choice of interoperable products while ensuring that SEP holders are adequately remunerated for their intellectual property.

The Motorola Mobility SEPs in question relate to the European Telecommunications Standardisation Institute's (ETSI) GPRS standard, part of the GSM standard, which is a key industry standard for mobile and wireless communications. When this standard was adopted in Europe, Motorola Mobility gave a commitment that it would license the patents which it had declared essential to the standard on FRAND terms. Nevertheless, Motorola Mobility sought an injunction against Apple in Germany on the basis of a GPRS SEP and, after the injunction was granted, went on to enforce it, even when Apple had declared that it would be willing to be bound by a determination of the FRAND royalties by the German court.

The basic problem is that the "fair" and "reasonable" bit in FRAND are ill defined. Until now, companies and courts have more or less agreed on what those terms mean – which is why FRAND has seemed to work. But the dense patent thickets surrounding smartphones have changed all that: practically everybody is suing everybody else, and "fair" and "reasonable" got chucked out of the window along with many other sensible attitudes.

Now that the European Commission is involved, Motorola will doubtless start behaving again, but the fact that it took this high-level intervention to resolve what is essentially a trivial patent spat shows that the FRAND system is fundamentally unfit for purpose: this is not a viable way to proceed in the future. The only logical solution is to adopt RF licensing in these circumstances. That's right, because it allows free software to compete on a level playing field, and it's rational, since it avoid the kind of playground bickering exemplified by the present case.

Update:Here's a good post by LibreOffice's Charles-H. Schulz from a couple of weeks ago making the same point about FRAND in the law case involving Motorola and Microsoft in the US.

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Copyright © 2013 IDG Communications, Inc.

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