One of the world’s greatest experiments in open innovation is mobile wireless. Technology enterprises have invested billions of R&D dollars to develop 2G, 3G, 4G, now 5G, and hopefully 6G soon. Technology developers make investments and look to the patent system and associated regulators to reward them for risky investments, should their patented technologies become included in the standards. In recent years there has been an uptick in the number of technology implementers. But because patents are not self-enforcing, unlicensed use occurs, which is corrosive of the open innovation system that allows non-vertically integrated firms to compete at the device level. This chapter reviews antitrust theories that some implementers have used to avoid paying royalties to patent owners. This is examined in the context of the FRAND licensing regime established by ETSI, a standards development organization. “Hold up” and “hold out” theories are examined. Hold up theories lack empirical support and are misused by some implementers—particularly those in China—who would prefer to free ride on the R&D investments of others. Restoring and revitalizing technology markets for mobile wireless likely requires limits to be placed on the availability of FRAND licenses with respect to recalcitrant technology implementers. Otherwise, the innovation ecosystem will be harmed, and open innovation (that is, licensing) business models will collapse.

Times are changing as our global ecosystem for commercializing innovation helps bring new technologies to market, networks grow, and interconnections and transactions become more complex around standards, all to enable vast opportunities to improve the human condition, to further competition, and to improve broad access. The policies that governments use to structure their legal systems for intellectual property, especially patents, as well as for competition—or antitrust—continue to have myriad powerful impacts and raise intense debates over challenging questions. This chapter explores a representative set of debates about policy approaches to patents, to elucidate particular ideas to bear in mind about how adopting a private law, property rights-based approach to patents enables them to better operate as tools for facilitating the commercialization of new technologies in ways that best promote the goals of increasing access while fostering competition and security for a diverse and inclusive society.

Chapter 20 covers issues relating to the licensing of patents in the context of technical standard setting. It briefly summarizes the development of standards-development organizations (SDOs) and their policies regarding patents on standards. It then addresses the issue of determining fair, reasonable and nondiscriminatory royalty rates, which are required by many SDO patent policies. It also covers patent disclosure requirements under SDO policies (Qualcomm v. Broadcom) and the contours of the nondiscrimination prong of FRAND. Next it addresses the effect of a FRAND commitment on the ability of parties to seek injunctive relief (Apple v. Motorola), and then the effect of the transfer of an underlying patent on the FRAND commitment made by its prior owner.

This chapter addresses a special category of cases in which an asserted patent is, or has been declared to be, essential to the implementation of a collaboratively developed voluntary consensus standard, and the holder of that patent has agreed to license it to implementers of the standard on terms that are fair, reasonable, and nondiscriminatory (FRAND).This chapter explores how the existence of such a FRAND commitment may affect a patent holder’s entitlement to monetary damages and injunctive relief. In addition to issues of patent law, remedies law, and contracts law, we consider the effect of competition law on this issue.

Although competition law and IP law probably pursue complementary goals, competition laws can (1) affect remedies available for patent infringement; and/or otherwise (2) limit the conduct of patentees, particularly when transferring or licensing their patents. This chapter discusses the cases in which tensions between the protection of patents in complex products and the competition laws have arisen or may arise, particularly as regards the ability of owners of standard essential patents (SEPs) to monetize their patents either by seeking an injunction against implementers or by refusing to grant licenses complying with previously given commitments — generally, commitments to license on fair, reasonable, and nondiscriminatory (FRAND) terms. This chapter also examines potential competition law constraints on the pricing of patent licenses, other licensing terms, multilevel licensing and level discrimination, patent pools, sale of patent portfolios ,and patent acquisitions.