Chapter 1: “Introduction to the Licensing of Standardized Technology”

[Summary of Chapter 1]:

The “network economy” is a concept by which value is created through the interaction of people and entities on electronic networks. In the world of technology, network economy implies the joint operation of hardware and software belonging to many different people, all working together according to some defined “standard” or protocol. One serious problem with the network economy is that the ownership of the technology, in the form of patents covering key aspects of a network, tends to be split among multiple parties, a process call “fragmentation” of patent ownership. Fragmentation increases as the technology becomes more complex. For companies to produce products in the face of severe fragmentation, the companies must cross-license key patents or otherwise acquire rights to use essential technology.

“FRAND”, an acronym for “Fair”, “Reasonable”, and “Non-Discriminatory”, represents a concept and a commitment by which the owners of technology license their technology on terms & conditions that allow the network economy to thrive.  However, there is no definition of FRAND that has been generally accepted by the technological community.  Chapter 1 provides a definition of “FRAND”, looking at each of the three concepts “Fair”, “Reasonable”, and “Non-Discriminatory”.  There is a description and explanation of the conflicts to create technical standard for 3G cellular technology.  The wars over technical standards presage the patent wars to come, of which we have seen many in the past few years in electronic technology, particularly in cellular technology.


[Brief Excerpt from Chapter 1, p.25]:

The purpose of this book is to suggest an approach to deal with the problem of increasing fragmentation of essential patent ownership.  This book proposes an approach that reflects the intersection of patent rights, antitrust concerns, and standards-setting, together with the imperative need to produce commercially and economically viable products.  The book gives content to the concept of “FRAND”.  The book does not attempt to quantify, objectively, FRAND licensing for all technologies, since the development of FRAND licensing for each technology musts be done on a case by case basis, depending on the business environment and circumstances.  Rather, the book attempts to show how FRAND may be established by the objective evaluation of patent essentiality, by the offering of licensing terms & conditions that will be acceptable tot both licensors and licensees, and by the creation of structures and methods of offering group licenses in a way that will be acceptable to the antitrust authorities in relevant jurisdictions.

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