Internet of things and licensing: SEPs and FRAND determination

Claudia Tapia

Chapter 8 in A Modern Guide to Patents, 2025, pp 198-233 from Edward Elgar Publishing

Abstract: With the growth of the IoT, there is an intensified focus on patents that are essential to cellular standards. While some of this communication will take place via Bluetooth and/or Wi-Fi, one of the pillars of the IoT is cellular standards. In particular, 4G and 5G networks are crucial for some IoT applications, providing ultra-fast and highly reliable connectivity indispensable for devices to operate seamlessly. Since the creation of 1G, cellular standards have led to unprecedented market success in the information and communications technologies sector. There are two main reasons for this impressive achievement: (i) a joint international collaboration between hundreds of stakeholder representatives across academia, government agencies, and industry under the umbrella of 3GPP, endorsing the so-called WTO principles; and (ii) the FRAND commitment, i.e. the undertaking of owners of patents or patent applications potentially essential to a standard that if any of them ever become essential patents (SEPs) they will be available on fair, reasonable and non-discriminatory (FRAND) terms and conditions. Despite the tremendous success of cellular standards and their significant benefits for economic and social welfare, the ecosystem has been subject to scrutiny on several occasions. Some calls for reform have advocated for a more transparent framework. This framework aims to encourage participation from companies, particularly small and medium-sized enterprises (SMEs), that are less familiar with FRAND licensing practices. Instead of seeking a global solution for IoT challenges or allowing enough time for the market or the Unified Patent Court system to address them, the European Commission is aiming to regulate (Proposal COM(2023)0232). Concerns have been raised that if the Council of the European Union (the Council) approves the draft regulation, other countries might adopt similar measures. This could lead to national, possibly incompatible systems, devaluation of SEPs, increased licensing burdens, and a significant reduction in innovation within standardisation. This chapter illustrates the standardisation process, describes the FRAND licensing process, examines the guidelines given by EU courts (covering the particularities for the IoT), briefly analyses the draft regulation proposed by the European Commission, and proposes global enhancements to the existing system.

Keywords: FRAND; IoT; SEPs; Standardisation; WTO; Licensing negotiations; Connectivity; European Commission; Regulation (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035308590
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