Standard-essential patents and FRAND licensing – At the crossroads of economic theory and legal practice

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The concept of FRAND licensing has been widely debated for years. It is not an exaggeration to call the stream of scholarly papers a flood. And since 2015, the Court of Justice of the European Union and many national courts have weighed in as well. Yet notwithstanding the apparent abundance of scholarly analyses and judicial precedent, both the theory and practice of SEP licensing remain a black box. This is due mainly to the fact that ‘economics’ and ‘law’ coexist in different universes. Economic analyses often focus on specific issues, mostly in technical and formal terms. Lawyers, however, often lack access to the closed world of economic models and econo-technical jargon. The courts literally crave a set of accessible and practical guidelines for resolving FRAND disputes. This paper provides an overview of the most pressing practical issues of SEP licensing and offers a roadmap for the practical implementation of economic wisdom. Unlike most of the economic literature, it seeks to provide a more comprehensive and structured (and, hence, more workable) guide to the resolution of practical disputes.