In the modern world of computing and telecommunications, the process of creating standards serves an important role. Standards serve to define precise specifications for components associated with a particular technology, thus facilitating interoperability among components which are covered by the technology. Standard-setting organizations (SSOs), which are responsible for adopting standards for a particular industry, play an important role in governing patent ownership rights that are applicable to standards adopted by the SSO.
Typically, an SSO requires the owner of a patent which is essential to a particular standard (known as a standard essential patents or SEP) to license the patented technologies on reasonable and nondiscriminatory (RAND) terms, or on fair, reasonable and nondiscriminatory (FRAND) terms, when the owner participates in activities associated with adopting the standard. Companies making products meeting these standards can then rely on the availability of licenses to these patents on commercially reasonable terms.