In these times, companies in the telecommunications and computing industries must be particularly careful when it comes to offering a product or service that uses a particular standard, such as the WiFi, 3G or JPEG standards. This is because an owner of patent covering a standard, known as a standard-essential patent (SEP), may be entitled to enjoin a company from offering the product or service if it is unable to negotiate a license. In cases where a company has made substantial investments in reliance upon the standard, enjoining it from further use of the standard can be detrimental.
Although standards serve an important role in today’s world and are crucial to many industries, issues invariably arise around SEPs. As discussed in a previous article, an organization responsible for adopting a standard (standard-setting organization or SSO) typically requires the owner of an SEP to license the patented technology on reasonable and nondiscriminatory (RAND) terms when the owner participates in activities associated with adopting a standard. Despite these and other efforts by SSOs to ensure that licensing terms are reasonable for those seeking to adopt the standard, the problem of patent hold-up remains a serious issue.