A courtroom scale balancing a smartphone and a patent document, symbolizing FRAND licensing.

Fair or Foul? Unpacking the Controversy Around FRAND Licensing

Soraya Malik in Law & Justice June 2025 • 4 min read.

"A Deep Dive into the Debate Sparked by the Indian Competition Commission's Rulings"

In today's interconnected world, technology standards are the invisible backbone of everything from smartphones to cellular networks. These standards rely on patents, and the licensing of these patents is governed by what's known as FRAND – fair, reasonable, and non-discriminatory – terms. But what happens when 'fair' becomes a battleground?

Recent rulings by the Indian Competition Commission (CCI) have ignited a global debate about FRAND licensing, specifically concerning percentage-based royalties. These rulings challenge the long-standing practice of calculating royalties based on the selling price of the end product, arguing that it could be discriminatory. This has sent ripples through the tech world, prompting a re-evaluation of licensing practices and their impact on innovation.

This article dives deep into the heart of this controversy. We'll unpack the complexities of FRAND licensing, explore the arguments for and against percentage-based royalties, and examine the potential consequences of these groundbreaking rulings. Whether you're a tech enthusiast, a business professional, or simply curious about the forces shaping our digital world, this is a conversation you won't want to miss.

What Exactly is FRAND Licensing, and Why Does It Matter?

A courtroom scale balancing a smartphone and a patent document, symbolizing FRAND licensing.

Imagine trying to build a car, but needing parts that are patented by different companies. FRAND licensing is like an agreement that these companies will offer those parts at a fair price and under reasonable terms. This ensures that everyone has access to essential technologies needed to create products that meet industry standards.

FRAND commitments are crucial because they prevent patent holders from abusing their power by charging exorbitant fees or refusing to license their technology altogether. These commitments foster innovation, allowing companies to develop new products and services based on established standards.

Fairness: Ensures that licensing terms are equitable and do not unfairly disadvantage licensees.
Reasonableness: Requires that royalty rates are justifiable and reflect the value of the patented technology.
Non-discrimination: Prevents patent holders from favoring certain licensees over others.

However, the interpretation of FRAND principles can be complex and contentious, especially when it comes to determining appropriate royalty rates and licensing terms. This is where the recent Indian Competition Commission rulings come into play.

The Future of FRAND: Navigating a Shifting Landscape

The debate surrounding FRAND licensing is far from over. As technology continues to evolve, and global markets become increasingly interconnected, it's crucial for policymakers, industry leaders, and legal experts to engage in thoughtful dialogue and develop clear, consistent guidelines that promote innovation, competition, and fairness for all.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.1016/j.iimb.2017.09.002, Alternate LINK

Title: On The “Non-Discrimination” Aspect Of Frand Licensing: A Response To The Indian Competition Commission'S Recent Orders

Subject: Economics and Econometrics

Journal: IIMB Management Review

Publisher: Elsevier BV

Authors: David J. Teece, Edward F. Sherry, Peter C. Grindley

Published: 2018-03-01

Everything You Need To Know

What is FRAND licensing, and why is it so important in the tech industry?

FRAND licensing, which stands for fair, reasonable, and non-discriminatory licensing, is essential in the tech industry because it governs how companies license patents necessary for creating products that meet industry standards. It ensures that all companies have access to crucial technologies, like those used in smartphones and cellular networks, at a fair price and under reasonable terms. This process fosters innovation by preventing patent holders from excessively charging or refusing to license their technology. It helps maintain a competitive environment and allows companies to develop new products and services based on established standards. The three main components of FRAND are Fairness, Reasonableness, and Non-discrimination.

How do the Indian Competition Commission rulings relate to FRAND licensing?

The Indian Competition Commission (CCI) rulings have sparked a global debate about FRAND licensing, particularly regarding percentage-based royalties. These rulings challenge the standard practice of calculating royalties based on the selling price of the end product. The CCI suggests this method could be discriminatory, potentially leading to unfair practices. The CCI's perspective highlights the complexities in determining appropriate royalty rates and licensing terms within FRAND, and these rulings have spurred a re-evaluation of licensing practices and their impact on innovation worldwide.

What are the key principles that define FRAND licensing?

FRAND licensing is defined by three core principles: Fairness, Reasonableness, and Non-discrimination. Fairness ensures that licensing terms are equitable and do not unfairly disadvantage licensees. Reasonableness demands that royalty rates are justifiable and reflect the value of the patented technology. Non-discrimination prevents patent holders from favoring certain licensees over others. These principles collectively aim to create a balanced ecosystem where technology is accessible, innovation is encouraged, and competition thrives.

Why is it important to avoid abuse of power by patent holders within the FRAND framework?

Avoiding the abuse of power by patent holders is crucial within the FRAND framework to encourage innovation. Without FRAND commitments, patent holders could potentially charge exorbitant fees or refuse to license their technology, hindering the development of new products and services. FRAND ensures that essential technologies are available at fair prices, promoting a level playing field where companies can build upon existing standards. This helps avoid monopolies or situations where a single entity controls access to vital technologies, thus stifling competition and innovation.

How might the evolving nature of technology affect FRAND licensing in the future?

As technology advances and global markets become increasingly interconnected, FRAND licensing faces new challenges and opportunities. The debate over appropriate royalty rates, licensing terms, and the interpretation of FRAND principles will likely intensify. Policymakers, industry leaders, and legal experts must engage in a thoughtful dialogue. They must develop clear and consistent guidelines to navigate a shifting landscape. The aim is to promote innovation, competition, and fairness for all stakeholders. The future success of FRAND will depend on its ability to adapt to new technologies and ensure that its core principles remain relevant and effective in a dynamic environment.