FRAND Forever? Or Are Other Business Models Possible?

In the context of the development of new technology standards, Intellectual Property Rights (IP Rights) are the engine that ensure and sustain technology innovation. The FrameWork License approach intends to move past FRAND assurances which haven’t reduce

Luxembourg(21 Jan 2021)

What is the FrameWork License (FWL)

In the context of the development of new technology standards, Intellectual Property Rights (IP Rights) are the engine that ensure and sustain technology innovation. FWL intends to move past FRAND assurances which haven’t reduced friction between innovators and implementers.

In fact, the question of the implementation of FRAND assurances has created a diversity of interpretations, including different decisions taken by the courts. So much so that the recent judgment of the UK Supreme Court affirms a comprehensive principle of the meaning of FRAND: "This is a single, composite obligation, not three distinct obligations that the license terms should be fair, and separately, reasonable, and separately, non-discriminatory".

So, the FRAND assurance, made during the standardization process of a new technology, has become a "headache" not only for the courts, but also for those who have to operate on the basis of what happened during the standardization process.

For this reason, Leonardo Chiariglione, who was for 32 years the convenor of the MPEG standardization group, has founded a new international and unaffiliated standards association called MPAI (Moving Picture, audio and data coding by Artificial Intelligence) which has adopted a new management model of the IP Rights associated with the works done within a standardization body. This new industrial property management model is called FrameWork License (FWL). This model intends to overcome all the uncertainties generated by the FRAND declaration, because guidelines on how the future licenses relating to the Standard Essential Patents (SEPs) should be applied are already established at the outset of the standardization work.

With these more precise guidelines already decided in the course of the standardization process, MPAI plans to help both the holders of SEPs and the implementers of the new standardized technologies to find an agreement for the use of SEPs, avoiding the frictions that we have sometimes seen.

As a consequence of the standardization works, a Call for Technologies supporting the MPAI AI Framework (AIF) standard was recently issued, along with AIF Framework License for its potentially essential IPRs.

The technical goal of MPAI-AIF is to enable the set up and the execution of mixed processing and inference workflows made of Machine Learning, Artificial Intelligence and legacy Data Processing components called AI Modules (AIM).

The MPAI AI Framework standard will facilitate integration of AI and legacy data processing components through standard interfaces and methods. MPAI experts have already validated MPAI’s innovative approach in a sample micro controller-based implementation that is synergistic with MPAI-AIF standard development.

The Framework License.

Access to the standard will be granted in a non-discriminatory fashion in compliance with the generally accepted principles of competition law and agreed upon before a standard is developed.

MPAI has replaced FRAND assurances with FWLs defined as the set of voluntary terms to use in a license, without monetary values. FWLs are developed by a committee (the IPR Support Advisory Committee) of MPAI members who are experts in the field of IP.

Practically, the FWL is the business model to remunerate IPRs in the standard that does not bear values: no $, no %, no dates etc. At most, the FWL could provide that in individual cases there is a CAP for the royalties to be paid, or an initial grace period where no royalties are paid to foster the adoption of the technology by the market and so on. Furthermore, the FWL states that the total cost of the licenses issued by IPR holders will be in line with the total cost of the licenses for similar standardized technologies and will take into account the value on the market of the specific standardized technology.

Only when the future standards developed by MPAI will be adopted by the marked and the FWLs will operate as guidelines for licensing the technologies compliant with the standard, it will be possible to really understand if the FWL is useful to help close the gap between the licensors and implementers. At that point, we might simply put the current FRAND declaration concept in the attic.

The full text of the FWL associated with the MPAI-AIF standard can be found on at this link.

The guidelines for the subsequent licenses to the AIF-FWL are listed in the following:

Conditions of use of the License

1. The License will be in compliance with generally accepted principles of competition law and the MPAI Statutes
2. The License will cover all of Licensor’s claims to Essential IPR practiced by a Licensee of the MPAI-AIF standard.
3. The License will cover Development Rights and Implementation Rights
4. The License will apply to a baseline MPAI-AIF profile and to other profiles containing additional technologies
5. Access to Essential IPRs of the MPAI-AIF standard will be granted in a non-discriminatory fashion.
6. The scope of the License will be subject to legal, bias, ethical and moral limitations
7. Royalties will apply to Implementations that are based on the MPAI-AIF standard
8. Royalties will not be based on the computational time nor on the number of API calls
9. Royalties will apply on a worldwide basis
10. Royalties will apply to any Implementation
11. An MPAI-AIF Implementation may use other IPR to extend the MPAI-AIF Implementation or to provide additional functionalities
12. The License may be granted free of charge for particular uses if so is decided by the licensors
13. The Licenses will provide:
14. a threshold below which a License will be granted free of charge and/or
15. a grace period during which a License will be granted free of charge and/or
16. an annual in-compliance royalty cap applying to total royalties due on worldwide revenues for a single Enterprise
17. A preference will be expressed on the entity that should administer the patent pool of holders of Patents Essential to the MPAI-AIF standard
18. The total cost of the Licenses issued by IPR holders will be in line with the total cost of the Licenses for similar technologies standardized in the context of Standard Development Organizations
19. The total cost of the Licenses will take into account the value on the market of the AI Framework technology Standardized by MPAI.