On December 21, 2017, the District Court for the Central District of California issued TCL v. Ericsson, resolving a long-standing dispute between the parties concerning worldwide licenses to 2G, 3G, and 4G standard essential patents (SEPs) owned by Ericsson.
The court determined that none of Ericsson’s previous offers had satisfied its obligation to license its SEPs on terms that are fair, reasonable and non-discriminatory (“FRAND”). The court therefore went on to provide its own calculation of FRAND rates using both the so called “top-down” approach and benchmarking against comparable licenses from other firms who are “similarly situated.” With respect to the “non-discriminatory” element of FRAND, the court ruled that while offering the same rate to all potential licensees is not required, differences should be justified, and differences in sales volume alone cannot justify discriminating against smaller implementers of SEPs. Adding to existing case law both in the US and abroad, the TCL decision provides a reasoned legal framework to parties negotiating FRAND licenses.