As information and communication technology(“ICT”) has been applied to various types of products, such as mobile phones, automobiles, and medical devices, standards play important roles in terms of comparability and interoperability. Standard-setting organizations(“SSO”) set standards with advanced technologies, and product manufacturers have implemented the standards into their products for customers to commonly use the products regardless of the manufacturer. Research institutes and high-tech companies around the world are investing in R&D for new technologies and making efforts for their technologies to be adopted to standards. The research institutes and the tech giants will continue to invest only if they expect the greater returns which can be generated from standard-essential patents(“SEP”).
The standards must be used by all participants in the market. Contrary to non-SEPs, unlimited exclusive rights to SEPs may not be guaranteed, considering SEP holders may abuse their rights in ways of patent hold-up, royalty stacking, and patent ambush. Thus, SSOs require the participants in the standard-setting process to disclose their intellectual property rights(“IPR”) and to commit to grant licenses under the IPRs to all willing licensees on fair, reasonable, and non-discriminatory(“FRAND”) terms if their contribution is adopted to the standards. However, since the terms of the FRAND commitment are not stipulated in detail, there are many legal disputes and controversies regarding the interpretations of the commitment.
One of the major issues concerning the FRAND commitment is which level in the supply chain SEP holders should grant licenses to. A group of scholars and most SEP holders assert that SEP holders have the right to choose licensees and may grant the license only to the end-user product manufacturers. Some SSOs, however, require SEP holders to grant licenses to “all” willing licensees in their IPR policies, and other SSOs’ IPR policies are also interpreted that the license should be granted to all infringers to the SEPs, which includes the component makers. Moreover, SEP holders’ refusal to grant licenses to a certain group of willing licensees may constitute abuse of a dominant position. Therefore, SEP holders are required to grant licenses to all willing licensees in the supply chain. In addition,given SSOs’ IPR policies which commonly require patent holders to grant licenses under their patents necessary to make, use or sell the products which comply with standards, the licensed patents should be SEPs which component makers directly or indirectly infringe on their products.