FRAND licensing works
Discover our SEP licensing principles
We have one of the broadest and strongest patent portfolios in the telecommunications industry with a leading share of Standard Essential Patents in every generation of cellular standards. In addition, we hold a world-class portfolio of patents essential to video standards, such as AVC/H.264, HEVC/H.265, and VVC/H.266, as well as a significant portfolio of patents essential to the wireless LAN (WLAN) standard.
These are inventions that have been contributed to industry standards – like 4G or 5G – and have to be used in order for a device or service to comply with these standards. In practice, this means any device that is connected to any cellular network automatically uses Nokia’s intellectual property and requires a license and a royalty payment.
Without our patented inventions – and other contributions to open standards by other inventors – making a mobile phone call or streaming videos would not be possible. A connected car would not be able to give the driver up-to-date traffic information. Remote healthcare or remote learning would not be possible.
On 27 April 2023, the European Commission proposed regulations (‘the SEP initiative’) which would transform the licensing of standard-essential patents (SEPs). Nokia is a major inventor and an implementer of standardized technology, and we therefore support a balanced approach to SEP licensing that both incentivizes inventors and provides predictability to companies that license the use of another company’s inventions. However, we believe the SEP initiative is deeply flawed and cannot achieve its goals and will undermine European leadership in 5G/6G. Read more on our blog.
Nokia’s leadership in technology standardization
Nokia has contributed many fundamental technologies to the development of wireless communication and multimedia standards over the past decades. We have been instrumental in leading the standardization of many technologies that define the way in which we communicate and view data today.
The technologies we contribute to industry standards are the product of Nokia’s significant research & development (R&D) investments: Since 2000 we have invested over €140 billion in R&D. In 2022, our R&D spend was over €4.5 billion. We continue to make substantial investments in R&D and to generate new patented inventions to add to our strong and growing portfolio.
FRAND licensing balances the market
Globally standardized mobile communications and other technologies have enabled tremendous innovation, consumer choice and industry growth. Standardized technologies allow products manufactured by different companies to communicate seamlessly with each other across country borders. Open standardization also enables new market entrants to develop standardized, interoperable products without making the massive investments required to develop the standards.
Patents are a key ingredient in open standardization: they allow participating companies to disclose and share their technologies openly, knowing that their innovations will be protected.
Nokia is both a major inventor and a licensee of other companies’ technologies. We believe in a fair licensing approach that strikes a balance between the needs of those who develop and contribute technologies to standards and those who implement them. This is achieved through fair, reasonable and non-discriminatory (FRAND) licensing of standard essential patents (SEPs):
- FRAND licensing enables fair and adequate compensation to the developers of standard-essential technologies, making their R&D investments economically viable.
- At the same time, FRAND licensing provides authorized access to patented inventions essential to using a standard to companies that implement those standards in their products.
SEPs are customarily made available on a FRAND basis, in line with the intellectual property rights policies of the relevant standard development organizations (SDOs). We support FRAND licensing of SEPs and offer licenses to our SEPs in accordance with our undertakings to SDOs.
Most licensing agreements are concluded amicably
Most licensing agreements between standard-essential technology developers and implementers are concluded amicably, but sometimes litigation is necessary to ensure good faith negotiations.
Although it is always a last resort, the possibility of litigation is necessary to support FRAND licensing and maintain a sustainable ecosystem. It ensures that those who develop the standards can receive fair and reasonable royalties for sharing their technologies enabling them to keep innovating and further investing in R&D, and ensuring implementers who agree in good faith to take a FRAND license are not competitively disadvantaged compared to those who don’t.
This creates a level playing field that allows everyone to adopt the latest advanced technologies for their products and services.
What is a Standard Essential Patent (SEP) and why are SEPs important? What happens if a SEP owner contacts me? Find out the answers to these questions and many more in our comprehensive Q&A.
Susanna Martikainen, Chief Licensing Officer at Nokia, spoke at IP Forefront's ICT IP conference in Shenzhen, China (March 2023) about the benefits of FRAND licensing. Her three themes were:
• The licensing of Standard Essential Patents on FRAND terms works well and delivers huge economic and social benefits
• The real issue with SEP licensing is hold out by unwilling licensees
• Arbitration is an effective tool to resolve global FRAND disputes
Adrian Howes, Head of IP and Standards at Nokia, wrote an article on SEP licensing exploring the current threats to open standardization. Read the full article, published in the International In-house Counsel Journal.