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Brussels, 10 th December 2009

Antitrust: Commission welcomes IPCom's public FRAND declaration

The European Commission welcomes the public declaration by German IP licensing company IPCom, following discussions with the Commission, that it is ready to take over Bosch's previous commitment to grant irrevocable licences on fair, reasonable and non-discriminatory (FRAND) terms to patents held by IPCom which are essential for various standards set by the European Telecommunications Standard Institute (ETSI) and Universal Mobile Telecommunications System (UMTS). These are patents which IPCom acquired from Bosch and for which Bosch had previously made such a commitment when the standards in question were developed. The Commission welcomes IPCom’s declaration and considers that it is important that when patents essential to a standard are transferred from one owner to another, so should any relevant FRAND commitments.

In 2007, IPCom acquired the mobile telephony patent portfolio developed by Robert Bosch GmbH (Bosch) between the mid-1980s and 2000, which included patents essential to the GSM and UMTS standards. As a member of the European Telecommunications Standards Institute (ETSI), Bosch took part in the GSM and UMTS (WCDMA) standard setting processes. Bosch had declared that it held essential patents in the relevant standards and committed to ETSI "to grant irrevocable licenses on fair, reasonable and non-discriminatory terms and conditions” for such patents.

The transfer of FRAND commitments after the sale of standard-essential patents is important from a competition law perspective.

The Commission's Guidelines on Horizontal Cooperation [1] include a section on standard-setting and set out that " to avoid elimination of competition access to the standard must be possible for third parties on fair, reasonable and non-discriminatory terms ." Standard setting organisations, including ETSI, therefore generally require their members to commit to license their essential intellectual property rights on FRAND terms as a condition for inclusion in their standards.

The unrestricted access to the underlying proprietary technology on FRAND terms for all third parties safeguards the pro-competitive economic effects of standard setting. Such effects could be eliminated if, as a result of a transfer of patents essential to a standard, the FRAND commitment would no longer apply.

[1]   Commission Notice: Guidelines on the applicability of Article 81 of the EC Treaty to horizontal cooperation agreements, Official Journal C 003, 06/01/2001 p 2 to 30 .

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