Technology standards are a cornerstone of the modern economy. They set technical requirements that allow conforming products and services to perform particular tasks in a predictable way – for example, how devices connect to a network or each other, how data is formatted and transmitted, or how signals are encoded and decoded.
The benefits that a standard conveys reflect the combined contributions of two groups: innovators of standards, who invest in developing solutions to be incorporated in these technology platforms; and implementers of standards, who invest in developing standard-compliant products, bringing value to consumers.
Each group’s contribution is dependent on that of the other. A technical solution creates less value if it does not become part of the industry norm that manufacturers or service providers use; while implementers equally rely on getting access to superior technologies to make better and safer products.
Standard essential patents (SEPs) and the undertaking to license them on fair, reasonable and non-discriminatory (FRAND) terms are central to a balanced dynamic between the two groups. FRAND licensing seeks to accommodate the ability of innovators to obtain appropriate return on their R&D investments, while ensuring access to standardized technologies on sensible terms. Yet translating this high- level undertaking into concrete terms can be complex in practice.
This publication explains why economic valuation plays a central role in FRAND licensing and dispute resolution, and provides an accessible overview of the principal methodologies used in SEP valuation. Throughout, it highlights both the strengths of the methods discussed and the limitations that matter most in real-world scenarios.
Prepared under the WIPO Strategy on SEPs , the report aims to offer an objective and practically relevant resource. While recognizing that there is no single formula for determining FRAND terms across all cases, it offers an analytical review supporting predictability in a field where the stakes are high and details matter.
We trust that this publication will assist stakeholders in navigating SEP valuation with greater clarity and confidence. By fostering a more informed and constructive discussion among parties, it serves the broader objective of ensuring that standards continue to enable innovation, competition and inclusive economic growth.
Lisa Jorgenson
Deputy Director General
World Intellectual Property Organization
Marco Alemán
Assistant Director General
World Intellectual Property Organization