FRAND and RAND are two vague terms for licensing schemes which are offered to all developers, or all members of a group, including competitors. In software, these terms usually include a per-copy royalty fee, which means that those who distribute software in a model which does not involve a per-copy fee (as is typical for free software) have no way to avail of the offered licence.
The abbreviations come from the misleading name "Fair, Reasonable, And Non-Discriminatory". These adjectives may be somewhat applicable to hardware standards, but certainly aren't for any intangible goods, which may be distributed at no cost and further copied by third-parties.
"FRAND" licensing is required by some standards bodies, but the term has no definition so these requirements are basically just good intentions or empty words requested by patent holders to make a problem look solved.
FRAND terms should be replaced by "royalty-free" terms, also called "RAND-zero".
How RAND discriminates
"FRAND" requirements which may exclude free software, freeware, and other intangible goods which can be distributed at no cost:
- Per-copy fees
- If the distributor must pay a per-copy fee, even a tiny one, she can find herself unable to agree to the licence because she can never know how many copies of her software have been made. A maximum fee is impractical because it will almost surely be too high to by paid by someone who distributes their software at no cost, and the maximum fee would have to define what is covered. Such a definition is very difficult without placing restrictions on later modification.
- Only applying to complete implementations
- This makes many types of downstream modification impossible.
- Limiting use to particular fields
- This also places impossible restrictions on downstream modifications.
- Restricting further redistribution
- If the licensing terms say that direct recipients are covered but the developer cannot allow recipients to make copies and redistribute then this excludes many common software distribution models.
What price is "reasonable"?
This term is not defined and there is very little case law. The only known court where a judge put a cash value on a patent deal is the Microsoft v. Motorola case in 2013 in the USA, but this was a district court, not an appeals or supreme court, and the judge's ruling was specific to a business deal between these two companies.
Microsoft v. Motorola (2013, USA)
Microsoft had to pay patent royalties to Motorola. The case was heard in the same district as Microsoft's headquaters, so some people suggest that the judge might have been soft on them. In summary, the judge used the method proposed Motorola rather than that proposed by Microsoft, but he used the lower estimate (cheaper for Microsoft) each time there was room to choose.
- So that’s what “rand” means?: A Brief Report on the Findings of Fact and Conclusions of Law in Microsoft v. Motorola (USA), 27 Apr 2013, Jorge L. Contreras
- The Microsoft v. Motorola Order on RAND and In a First, Seattle Judge Sets RAND Rate in MS v. Motorola, April 2013, Groklaw
- Annotated copy of the ruling, by law firm Dow Lohnes, April 2013 essentialpatentblog.com
Related pages on ESP Wiki
- Harm to standards and compatibility
- Terminology recommendations - discussion of other terms which shouldn't be used
News (newest first):
- IEEE Amends its Patent (FRAND) Policy, 9 Feb 2015, Patently-O (article gives current state of various issues)
- Why FRAND Commitments are Not (usually) Contracts [in the USA], September 2014, Patently-O
- The February of FRAND, 6 Mar 2012, Jorge L. Contreras
- Follow-up: The Frand Wars: Who’s on First?, 17 Apr 2012, Jorge L. Contreras
- Motorola Mobility wins German patent suit against Apple, overcomes FRAND defense, 9 Dec 2011, Florian Mueller