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Core Principles and Approaches for Licensing of Standard Essential Patents

The “Core Principles and Approaches for Licensing of Standard Essential Patents”, also referred to as “CWA2”, can be found on this website.

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What is it?

The CWA2 project was launched within the framework of a so-called CEN CENELEC Workshop Agreement, with the support of Deutsche Institut für Normung (DIN).

Fifty six organizations from a diverse range of industries, as well as industry associations representing hundreds more, have worked to develop a CWA setting out policy approaches that may be helpful to companies, individuals and policy-makers in evaluating SEP licensing.

The CWA2 participants include large and small European and international businesses, SMEs and associations from many different industry sectors. Its efforts have generated substantial public interest, including from the European Commission and various industry organisations.

Why does it matter?

As industry in Europe and globally develops new standards directed at the so called “Internet of Things” and “5G” applications, it has become ever more important to ensure a balanced system for the licensing to patents that are essential to those standardised technologies.

Those licenses are crucial to create a level playing field that companies, large and small, can rely on to develop their innovative products and services, to the benefit of consumers in the EU and around the globe.

CWA2 identifies six core principles and approaches that seek to foster a FRAND outcome when engaged in licensing negotiations.

The document sets forth policy principles and best practices. Companies, including signatories to the CWA2, remain free to conduct their negotiations as they determine on a case-by-case basis.

Core Principles

Injunctions

A FRAND SEP holder must not threaten, seek or enforce an injunction (or similar de facto exclusion processes) except in exceptional circumstances and only where FRAND compensation cannot be addressed via adjudication, e.g. lack of jurisdiction or bankruptcy. Parties should seek to negotiate FRAND terms without any unfair “hold up” leverage associated with injunctions or other de facto market exclusion processes.

License availability

A FRAND license should be made available to anybody that wants one to implement the relevant standard. Refusing to license some implementers is the antithesis of the FRAND promise. In many cases, upstream licensing can create significant efficiencies that benefit the patent holder, the licensee and the industry.

Court FRAND methodologies

SEPs should be valued based on their own technical merits, not on downstream products or uses. Valuation should focus on the smallest relevant component, exclude value created by standardisation itself, and reflect a reasonable aggregate royalty for the standard.

Patent bundling

Parties may voluntarily agree to portfolio licences, but disagreements over some patents should not block FRAND licences for patents that are agreed to be essential. Where patents are disputed, no party should be forced into a portfolio licence, and SEP holders must prove infringement, essentiality, and the applicable FRAND rate.

NDAs and fairness

Neither party should use excessive secrecy to undermine FRAND negotiations. Key information—such as patent lists, claim charts, licensing terms, and prior licensing practices—must be accessible to allow fair evaluation, and SEP holders should not exploit information asymmetries to disadvantage licensees.

Patent transfers

FRAND obligations continue unchanged after patent transfers. Transfers should explicitly preserve FRAND terms, not increase the value or royalties sought, and must not be used to inflate total royalties through portfolio break-ups or to undermine a licensee’s offset or reciprocity rights.