Competitive and Industry Harms Related to Refusals to License SEPs and Other Forms of “Level Discrimination” in SEP licensing

Brussels, December 2, 2020 – Companies that create devices supporting current and next-generation cellular and Internet of Things (IoT) applications are, and will continue to be, critical to the innovative development of the connected economy. Licensors of FRAND-encumbered standard essential patents (SEPs) must be willing to offer licences to their SEPs to all entities in the supply chain, including component manufacturers, that use the technology standards. This requirement is particularly critical for wireless communication standards, where standardized functionality is provided by a small number of component suppliers, and then integrated into thousands of different types of downstream devices throughout many different industry and economic sectors.

However, in violation of applicable law and the requirements of their FRAND commitments, some SEP holders refuse to grant licences to component manufacturers. In this paper, the FSA highlights some of the harms that result from the refusal to license both semiconductor companies that manufacture cellular chips, as well as module manufacturers that develop and sell components incorporating those chips.