In pharma, a license to manufacture can be given to one or two firms but this is exclusionary, in the sense they alone can manufacture.

In telecom, licenses are given to any manufacturer, as long as it agrees to pay a reasonable royalty. A handset uses hundreds of patents at the same time, and this model suits. An industry standards body examines all patent applications for innovation etc. It declares some of them to be Standard Essential Patents (SEPs). These SEPs are available to anyone on a Fair Reasonable And Non-Discriminatory (FRAND) basis.

The issue is whether royalty should be based on the value of the component being sold or the whole handset’s price. The patent does not always reside at the chipset level. It can be anywhere in the network. Who should pay the royalty? Whether a chipset maker, or the telco or the handset maker? If charged to the device, the system becomes simpler.

It is also to be considered whether an absolute value is to be charged instead of pegging the royalty to the handset price.

With FRAND terms, technology suppliers are offering more and more capabilities to more and more device manufacturers. Consequently, the customer benefits. Device prices continue to crash even while these are becoming more powerful.