To get inter-operability of technologies, and achieve scale of economies, standards are evolved. These are agreed upon by the Standard Setting Organisations ( SSOs ) in various industries.

In the market, organisations compete to get their patent a particular standard. It is called a Standard Essential Patent ( SEP ). It gives rewards and market power to a patent holder.

Every producers who intends to produce an SEP-compliant product ( he becomes an implementer ) must get a licence to use the SEP. SSOs have extracted an assurance from SEP holders that such a license will be given on reasonable and non-discriminatory royalty and other terms generally called FRAD ( fair, reasonable and non-discriminatory ). A balance is to be found between just rewards to an SEP owner and the access to technology on FRAND terms.