Reasonable and Non Discriminatory Licensing
Encyclopedia
Reasonable and non-discriminatory licensing (RAND) is a type of licensing typically used during standardization
processes. When joining a standardization body, companies normally agree that if they receive any patent
s on technologies which become essential
to the standard they agree to allow other groups attempting to implement the standard to use those patents and they agree that the charges for those patents shall be reasonable. RAND licenses allow a competitive market to develop between multiple companies making products which implement a standard.
Having created a RAND-based standard does mean that the known exclusive rights can be licensed from their right holders at published RAND conditions. If at a later time exclusive rights beyond this will get visible or even claimed, this does not at all mean that those parts will be available under RAND conditions but the requested charges can be rather unreasonable instead. The acting standardisation group often has few options for reacting to this, other than creating a newer version of the standard that works around the parts now known to be problematic (if this is possible at all). For example, see the case of the de facto GIF
standard or the JPEG
standard, which was severely damaged by suddenly surfacing patent
s.
The second, more subtle, limitation of RAND licenses in standardisation is that the term does not say anything about the relation of the license to the product cost. With this a right that was found to fit, e.g. into a medical device, can have a rather high price per unit via its published RAND conditions. Now finding a second case, e.g. in a cheap consumer device, will not necessarily change the RAND licensing terms in any way.
Almost all free software licenses are RAND, but a RAND license is not necessarily compatible with free software licenses. If a standards body requires the use of a RAND license, free software developers must check the terms of the specific license chosen by the rights holder in order to determine if the standard may be used in free software. A particular RAND license could be incompatible with free software in several ways, such as requiring licensing fees, only applying to complete implementations of the licensed standard, limiting use to particular fields, or restricting redistribution. Some free software advocates argue that standards bodies should use a different term, such as "uniform fee only" (UFO), because they believe a license that charges for a patent license is inherently non-reasonable, and thus the term RAND is misleading.
One very successful area where RAND is in use is in the GSM and UMTS mobile phone
standards where many different manufacturers compete to provide handsets and base station
s. This is possible because the systems are based on open standards and because the patents required to implement this are mostly available under RAND terms. This situation is claimed, for example by the 3GPP
to lead to strong price competition and lower market prices for this equipment both to consumers and to operators
. This compares very well to other standards such as CDMA, where single companies may have almost complete control over particular areas of technology and manufacturing.
In contrast to the situation for GSM, the World Wide Web Consortium
considered standardising on RAND principles, but, after considerable resistance from many different sources, abandoned this strategy in order to aim for royalty free licensing.
As the word "reasonable" is absolutely free in interpretation, standards of the RAND type can be used to keep small and mid-sized businesses away from the market. This can easily lead to oligopolies
, where few big enterprises share the markets. Customers then have to pay inflated prices and technological and economical progress is decelerated.
The RAND-Z (RAND with zero royalty) or RAND-RF (RAND Royalty Free) licensing means that the company promises to license the technology at no charge, but implementers still have to get the licenser's permission to implement. The licenser may not make money off the deal but can still stop some type of products or require some type of reciprocity or do more subtle things like drag out the licensing process.
Standardization
Standardization is the process of developing and implementing technical standards.The goals of standardization can be to help with independence of single suppliers , compatibility, interoperability, safety, repeatability, or quality....
processes. When joining a standardization body, companies normally agree that if they receive any patent
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
s on technologies which become essential
Essential patent
An essential patent is a patent which discloses and claims one or more inventions that are required to practice a given industry standard. Standardisation bodies, therefore, often require members disclose and grant licenses to patents and pending patent applications that they own and that cover a...
to the standard they agree to allow other groups attempting to implement the standard to use those patents and they agree that the charges for those patents shall be reasonable. RAND licenses allow a competitive market to develop between multiple companies making products which implement a standard.
Having created a RAND-based standard does mean that the known exclusive rights can be licensed from their right holders at published RAND conditions. If at a later time exclusive rights beyond this will get visible or even claimed, this does not at all mean that those parts will be available under RAND conditions but the requested charges can be rather unreasonable instead. The acting standardisation group often has few options for reacting to this, other than creating a newer version of the standard that works around the parts now known to be problematic (if this is possible at all). For example, see the case of the de facto GIF
GIF
The Graphics Interchange Format is a bitmap image format that was introduced by CompuServe in 1987 and has since come into widespread usage on the World Wide Web due to its wide support and portability....
standard or the JPEG
JPEG
In computing, JPEG . The degree of compression can be adjusted, allowing a selectable tradeoff between storage size and image quality. JPEG typically achieves 10:1 compression with little perceptible loss in image quality....
standard, which was severely damaged by suddenly surfacing patent
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
s.
The second, more subtle, limitation of RAND licenses in standardisation is that the term does not say anything about the relation of the license to the product cost. With this a right that was found to fit, e.g. into a medical device, can have a rather high price per unit via its published RAND conditions. Now finding a second case, e.g. in a cheap consumer device, will not necessarily change the RAND licensing terms in any way.
Almost all free software licenses are RAND, but a RAND license is not necessarily compatible with free software licenses. If a standards body requires the use of a RAND license, free software developers must check the terms of the specific license chosen by the rights holder in order to determine if the standard may be used in free software. A particular RAND license could be incompatible with free software in several ways, such as requiring licensing fees, only applying to complete implementations of the licensed standard, limiting use to particular fields, or restricting redistribution. Some free software advocates argue that standards bodies should use a different term, such as "uniform fee only" (UFO), because they believe a license that charges for a patent license is inherently non-reasonable, and thus the term RAND is misleading.
One very successful area where RAND is in use is in the GSM and UMTS mobile phone
Mobile phone
A mobile phone is a device which can make and receive telephone calls over a radio link whilst moving around a wide geographic area. It does so by connecting to a cellular network provided by a mobile network operator...
standards where many different manufacturers compete to provide handsets and base station
Base station
The term base station can be used in the context of land surveying and wireless communications.- Land surveying :In the context of external land surveying, a base station is a GPS receiver at an accurately-known fixed location which is used to derive correction information for nearby portable GPS...
s. This is possible because the systems are based on open standards and because the patents required to implement this are mostly available under RAND terms. This situation is claimed, for example by the 3GPP
3GPP
The 3rd Generation Partnership Project is a collaboration between groups of telecommunications associations, known as the Organizational Partners...
to lead to strong price competition and lower market prices for this equipment both to consumers and to operators
Mobile network operator
A mobile network operator , also known as mobile phone operator , carrier service provider , wireless service provider, wireless carrier, or cellular company, or mobile network carrier is a telephone company that provides services for mobile phone subscribers.One essential...
. This compares very well to other standards such as CDMA, where single companies may have almost complete control over particular areas of technology and manufacturing.
In contrast to the situation for GSM, the World Wide Web Consortium
World Wide Web Consortium
The World Wide Web Consortium is the main international standards organization for the World Wide Web .Founded and headed by Tim Berners-Lee, the consortium is made up of member organizations which maintain full-time staff for the purpose of working together in the development of standards for the...
considered standardising on RAND principles, but, after considerable resistance from many different sources, abandoned this strategy in order to aim for royalty free licensing.
As the word "reasonable" is absolutely free in interpretation, standards of the RAND type can be used to keep small and mid-sized businesses away from the market. This can easily lead to oligopolies
Oligopoly
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers . The word is derived, by analogy with "monopoly", from the Greek ὀλίγοι "few" + πόλειν "to sell". Because there are few sellers, each oligopolist is likely to be aware of the actions of the others...
, where few big enterprises share the markets. Customers then have to pay inflated prices and technological and economical progress is decelerated.
The RAND-Z (RAND with zero royalty) or RAND-RF (RAND Royalty Free) licensing means that the company promises to license the technology at no charge, but implementers still have to get the licenser's permission to implement. The licenser may not make money off the deal but can still stop some type of products or require some type of reciprocity or do more subtle things like drag out the licensing process.
See also
- Fair, reasonable, and non-discriminatory terms (FRAND)
- League for Programming FreedomLeague for Programming FreedomLeague for Programming Freedom was founded in 1989 by Richard Stallman to unite free software developers as well as developers of proprietary software to fight against software patents and the extension of the scope of copyright...
(LPF)