Reasonable and Non Discriminatory Licensing

Reasonable and Non Discriminatory Licensing (RAND) is a term for a type of licensing typically used during standardization processes. The normal case is that when joining the standardization body, companies agree that if they receive any patents on technologies which become essential to the standard then 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 The acting standardisation group often has few options for reacting to this, other than creating a newer version of the standard that works around the parts now known to be problematic (if this is possible at all).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 patents.

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.

RAND is also in conflict with free software as this is often offered for no fee at all and most often with no way to track any distribution or even the "customer base". Whoever does use the software is granted the rights of the copyright holders for the code via some license like the GPL for free. Other rights like patent rights and similar are generally not covered with this. If a user of such software thinks he needs more rights from third parties, then he has to care for this on his own. A RAND licensing for such other rights might still ease his operations but it just negates the freeness of a particular piece of software — written and licensed free but still in need for charges. Providing really free software for a standard that incorporates RAND components therefore is a problem for the free and open source community.

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 stations. 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.

ee also

* Fair, Reasonable and Non Discriminatory Licensing (FRAND)

External links

* [http://www.3gpatents.com/ 3G Patents Ltd — Licensing body for WCDMA patents]
* [http://www.w3.org/TR/patent-practice Current W3C patent policy]
* [http://lpf.ai.mit.edu/ League for Programming Freedom]