WIPO report endorses complementary use of FRAND valuation methodologies

Context:

• FRAND (fair, reasonable and non discriminatory) disputes increasingly involve competing valuation methodologies, with courts and tribunals across jurisdictions relying on approaches such as comparable licenses, top-down analysis, and various forms of value-based valuation, often reaching different outcomes.
• The World Intellectual Property Organization (WIPO) offers alternative dispute resolution (ADR) for standard-essential patent (SEP) matters. It also takes high-level positions on select patent policy topics.

What’s new: WIPO recently published FRAND Economics: Valuation Methods in Licensing Standard Essential Patents, a comprehensive economic analysis of comparable-license, bottom-up, and top-down valuation methodologies. Rather than endorsing a single methodology, the report concludes that no approach is universally reliable and that FRAND assessments are often strengthened by using multiple methodologies as complementary tools.

Direct impact: The report is not binding on anyone, but provides policymakers, courts, arbitrators, and licensing parties with a structured framework for evaluating FRAND terms, emphasizing that comparable-license, bottom-up, and top-down methodologies are most effective when used as complementary tools to test assumptions and cross-check valuation outcomes.

Wider ramifications: The report reflects a growing focus on economic valuation in FRAND disputes and may contribute to efforts to develop more consistent and transparent valuation frameworks across jurisdictions by treating licensing methodologies as complementary rather than competing approaches.