An SEP is a patent, necessarily infringed when implementing a technical standard adopted by a standards development organization (SDO), for example, IEEE, ISO/IEC MPEG or DVB. In order to eliminate the risk of hold-up by an SEP owner, SDOs generally include in their IPR policies a requirement that members declare whether they are prepared to offer licences to their SEPs on terms that are fair, reasonable and non-discriminatory (FRAND). A second obligation that selected SDOs implement is to require notification of patents that are or may become essential. If SEP owners identify a patent and say that they will not offer licences on FRAND terms, the SDO may remove the technology from the standard.SEP ownership, together with the FRAND promise, is treated by courts within a framework based on antitrust rules or contract law. These IPR policies work well for the SDOs, ensuring reward for the technology contributors and access to SEPs, and therefore to the standard, for implementers. But bilateral licensing negotiation between the SEP holder and the implementer has become drawn out, subject to delaying tactics and other gamesmanship by implementers. Costly litigation is often the result. Patent pools are an alternative, efficient and pro-competitive mechanism for licensing, bringing together in a licensing program SEPs owned by multiple owners. The pool offers a one-stop shop, a lower aggregate royalty and transparency in the offered SEPs and in the licensing terms, and evaluations of essentiality performed by independent third party experts. One SDO, DVB, actively encourages pools of DVB-essential standards by fostering their formation in a pre-commercial process. Pools reduce the overall number of litigations, thanks to aggregation. Further, over the past decade judicial decisions, such as Sisvel v Haier, have been useful in identifying the steps in good-faith negotiation, the elements of a FRAND offer, and the conditions under which the SEP holder can enforce its rights through injunctions. This judicial framework, together with pooling, can be applied to increase transactional efficiency, especially at a time of growing complexity through convergence of new industries, benefitting not only large market players but also small and medium-sized enterprises
