Does the FRAND Obligation Survive the Patent’s Divestiture?
In 1997, the Advanced Television Systems Committee adopted the A/65 standard for digital television broadcast signals. Thomson Licensing S.A., which held various patents essential to the standard, promised to license on FRAND terms. Ten years later, Thomson sold two of the patents to Funai Electric Co., Ltd., which makes digital televisions and receivers. From then on, firms not already licensed by Thomson under the standard needed licenses from both Thomson, which had made a FRAND commitment, and Funai, which had not. Funai’s competitor Vizio sought a license from Funai. But according to Vizio, Funai repudiated Thomson’s FRAND commitment and imposed “much higher” royalties. Vizio sued Funai in the Central District of California, challenging Thomson’s sale of the patents under Clayton Act Section 7 as well as Funai’s licensing and enforcement conduct under Sherman Act Section 2. Vizio alleged a Sherman Act Section 1 conspiracy between Thomson and Funai based on their alleged agreement
