Economic Perspectives on FRAND

This paper aims at clarifying basic elements of FRAND royalty rate determination from an economic perspective.
Specifically, it discusses FRAND royalty calculations in light of the ‘present value- added’ approach.
The ‘present value-added’ method hinges the concept of value on the ability to generate future earnings.
The method can also be used in the absence of comparable licenses and/or newly developing business sectors and remains neutral with respect to the royalty base.
Other methods addressed are the ‘comparable licenses’ method, the ‘cost’ method and the ‘top down’ method