Licensing and Valuation of Standard Essential Patents – Setting the record straight on the Present Value-Added Approach

The European Commission’s Expert Group on the Licensing and Valuation of Standard Essential Patents’ (EO8000, subsequently ‘the EC Expert report’)[1] sought to elaborate on various approaches that allow to value standard essential patents and determine FRAND (fair, reasonable and non-discriminatory) licensing rates.[2] In doing so, the group’s report also touched upon the ‘Present Value-Added Approach’ (PVA), a valuation approach, which was discussed previously in this journal.[3]

As the way the Expert report described certain aspects of the present value-added approach runs[4] afoul to the way the PVA was characterized in ‘the Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee. Setting Out the EU Approach to Standard Essential Patents.’ (subsequently called ‘the EC Communication.’), [5] I believe there is a need to set the record straight. This is particularly important to as I was the lead author of an article published previously in this journal that embraces the PVA approach.[6]