Reasonable and Non Discriminatory Licensing
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Reasonable and Non Discriminatory Licensing (RAND) is a term for a type of licensing typically used during standardization processes. The normal case is that when joining the standardization body, companies agree that if they receive any patents on technologies which become essential to the standard then they agree to allow other groups attempting to implement the standard to use those patents and they agree that the charges for those patents shall be reasonable.
RAND licenses allow a competitive market to develop between multiple companies making products which implement a standard. There are, however, two key limitations to this. Firstly, if a company is not involved in the standardisation body, but does have a submarine patent in the area this company can destroy the standard (by disallowing its use) or even merely charge unreasonable amounts for its use with no way for the standardisation body to react to this. For example, see the case of the JPEG standard, which was severely damaged by such a tactic.
The second, more subtle, limitation of RAND licenses in standardisation is that the term does not say anything about the relation of the license to the product cost. Typically free software applications and research projects create systems with no profit whatsoever. If these are distributed, there may be considerable liability for someone who has voluntarily created something for the good of others with no financial benefit to themselves, which is considered very problematic by many bodies (e.g. the League for Programming Freedom, the FFFI). A way to partially overcome this would be to use royalty free licenses, but this would not solve the submarine patent issue.
One very successful area where RAND is in use is in the GSM and UMTS mobile phone standards where many different manufacturers compete to provide hand sets, base stations. This is possible because the systems are based on open standards and because the patents required to implement this are mostly available under RAND terms. This situation is claimed, for example by the 3GPP to lead to strong price competition and lower market prices for this equipment both to consumers and to operators. This compares very well to other standards such as CDMA, where single companies may have almost complete control over particular areas of technology and maufacturing.
In contrast to the situation for GSM, the World Wide Web Consortium considered standardising on RAND principles, but, after considerable resistance from many different sources, abandoned this strategy in order to aim for royalty free licensing.
