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A standard-essential patent (SEP) (also called an essential patent) is a patent that claims an invention that must be used to comply with a technical standard. Standards organizations, therefore, often require members to disclose and grant licenses to their patents and pending patent applications that cover a standard that the organization is developing on fair, reasonable, and non-discriminatory (FRAND) terms. Failure to license an essential patent may be a form of patent misuse.
If a standards organization fails to get licenses to all patents that are essential to complying with a standard, owners of the unlicensed patents may demand or sue for royalties from companies that adopt the standard. This happened to the GIF and JPEG standards, for example.
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