What is the MFN percentage?

The MFN percentage consists of the lowest royalty percentage included in a Standard License Agreement regarding a specific patent. Each subsequent member that wants a license under the same patent is entitled to obtain a Standard License Agreement including the MFN percentage.

MFN stands for “Most Favoured Nations”. The most-favoured-nation clause is common in many trade agreements; the clause gives other countries the same trading opportunities as the most favoured nation.

Each member that already has a Standard License Agreement for the same patent but against a higher royalty percentage, will only have to pay the new MFN percentage from the moment his MFN percentage has been set. It does not make a difference whether the members involved agreed on a Standard License Agreement bilaterally, or whether the Standard License Agreement was the result of a Baseball Procedure.