New Papers on FRAND, SEPs, Holdup & Holdout, Part 1

1.  Vincent Angwenyi published an article titled Hold-up, Hold-out and F/RAND:  The Quest for Balance in the February 2017 issue of GRUR Int. (pp. 105-14).  Here is the abstract:

Hold-up and hold-out by analogy can be regarded as two sides of the same coin.  The coin in this case can be said to represent the patent or the technology in question, the ultimate beneficiary of which should be society.  A healthy patent ecosystem can be maintained in part by ensuring that innovators are motivated to continue creating new technology and implementers to convey the benefits of the innovation to society.  An ideal situation is one that balances the interests of innovators and implementers as much as possible.

2.  Jorge Contreras and Michael Eixenberger have posted a paper on ssrn titled The Anti-Suit Injunction - A Transnational Remedy for Multi-Jurisdictional SEP Litigation, to be published in the forthcoming Cambridge Handbook of Technical Standardization Law - Patent, Antitrust and Competition Law (Jorge L. Contreras, ed.).  Here is a link, and here is the abstract:

Litigation concerning standards-essential patents (SEPs) has become increasingly global, with parallel litigation occurring over the same issues in multiple jurisdictions throughout North America, Europe and Asia. As a result, litigants have sought mechanisms to coordinate these actions both to manage costs and to avoid inconsistent and incompatible results. One little-known procedural mechanism that has long been available to manage multi-jurisdictional litigation, and which is growing in popularity in SEP disputes, is the anti-suit injunction.

An anti-suit injunction is an interlocutory remedy issued by a court in one jurisdiction which prohibits a litigant from initiating or continuing parallel litigation in another jurisdiction or jurisdictions. Anti-suit injunctions thus contain litigation costs and reduce the likelihood of inconsistent results by ensuring that issues are resolved in one jurisdiction before they are litigated elsewhere. In the standards context, anti-suit injunctions can be particularly powerful tools for prospective licensees alleging that SEP holders have failed to comply with their FRAND licensing obligations. Specifically, a court reviewing a SEP holder’s compliance with a FRAND licensing commitment may issue an anti-suit injunction to prevent the SEP holder from bringing foreign patent infringement claims (including injunctions against the sale of infringing products) until the FRAND licensing dispute has been resolved in the issuing jurisdiction.

This chapter discusses the historical development and procedural requirements for anti-suit injunctions in both the United States and Europe. It also reviews recent SEP cases in which anti-suit injunctions have been granted, including Microsoft v. Motorola, Vringo v. ZTE and TCL v. Ericsson.

3.  Alexander Galetovic and Stephen Haber have published a paper titled The Fallacies of Patent-Holdup Theory, 13 J. Comp. L. & Econ. 1 (2017).  Here is a link to the article, and here is the abstract: 

Patent-holdup theory avers that the patent system threatens the rate of innovation in the U.S. economy, particularly in information technology industries that are heavily reliant on standard-essential patents. We show that arrays of empirical tests falsify the core predictions of the theory. We therefore examine the logic of patent-holdup theory. We show that patent-holdup theory conflates two mutually inconsistent economic mechanisms: holdup (the appropriation of a quasi rent) and the exercise of monopoly power (to set the market price to extract a monopoly rent). Moreover, three fallacies underpin patent-holdup theory: (1) that patent holdup is a straightforward variant of holdup as it is understood in transaction-cost economics; (2) that royalty stacking is holdup repeated multiple times on the same product; and (3) that standard-essential patents contribute little or no value to the markets they help create. These fallacies give rise to a theory that is logically inconsistent and incomplete, and that ignores economic fundamentals. The flaws in logic of patent-holdup theory, and its lack of fit with the evidence, suggest that a new theory about the mechanics and dynamics of SEP-intensive IT industries is called for, both as a matter of science and as a guide to antitrust and patent policies.

4.  Jens Leth Hougaard, Chiu Yu Ko, and Xuyao Zhang have posted a paper on ssrn titled A Welfare Economic Interpretation of FRAND.  Here is a link to the article, and here is the abstract: 

Setting an industry-wide standard is crucial for information and communication technologies for interoperability, compatibility and efficiency. To minimize holdup problems, patent holders are often required to ex-ante commit to licensing their technologies under Fair, Reasonable and Non-Discriminatory (FRAND) terms. Yet, there is little consensus, in both courtrooms and industries, on the exact meaning of FRAND. We propose a welfare economic framework that enables a precise distinction: fairness in the distribution of royalty payments among patent users, and reasonableness in setting the size of the compensation to the patent holder, where both the size and the distribution of payments are determined in a non-discriminatory way making sure that similar firms are treated similarly. We illustrate our approach in various classic models from industrial organization, and discuss further potential applications.

5.  Anne Layne-Farrar and Koren W. Wong-Ervin have posted a paper on ssrn titled Methodologies for Calculating Frand Damages: An Economic and Comparative Analysis of the Case Law from China, the European Union, India, and the United States, forthcoming in the Jindal Global Law School Law Review (2017).  Here is a link to the paper, and here is the abstract:

In the last several years, courts around the world, including in China, the European Union, India, and the United States, have ruled on appropriate methodologies for calculating either a reasonable royalty rate or reasonable royalty damages on standard-essential patents (SEPs) upon which a patent holder has made an assurance to license on fair, reasonable and non-discriminatory (FRAND) terms. Included in these decisions are determinations about patent holdup, licensee holdout, the seeking of injunctive relief, royalty stacking, the incremental value rule, reliance on comparable licenses, the appropriate revenue base for royalty calculations, and the use of worldwide portfolio licensing. This article provides an economic and comparative analysis of the case law to date, including the landmark 2013 FRAND-royalty determination issued by the Shenzhen Intermediate People’s Court (and affirmed by the Guangdong Province High People’s Court) in Huawei v. InterDigital; numerous U.S. district court decisions; recent seminal decisions from the United States Court of Appeals for the Federal Circuit in Ericsson v. D-Link and CISCO v. CSIRO; the six recent decisions involving Ericsson issued by the Delhi High Court; the European Court of Justice decision in Huawei v. ZTE; and numerous post-Huawei v. ZTE decisions by European Union member states. While this article focuses on court decisions, discussions of the various agency decisions from around the world are also included throughout.