Carrier on Why FRAND Is Hard

I have finished reading Mr. Justice Marcus Smith’s decision in Optis v. Apple, and am working on a blog post which I hope to complete this week.  Meanwhile, I’d like to note Michael Carrier’s very interesting paper, Why Is FRAND Hard?, 2023 Utah L. Rev. 431 (2023).  Unlike the Optis decision, this is a fairly quick read.  Parts of the article are adapted from Professor Carrier’s previous work, as he acknowledges, and parts are new.  Here is a link to the article, and here is the abstract:

 

Standards, common platforms that allow products to work together, are essential to the modern economy. But standards often are based on patented technologies. And in what has been referred to as "patent holdup," the owners of patents incorporated into standards may exploit that power by refusing to license their patent or charging excessive royalties. For this reason, many standards development organizations ("SDOs") have required patent holders to commit to licensing their patents on fair, reasonable, and nondiscriminatory ("FRAND") terms.

 

The FRAND solution sounds promising in theory. But it has proven challenging in practice. Why? In this Article, I offer eight reasons: (1) excessive attention on patent holdup; (2) unsupported positions on holdup; (3) the role of funding; (4) patent trolls; (5) modest challenges based on clear rules or facts; (6) medium challenges based on unclear rules or facts; (7) significant challenges arising from the meanings of “fair and reasonable” and nondiscriminatory; and (8) extraordinary challenges relating to global issues.

 

The first four challenges offer low-hanging fruit that could clarify FRAND issues. The remaining four pose varying levels of difficulty. While not all of these challenges can be addressed with simple solutions, an awareness of the types of challenges presented by FRAND could prove helpful in the years ahead.

I agree with much of Carrier’s analysis, including his “Challenge 1:  Excessive Attention to Systemic Holdup”; much of his critique of the “absolutist” positions advanced by former Antitrust Division head Makan Delrahim (e.g., that the Constitution enshrines a right to injunctive relief for patent infringement); and his hierarchy of “modest,” “medium,” “significant,” and “extraordinary” FRAND challenges.  He concludes, correctly in my view, that the global nature of commerce and resulting global litigation over FRAND terms present the “most perplexing, extraordinary challenge,” because they “implicate national sovereignty and politics.  Courts around the world apply different rules and need not be bound by other courts’ rulings.  There is no simple answer here” to questions concerning, for example, antisuit injunctions.