Wednesday, January 27, 2021

Cotter on Global FRAND Litigation

The Patently-O Law Journal just published my essay, Is Global FRAND Litigation Spinning Out of Control?  Here is a link, and here is the abstract:

It has often been observed that, while patent rights are territorial in scope, commerce is global and, increasingly, interconnected.  Indeed, with the advent of 5G and the Internet of Things (IoT), technical standards soon will enable not only devices such as smartphones and tablets, but also automobiles, medical devices, and even home appliances to receive and transmit data within and across national borders.  To achieve these ends, firms participate in standard-setting organizations (SSOs) to hammer out the technical standards that enable communication and interoperability among devices.  Moreover, because the implementation of these standards requires the use of many different, typically proprietary, technologies, SSOs generally encourage or require their members both to declare their ownership of patents that may be essential to the practice of the relevant standard, and to commit to licensing these standard-essential patents (SEPs) on fair, reasonable and nondiscriminatory (FRAND) terms.  The FRAND commitments themselves, in turn, often are interpreted as binding contracts for the benefit of third parties (that is, for the benefit of implementers).  In principle, these requirements work to ensure both that implementers are able to access essential technologies, and that owners are fairly compensated for their inventive contributions. 

Two problems nevertheless can impede the smooth working of such a system.  The first is that SSO rules typically do not define the term “FRAND,” for a variety of reasons.  Disputes over the meaning of FRAND therefore are inevitable.  The second is that, because patents are territorial, courts often have been reluctant to adjudicate foreign patent rights.  This understanding of patent rights, however, might appear, to some observers at least, to collide with commercial realities, when parties are unable to reach agreement and opt for adjudication by national courts.  Current responses to these problems are likely to prove unsatisfactory for both owners and implementers; a comprehensive solution nonetheless remains, for now, elusive.

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