Thursday, September 8, 2022

Walz, Benz & Pichlmaier on Obligatory ADR in FRAND Disputes

Axel Walz, Sebastian Benz, and Tobias Pichlmaier published a two-part series in GRUR titled Obligatorische Schlichtung bei FRAND-Streititgkeiten ("Obligatory Schlichtung in FRAND Disputes"), GRUR 2022, 446-456, 513-522.  I've kept the word Schlichtung in the original German.  Although the word is sometimes translated as "arbitration," the more precise German word for arbitration is Schiedsverfahren; the word Schlichtung is more properly used to denote various hybrids of arbitration and mediation.  See, e.g., Peter Tochtermann, Mediation in Germany:  The German Mediation Act--Alternative Dispute Resolution at the Crossroads, in Mediation:  Principles and Regulation in Comparative Perspective 521, 524 (Klaus J. Hopt & Felix Steffek eds. 2013) (distinguishing Schlichtung from mediation, in that the Schlichtungstelle, like an arbitrator, makes a decision, which however is not necessarily binding on all the parties); Timothy Stolzfuss Jost, Schlichtungsstelle und Gutachterkommissionen:  The German Approach to  Extrajudicial Malpractice Claims Resolution, 11 Ohio  St. J. Dispute Resolution 81 (1996).  The authors of the two-part series under discussion here discuss how German copyright law makes use of Schlichtung (and arbitration)  under certain circumstances.  As applied to FRAND disputes, if I understand correctly, their proposal would have the Schlichtungstelle propose a settlement which the parties could reject--though if they do so, they might face certain consequences (the loss of a right to injunctive relief or, in the case of the implementer, of being able to rely on the competition-law defense).  Anyway, here are the two abstracts, in my translation from the German:


Patent infringement courts increasingly are confronted with disputes in which the question of fair, reasonable and nondiscriminatory license terms for the use of standard-essential patents takes center stage.  The procedural framework in which this question typically is addressed, the so-called FRAND objection, appears to be only inadequately aligned with the specific needs and complexity of the topic.  This essay therefore proposes the introduction of mandatory Schlichtung in FRAND disputes, and to this end proposes an orientation to the relevant standards in related bodies of law, especially copyright—not with the aim of providing an unassailable solution, but as a starting point for a legal policy (rechtspolitischen) debate.

*                      *                    *

The present essay proposes the introduction of mandatory Schlichtung of FRAND disputes.  In connection with Part I (GRUR 2022, 446), in which initially the necessity of an effective and proportionate rights enforcement mechanism was presented and the model of the existing copyright Schlichtung procedure was examined, the subject matter of the present Part 2 is the development of concrete corner points (Eckpunkte) for the implementation of FRAND Schlichtung proceedings as well as their constitutionality.  As the basis for wider discussion the essay proposes in addition a concrete legal-technical implementation and concludes with an appeal to the legislator.

I don’t have a strong opinion, at this point, on the merits of the proposal, but I will say that the concept of a hybrid arbitration/mediation procedure is interesting.  I wonder how many U.S. practitioners and scholars are even aware of this alternative model of ADR, and also whether there is any law-and-economics literature on it?  It seems like the sort of thing that might lend itself to some sort of economic or game theoretic analysis; see, e.g., Lisa Bernstein, Understanding the Limits of Court-Connected ADR: A Critique of Federal Court-Annexed Arbitration Programs, 141 U. Penn. L. Rev. 2169 (1993).


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