Peter Meier-Beck, the prominent, now-retired presiding judge of Germany’s Bundesgerichtshof, has made available an article, forthcoming in GRUR Int., titled Should the Unified Patent Court Set FRAND Terms? (Spoiler alert: Judge Meier-Beck’s answer is, unsurprisingly, “no.”) Here is a link to the paper, and here is the abstract:
Matthias Leistner recently addressed the question of how the Unified Patent Court should implement the decision of the Court of Justice of the European Union (CJEU) in Huawei v. ZTE in patent infringement proceedings involving a FRAND defence (GRUR Patent 2024, 327). In this context, he takes the view that the Unified Patent Court could and should – like the English courts – determine the terms of a FRAND licence agreement in the case of mutually ‘willing’ parties who are neither able to agree on the terms of such an agreement nor willing to accept a binding provision and its modalities by an arbitration tribunal or a third party. This article attempts to shed light on the prerequisites and limits of such a judicial FRAND determination.
Whether one agrees with Judge Meier-Beck or not, this is certainly an important article for anyone interested in FRAND issues. The first part of the article presents Judge Meier-Beck’s legal analysis, of why he believes neither the German courts nor the UPC have jurisdiction to set FRAND terms. The last few pages set forth his policy analysis of why this is a good thing. These latter arguments will be familiar to anyone who’s read Calabresi and Melamed, i.e., that the parties have better information than a court, that the administrative costs of having courts determine FRAND licenses would be enormous and the resulting rates subject to error, that it’s better for courts to follow the German model of fostering negotiations among the parties than providing perverse incentives by setting the rates or them, etc. (On the other hand, there is no mention of the counterargument that patent owners sometimes can use the threat of injunctive relief against locked-in implementers to extract royalties that reflect holdup value.) Judge Meier-Beck takes issue with the EC amicus brief’s view that courts should apply the Huawei v. ZGE steps in strict sequence, which he views as formalistic, and he’s not enthusiastic about the draft SEP Regulation authorizing panels to make nonbinding FRAND determinations, either, see p.7 n.49. He also seems a bit suspicious, in my reading, of what might motivate some of the courts that might undertake the setting of global FRAND terms. See p.9 (stating that if courts determine global FRAND terms, it is possible that those “decisions may also be determined by aspects other than the fair, reasonable and non-discriminatory terms or the worldwide use of standard-essential patents”; p.6 n.38 (stating that “in the global context in which conflicts of interest in question can be played out, it cannot be assumed that every state or judicial price fixing for licences to standard-essential patents worldwide is exclusively committed to the goal of finding a price that is analogous to competition”).
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As I mentioned the other day, I will be spending some time in Munich the next two weeks. I plan to resume blogging the week of February 17.
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