Abstract
Standard essential patent-licensing disputes have been raising the costs of business in the telecommunications industry for over a decade. As technology and interconnectivity extend beyond mobile phones into the Internet of Things (“IoT”), the number of these disputes will only increase. While many academics, policymakers, and stakeholders support arbitration to resolve these disputes, this article warns of the potential long-term consequences of doing so on a large scale.
Standard Setting Organizations usually require the owners of patented technology included in industry standards to commit to licensing on Fair, Reasonable, and Non-discriminatory (“FRAND”) terms to avoid potential abuse of their market power. Standards are global and patents are national, however; disputes between owners and implementers over FRAND rates have led to complicated jurisdictional problems. Some national courts have even set global FRAND licensing rates, leading to cross-border anti-suit, and even anti-anti-suit, injunctions.
International commercial arbitration of FRAND disputes may appear to be an efficient solution to the jurisdictional dilemma, but it would also reduce transparency, lead to increasingly inaccurate calculations of FRAND rates over time, cause information imbalances between the parties, create new conflict of laws problems, lead to underenforcement of national antitrust laws, and harm the integrity of the broader patent system. Without significant change from current international commercial arbitration norms and practice, widespread FRAND arbitration would nullify the very purpose for which the FRAND commitment was created—thus, FRAND arbitration will destroy FRAND.
Recommended Citation
Barbara Lauriat,
FRAND Arbitration Will Destroy FRAND,
30
Mich. Tech. L. Rev.
(2024).
Available at:
https://repository.law.umich.edu/mtlr/vol30/iss1/2
Included in
Communications Law Commons, Dispute Resolution and Arbitration Commons, Science and Technology Law Commons