US Courts Have Limited Ability To Set FRAND Rates Globally

US Courts Have Limited Ability To Set FRAND Rates Globally

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In an article published by Law360, Timothy Syrett offers a rebuttal to a recently published guest article calling for US courts to adjudicate global fair, reasonable and nondiscriminatory rates for standard-essential-patent licenses more frequently. Syrett notes that article misses a critical point: an explanation of how US courts would have the authority to engage in FRAND rate-setting for global portfolios of SEPs if the potential licensee does not agree to be bound by the court's determination.

Excerpt: US courts have correctly recognized that, absent the agreement of the potential licensee to be bound by a portfoliowide determination, they lack authority to resolve global FRAND disputes because they cannot compel a party to license patents it has not been found to infringe, and, moreover, they cannot determine liability for foreign patents. As one US court has observed, "there exists no legal basis upon which [a potential licensee] may be compelled to take a license for [an SEP owner's] patents on a portfolio-wide basis."

The basic structure of the US legal system is incompatible with the notion that a patent owner can unilaterally demand that a US court set and enforce payments for that party's global portfolio. US courts should continue to acknowledge the limits on their authority and leave global rate-setting only to the rare circumstances when the parties agree to such a procedure. US courts should decline to follow the lead of the Unwired Planet case in the UK.

Read the full Law360 article.

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