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3 Criterion J. on Innovation 1 (2018)

handle is hein.journals/critjinov3 and id is 1 raw text is: T H E C R I T E R I 0 N JOURNAL ON INNOVATIO N VOL. 3 2018 The FRAND Contract J Gregory Sidak* Government agencies in various countries have issued guidelines to facilitate private negotiation to license the use of standard-essential patents (SEPs) that a patent holder has voluntarily committed to a standard-setting orga- nization (SSO) to offer to license on fair, reasonable, and nondiscriminatory (FRAND) terms (or on reasonable and nondiscriminatory (RAND) terms, as the case may be) to a third-party seeking to implement the standard. In effect, these jurisdictions are competing in a tournament of sorts to identify the best legal framework for resolving FRAND licensing disputes. A leading candidate is the existing body of U.S. contract law. In this article, I examine the FRAND licensing of SEPs through the lens of U.S. contract law' I will eschew the phrase FRAND commitment in favor of the bulkier but more precise phrase the FRAND contract between the SEP holder and the SSO. That terminology helps to clarify that the license agreement potentially formed between the SEP holder and the implementer on FRAND terms is a separate, subsequent contract that is entirely distinct from the preexisting contract into which the SEP holder and the SSO have entered. I begin by asking in Part I whether the FRAND contract is enforce- able. U.S. courts have found that it is, yet commentators, courts, and other * Chairman, Criterion Economics, Washington, D.C. Email: jgsidak@criterioneconomics.com. I thank Kelsey Hopkins, Jihyuon Park, Urika Petrovi , Marc Richardson, Jeremy Skog, Blount Stewart, Han Tran, and Andrew Vassallo for helpful comments. I have served as a consulting or testifying economic expert for Ericsson, Netlist, and Qualcomm (as well as many other firms on a nonpublic basis) in disputes or negotiations concerning the licensing of SEPs on FRAND or RAND terms. No third party has com- missioned or funded this article. The views expressed here are solely my own. Copyright 2018 byJ. Gregory Sidak. All rights reserved. 1 Much of the discussion in this article updates and expands the comments that I submitted to the Japanese Patent Office (JPO) on November i, 2017. See J. Gregory Sidak, Comments on the Japan Guidelines for Licensing Negotiations Involving Standard-Essential Patents, Japan Patent Office (Nov I, 2017); see also Invitation to Contribute to Guidelines for Licensing Negotiations Involving Standard Essential Patents (SEPs), JAPAN PATENT OFFICE (Sept. 29, 2017), https://wwwjpo.go.jp/iken-e/I70929-hyojun-e.htm. Unless otherwise noted, my remarks in this article apply with equal force to an SEP holder's obligation to offer to license its SEPs on RAND terms. I

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