No Forum to Rule Them All: Comity and Conflict in Transnational Frand Disputes

By Greenbaum, Eli | Washington Law Review, September 1, 2019 | Go to article overview

No Forum to Rule Them All: Comity and Conflict in Transnational Frand Disputes


Greenbaum, Eli, Washington Law Review


INTRODUCTION

Patents grant territorial rights-they guard against infringement only within the state that issued the patent.1 In contrast, patent disputes increasingly flout international borders. Patent FRAND litigation in particular tends to sprawl across multiple countries. In a typical FRAND dispute, a patentee has committed to provide a "fair, reasonable and nondiscriminatory" (FRAND) license, but the parties cannot agree on the definitive meaning of those terms.2 Ensuing litigation can entangle the parties in global snarls of the patent, antitrust, and contract laws of multiple jurisdictions, intertwined with questions of international trade policy and national security strategy. While many courts and commentators aim to centralize and thereby streamline these disputes, this Article argues against the instinct to consolidate. Rather, absent other agreement between the parties, FRAND disputes should be resolved through the ordinary territorial structures of patent law, and attempts to simplify these disputes should focus on procedural and substantive coordination between jurisdictions.

Patentees most frequently make FRAND commitments when they are involved in technological standard-setting activities. such technology standards often aim to facilitate global interoperability and, as a result, the disputes that they ignite consistently rage across jurisdictional lines.3 For example, a current FRAND-related dispute between Apple and Qualcomm involves patents covering cellular telecommunication standards.4 Those standards allow for worldwide communication between cellular devices. such devices are built with different hardware, run on different software, and communicate across the separate networks of different countries-yet, the establishment of global telecommunication standards allows for easy communications across those differences.5 The dispute between Apple and Qualcomm over the use of those standards also cuts across national borders, involving civil litigation in five countries and related investigations by a number of national regulatory authorities.6 Similarly, a recent FRAND dispute between Samsung and Huawei involved parallel litigation in both the United States and China,7 and another recent dispute between TCL and Ericsson generated related proceedings in seven countries.8

Indeed, FRAND disputes can spawn litigation in each country in which standard-compliant products and services are made available. Each such country can see claims under its domestic patent laws (for example, regarding unlicensed patent infringement), antitrust framework (for example, regarding the unlawful use of market power conferred by standard-essential patents), and contract law (regarding the parties' contractual obligations under the FRAND commitment).9 A number of jurisdictions, sometimes in an attempt to streamline the complexity of the transnational dispute, have recently seized the authority to make a single FRAND royalty determination applicable to worldwide activities. In two recent decisions, a United States district court set FRAND royalty rates for worldwide sales despite parallel foreign litigation.10 Similarly, two British courts have recently asserted the jurisdiction to set worldwide FRAND rates over the defendant's strident objections.11 Additionally, the Chinese judiciary may soon also demand the right to impose a worldwide resolution on FRAND litigants.12 And in the recent United States case of Huawei Techs. Co v. Samsung Elecs. Co.,13 the question of consolidation was squarely before the court.14

This Article argues that courts should resist the temptation to streamline worldwide FRAND litigation through consolidation of the dispute in one jurisdiction. indeed, absent other agreement between the litigants, standard-setting organizations should themselves disavow consolidation and instead require the jurisdiction-by-jurisdiction adjudication of FRAND disputes. Outside the FRAND context, commentators have wrestled with the challenges posed by multinational patent litigation, and a number of scholars have advocated for the consolidation of cross-border disputes in order to reduce the cost and expense of litigation across jurisdictions. …

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