Last month, we briefly discussed an article that proposed that “baseball-style” arbitration be used to resolve FRAND licensing disputes. The following guest post about this article was authored by David Balto, a former Policy Director of the Bureau of Competition for the Federal Trade Commission who currently has his own public interest antitrust practice here in Washington, DC. David’s views expressed below are his own, and do not necessarily reflect the views of the authors of The Essential Patent Blog, Dow Lohnes PLLC, or Dow Lohnes’s clients.
Baseball has the Best Rules: Using Arbitration to Solve FRAND Disputes
How to calculate Fair, Reasonable and Nondiscriminatory (FRAND) royalties seems like one of the most intractable problems firms, standard setting organizations and the courts are grappling with. No wonder, there is sparse authority and relatively few litigated cases.
Two of the most thoughtful scholars on antitrust intellectual property issues — Professors Mark Lemley and Carl Shapiro — have weighed in and issued a paper outlining an interesting solution to the FRAND licensing problem and it provides a clarion call for how to grapple with the problem.
Their solution to this common problem? Requiring the parties to enter into a binding “baseball-style” arbitration – where each party must propose its final offer, and the arbitrator picks which one is the most reasonable (the arbitrator cannot choose a different number). In their paper, Lemley and Shapiro describe how their proposed system would work in practice, and claim it would moot many of the FRAND-related disputes ongoing today. Continue reading →
Late last week, Apple Inc. filed a notice of appeal with the United States District Court for the Western District of Wisconsin, announcing its intent to appeal to the Federal Circuit Judge Barbara B. Crabb’s dismissal of Apple’s SEP-related contract and antitrust claims against Motorola Mobility (case No. 3:11-cv-00178-bbc). This presents us with an opportunity to do a brief “catching up on” post on this particular portion of the larger Apple-Motorola dispute.
Today, Weds., Mar. 28, 2012, in Promega. v. Life Tech., No. 2011-1263, the Federal Circuit (Rader, Newman (dissenting) and Dyk) affirmed the district court’s order compelling arbitration of infringement claims under the Federal Arbitration Act based on an arbitration agreement that had been assigned among related entities. This decision provides insight into the Federal Circuit’s view of the Federal Arbitration Act that appears to favor enforcing agreements to arbitrate.