Contract Theory—Who Needs It?
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I would like to thank Professor Jonathan Masur and the editors and staff of The University of Chicago Law Review, including Andy Wang, Zoë Ewing, Jonah Klausner, Karan Lala, Eric Haupt, Eugene DeCosse, and Helen Chamberlin, for their thoughtful advice and insights.
Holders of patents covering technology standards, known as standard-essential patents (SEP), control the rights to an invention with no commercially-viable alternative or that cannot be designed around while still complying with a standard. This gives SEP holders significant leverage in licensing negotiations. Standards development organizations (SDOs) play an important role in curbing opportunistic behavior by patent holders. SDOs require SEP holders to license their patents on fair, reasonable, and non-discriminatory (FRAND) terms. However, courts have mischaracterized FRAND commitments, concluding that these disputes carry a Seventh Amendment guarantee to a jury trial. This mischaracterization undermines the fair resolution of FRAND disputes, and a different approach is necessary. In this Comment, Marta Krason proposes an alternative analytical framework that more accurately characterizes FRAND disputes by drawing on principles from contract and property law, concluding that the constitutionally proper adjudicator is a judge, not a jury.
Thanks to Omri Ben-Shahar, Dick Craswell, Ariel Porat, and D.C. Toedt for helpful comments.
I am grateful to Russell Korobkin, Saul Levmore, and Eric Posner for helpful comments.