On FRAND-ly Terms: Examining the Role of Juries in Standard-Essential Patent Disputes
Modern society relies on interconnected technologies, and interoperability has become crucial for meeting consumer expectations. Technology standards have emerged to ensure compatibility and interoperability across products. Once an industry selects a standard as the default for consumers and businesses, industry players begin to adapt it, often phasing out alternative—sometimes even superior— technologies. Holders of patents covering technology standards, known as standard-essential patents (SEPs), 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 nondiscriminatory (FRAND) terms. However, courts have mischaracterized FRAND commitments, leading them to conclude 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.
This Comment proposes an alternative analytical framework that more accurately characterizes FRAND disputes by drawing on principles from contract and property law. Applying this framework leads to the conclusion that the constitutionally proper adjudicator is a judge, not a jury. Entrusting judges with these determinations increases the likelihood of consistent, uniform FRAND rates, which would help preserve the integrity of the SEP licensing regime and incentivize continued innovation.