Why Can’t We Be FRANDs?: Anti-Suit Injunctions, International Comity, and International Commercial Arbitration in Standard-Essential Patent Litigation
Picking up a smartphone to contact someone across the globe is facilitated by technical standards like 5G. These standards allow for technological compatibility worldwide. For instance, a 5G capable device can connect to 5G networks anywhere in the world because the same 5G standard is used globally. Standards, particularly those integral to the telecommunications industry, are also highly complex and contain many patents that are necessarily infringed when the standard is implemented. To avoid rampant patent infringement, owners of these standard-essential patents (“SEPs”) are required to license them to standard implementers at fair, reasonable, and non-discriminatory (“FRAND”) rates when their patents are incorporated into a standard. Apart from that, standard setting organizations (“SSOs”) provide minimal guidance about what rates are FRAND. As a result, SEP litigation over whether a rate is FRAND has spiked.
Courts hearing FRAND cases can set global rates, but patent rights are territorial. In response to the threat of foreign courts setting rates on patents granted in their jurisdiction, some courts have issued anti-suit injunctions to prevent parties from litigating a FRAND dispute elsewhere. This rise in anti-suit injunctions has resulted in some courts turning to anti-anti-suit injunctions as a response or preemptive measure. Parties have even petitioned courts for anti-anti-anti-suit injunctions. This spiral poses a threat to international comity because these injunctions, although directed at the litigants, interfere with a foreign court’s ability to decide what to do with a matter before it. Within the FRAND context, an added danger is the potential breakdown of future technological interoperability if some parts of the world adopt different standards than others. For example, this might make some smartphones incompatible with some cellular data networks. In place of litigation, international commercial arbitration has been used with some success in FRAND disputes, but there are downsides to using arbitration alone.
This Note recommends federal courts grant anti-suit injunctions in SEP litigation only under a restrictive test, rather than maintaining the current variation by circuit. Injunctions that up the “anti” should face greater scrutiny under a stricter test with international comity guiding the decision through concrete factors outlined in the sections on nonrecognition of foreign judgments in the Restatement (Fourth) of Foreign Relations Law of the United States. The Note further suggests that Congress should codify this test, but in the event of an injunction spiral that might preclude litigation altogether, SSOs should require the parties arbitrate the dispute before experts at the World Intellectual Property Organization (“WIPO”). Together, litigation and arbitration can help preserve the interconnected and technologically compatible system currently in place around the world.
AUTHOR: Raghavendra R. Murthy