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Settling Frand Disputes: Is Mandatory Arbitration A Reasonable And Nondiscriminatory Alternative?

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Listed:
  • Pierre Larouche
  • Jorge Padilla
  • Richard S. Taffet

Abstract

This article reviews the recent proposal by Mark Lemley and Carl Shapiro that standard-setting organizations (SSOs) amend their intellectual property rights (IPR) policies to require standard-essential patent (SEP) owners and willing licensees to resolve disputes over licensing terms, particularly fair, reasonable, and nondiscriminatory (FRAND) royalty rates, using mandatory binding final-offer (or “baseball”) arbitration. We first consider the fundamental underlying premise of the arbitration proposal—namely, that there are systemic problems relating to FRAND-based standardization and that current disputes are not being efficiently addressed. We find that mandatory baseball arbitration is an unnecessary intervention since there is no evidence of market failure, it will not necessarily afford better outcomes, and it is more likely to lead to decisions that undermine the standardization process.

Suggested Citation

  • Pierre Larouche & Jorge Padilla & Richard S. Taffet, 2014. "Settling Frand Disputes: Is Mandatory Arbitration A Reasonable And Nondiscriminatory Alternative?," Journal of Competition Law and Economics, Oxford University Press, vol. 10(3), pages 581-610.
    • Handle: RePEc:oup:jcomle:v:10:y:2014:i:3:p:581-610.
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    File URL: http://hdl.handle.net/10.1093/joclec/nhu020
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    Citations

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    Cited by:

    1. Pierre Larouche & Florian Schuett, 2019. "Repeated interaction in standard setting," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(3), pages 488-509, June.
    2. Chryssoula Pentheroudakis & Justus A. Baron, 2016. "Licensing Terms of Standard Essential Patents: A Comprehensive Analysis of Cases," JRC Research Reports JRC104068, Joint Research Centre.
    3. Justus Baron & Jorge Contreras & Martin Husovec & Pierre Larouche, 2019. "Making the Rules: The Governance of Standard Development Organizations and their Policies on Intellectual Property Rights," JRC Research Reports JRC115004, Joint Research Centre.
    4. Kwon, Seokbeom, 2020. "How does patent transfer affect innovation of firms?," Technological Forecasting and Social Change, Elsevier, vol. 154(C).

    More about this item

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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