Arbitration in SEP/FRAND Disputes: Overview and Core Issues

This article takes a look at arbitration in intellectual property matters with regards to the licensing of standard-essential patents (SEPs) on fair, reasonable, and non-discriminatory (FRAND) terms. Due to the digital transformation, the importance of FRAND licensing of SEPs is likely to increase and with it the need for appropriate conflict resolution. This is where arbitration can come into play due to its flexibility and efficiency. The resolution of SEP/FRAND disputes through Alternative dispute resolution (ADR) is also supported by administrative and judicial bodies and institutions such as the International Court of Arbitration of the International Chamber of Commerce (ICC) or the World Intellectual Property Organization (WIPO) have already gained experience in this field. The article lays down particularities regarding the scope of arbitration in such disputes before briefly touching upon the question of arbitrability. Due to the lack of a law applicable to a pre-existing contract in prototypical SEP/FRAND constellations, the choice of law is also of importance. A special emphasis is put on the issue of confidentiality in view of a public interest in having access to key results of SEP/FRAND arbitration proceedings. As set forth in the article, the FRAND ADR Guidelines authored by the Munich IPDR Forum propose a solution in the form of disclosure of the FRAND determination methodology to a neutral instance, subject to party approval. Lastly, the article looks at how state courts might assess licenses reached in alternative dispute resolution and examines whether EU competition law is a public policy hurdle in subsequent enforcement proceedings.