Journal Article

THE MEANING OF FRAND, PART II: INJUNCTIONS

J. Gregory Sidak

in Journal of Competition Law & Economics

Volume 11, issue 1, pages 201-269
Published in print March 2015 | ISSN: 1744-6414
Published online February 2015 | e-ISSN: 1744-6422 | DOI: https://dx.doi.org/10.1093/joclec/nhv005

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Under what conditions may the holder of standard-essential patents (SEPs) seek to enjoin an infringing implementer without breaching the SEP holder's contract with the standard-setting organization (SSO) to provide access to those SEPs on fair, reasonable, and nondiscriminatory (FRAND) terms? I show that the SEP holder's contractual obligations still permit it to seek an injunction. A FRAND commitment requires the SEP holder to offer a license for the SEPs on FRAND terms (or otherwise to grant implementers access to the SEPs). Extending an offer containing a price within the FRAND range discharges the SEP holder's contractual obligation. Thereafter, the SEP holder may seek to enjoin an implementer that has rejected a FRAND offer. This analysis indicates the imprudence of categorically banning injunctions for the infringement of SEPs, as some scholars have advocated and as one of the world's most significant SSOs—the Institute of Electrical and Electronics Engineers (IEEE)—actually did in 2015 in amendments to its bylaws. Such a ban would invite opportunism by implementers and is unnecessary. Courts already can prevent opportunism by SEP holders by conditioning an injunction on the implementer's actual or constructive rejection of a FRAND offer.

Keywords: K00; K12; K21; K41; L12; L63; O34

Journal Article.  33063 words. 

Subjects: Market Structure, Firm Strategy, and Market Performance ; Technological Change; Research and Development ; Antitrust Issues and Policies ; Manufacturing ; Law and Economics ; Contract Law

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