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Is Arbitration the Answer? Industry and Legal Experts Discuss Resolution of RAND Disputes

When a patent is essential to implementing a standard, standards developing organizations (SDOs) typically require that the Standard-Essential Patent (SEP) holder license implementers on reasonable and non-discriminatory (RAND) terms. In recent years, an increase in the number of high-profile SEP disputes in the mobile device sector has focused attention on what RAND commitments really mean and how they can be resolved more efficiently and without resorting to litigation. Many have pointed to arbitration as a possible means of resolving them.

To examine SEP and RAND issues, and explore the pros and cons of arbitration, nearly 70 legal experts and other members of the standards and conformity assessment community came together in October 2013, for the American National Standards Institute (ANSI) Legal Issues Forum: Arbitration of RAND Disputes, held as part of World Standards Week (WSW) 2013.

The event featured a keynote address from Oliver (Ollie) Smoot, past International Organization for Standardization (ISO) president and former chairman of ANSI’s Board of Directors. Mr. Smoot praised the widespread use by SDOs of the patent policy included in the ANSI Essential Requirements, and he highlighted elements of the policy and its guidelines that are intended to reduce the risk of patent disputes, including ANSI’s encouragement of early disclosure of SEPs and an early indication of the patent holder’s willingness to license on RAND terms.

Following Mr. Smoot’s address, Jorge Contreras, an associate professor of law at American University in Washington, DC, moderated an interactive roundtable discussion on issues related to the arbitration of RAND disputes. Panelists discussed the legal complications inherent in defining RAND terms and emphasized the importance of balance – ensuring fair compensation for patent holders while also preventing companies from profiting unduly from the inclusion of a patent in a widely adopted standard. Participants praised the federal government for raising concerns regarding RAND disputes in an open, reasonable manner, but cautioned that a flexible approach might be needed due to the varying cultures within different technology sectors and different SDOs.

Comparing the benefits and downsides of litigation, panelists noted the due process protections built into the U.S. legal system, but expressed concerns about the ability of non-expert jurors to fully engage with complex technical issues. With respect to arbitration, panelists noted that proceedings are private and can be arbitrated by an individual with demonstrated technical expertise, but that there can be significant variations in outcome depending upon the arbitrator. Support was voiced by some panelists for arbitration as a method for resolving disputes over the licensing of SEPs, with the caveat that arbitration is likely to be most effective in resolving disputes when it is entered into voluntarily by both parties. However, panelists and attendees alike agreed that the conversation must continue and solutions must continue to be analyzed.

To continue the conversation, another ANSI Workshop: Arbitration of RAND Disputes will be held January 21, 2014, at WilmerHale in Washington, DC, and will build on the discussions that began during the October Legal Issues Forum. The event will again be moderated by Professor Jorge Contreras, feature an interactive panel session consisting of legal and industry experts, and examine the incorporation of essential patents into standards, including RAND terms, arbitration, injunction, dispute resolution, and more. Click here to view the agenda.

As advancements in technology and innovation continue, issues surrounding SEPs and RAND will continue to become more complex. When industry and technical experts participate and collaborate on standardization initiatives, solutions can be found that respond to the needs of industry and offer alternatives to costly litigation.

Cisco representatives already participate in ANSI’s Intellectual Property Rights Committee (IPRPC), where the Institute’s positions are formulated on issues relating to SEPs, copyright, and other proprietary intellectual property in national, regional, or international standards. If you are also interested in these issues, please register for the free January 21st workshop to join the conversation, and help create solutions that save time, money, and make the world a better place for us all.

S. Joe Bhatia

President and CEO

American National Standards Institute

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