Patent Markets: An Opportunity for Technology Diffusion and FRAND Licensing?

Marquette Intellectual Property Law Review Volume 18 | Issue 2 Article 6 Patent Markets: An Opportunity for Technology Diffusion and FRAND Licensing? Stéphanie Chuffart-Finsterwald Follow this and additional works at: http://scholarship.law.marquette.edu/iplr Part of the Intellectual Property Commons Repository Citation Stéphanie Chuffart-Finsterwald, Patent Markets: An Opportunity for Technology Diffusion and FRAND Licensing?, 18 Marq. Intellectual Property L. Rev. 335 (2014). Available at: http://scholarship.law.marquette.edu/iplr/vol18/iss2/6 This Article is brought to you for free and open access by the Journals at Marquette Law Scholarly Commons. It has been accepted for inclusion in Marquette Intellectual Property Law Review by an authorized administrator of Marquette Law Scholarly Commons. For more information, please contact . CHUFFART-FINSTERWALD FINAL (DO NOT DELETE) 6/23/2014 1:41 PM PATENT MARKETS: AN OPPORTUNITY FOR TECHNOLOGY DIFFUSION AND FRAND LICENSING? STÉPHANIE CHUFFART-FINSTERWALD* INTRODUCTION ..................................................................................... 339 I. LICENSING AND TECHNOLOGY DIFFUSION ........................................ 341 A. Why Patent Licensing Enhances Technology Diffusion...... 341 B. Standard Setting and FRAND Terms ................................... 346 II. THE EMERGENCE OF A PATENTS MARKET ...................................... 353 III. A MARKET ILLUSTRATION: IPXI AND UNIT LICENSE RIGHTS....... 356 IV. PATENT MARKETS: TOOLS TOWARDS ENHANCED TECHNOLOGY DIFFUSION AND FULFILLMENT OF FRAND LICENSING COMMITMENTS? ......................................................................... 359 A. Features Favoring Technology Diffusion ............................ 359 1. Time Efficiency ............................................................. 359 2. Transparent Access ........................................................ 360 3. Equitable and Non-Exclusive Access to Technologies . 360 4. Fair Pricing and Reduction of Legal Costs in Licensing Process ......................................................................... 361 5. Inclusion of Patented Technology or Application Necessary to a Unit in ULR Contracts ......................... 362 B. Market-Established Prices as Criteria in Interpreting FRAND Licensing Terms ................................................................. 364 CONCLUSION ......................................................................................... 366 * Ph.D. Candidate, The Graduate Institute of International and Development Studies. LL.M. (Columbia Law School), Master in International Law (Graduate Institute of International and Development Studies), Bachelor in Law (University of Fribourg). This article was written during a fellowship at Columbia Law School’s Centre for Climate Change Law. I am grateful to Professor Harold Edgar, Professor Jorge Viñuales, Professor Mavis Fowler-Williams, and Professor Jacques de Werra for valuable comments on this article. I am also grateful to participants to the Columbia Law School Associates Workshop for comments on an earlier draft of this work, and in particular to Yafit Lev-Aretz, Elizabeth Sheargold, Shelley Welton, and Anne Siders. I am responsible for any remaining error. CHUFFART-FINSTERWALD FINAL (DO NOT DELETE) 336 MARQ. INTELL. PROP. L. REV. 6/23/2014 1:41 PM [Vol. 18:2 CHUFFART-FINSTERWALD FINAL (DO NOT DELETE) 2014] PATENT MARKETS 6/23/2014 1:41 PM 337 STÉPHANIE CHUFFART-FINSTERWALD Stéphanie Chuffart-Finsterwald is a fourth year Ph.D. candidate in international law at the Graduate Institute of International and Development Studies (the Graduate Institute) in Geneva, Switzerland. She specializes in international intellectual property law and international environmental law, in particular on the issue of environmental technology diffusion. She holds a LL.M. from Columbia Law School (Harlan Fiske Stone Scholar), a Bachelor Degree in Swiss Law (Magna Cum Laude) from the University of Fribourg, Switzerland, and a Master Degree in International Law from the Graduate Institute, where she equally worked as a teaching and research assistant in international environmental law. From June 2012 to December 2013, she was a visiting fellow at the Columbia Law School’s Centre for Climate Change Law. CHUFFART-FINSTERWALD FINAL (DO NOT DELETE) 338 MARQ. INTELL. PROP. L. REV. 6/23/2014 1:41 PM [Vol. 18:2 CHUFFART-FINSTERWALD FINAL (DO NOT DELETE) 2014] PATENT MARKETS 6/23/2014 1:41 PM 339 INTRODUCTION The increased complexity of technological features and a growing pace of innovation are forcing the innovation industry to adopt new research and development (R&D) strategies. Indeed, the production of most of today’s technologies requires a variety of machines and processes that are significantly more diverse than those available in any single firm. In addition, the nature of firms is changing and as firms have a tendency to become smaller, there is a greater need for access to technologies that small firms cannot develop themselves. An increase in technology diffusion is also needed to address global challenges such as climate change and human health. For these reasons, there is a need for strategic alliances and innovative licensing agreements among industries.1 At a time when technology diffusion is thus more needed than ever before, new solutions are required. However, in the absence of efficient forums, licensors, and licensees miss important opportunities in valuing intellectual property assets and diffusing technology. The emergence of patent markets where patents have become tradable assets can therefore present a unique opportunity, as these markets appear to be a relevant way of getting around the anti-commons. Furthermore, patent markets are of interest in the current fair, reasonable, and non-discriminatory (FRAND) licensing debate.2 As flagged by the recent amicus curiae submission presented by the Federal Trade Commission (FTC) in Apple v. Motorola,3 FRAND licensing commitments are central to the fight against anticompetitive practices in the much needed, but highly complex, standard setting processes. In our interconnected society ruled by technology intensive devices, industry has come together to institute standard-setting organizations (SSOs), which are industry groups establishing technical models, rules, and principles authoritative in a particular industry. These organizations have become increasingly important and promote innovation as well as interoperability of products.4 Standard setting and standard-essential patents 1. See, e.g., THEODORE HAGELIN, TECHNOLOGY INNOVATION LAW AND PRACTICE, 5–6 (2011); John Barton, New Trends in Technology Transfer: Implications for National and International Policy, in INTERNATIONAL INTELLECTUAL PROPERTY IN AN INTEGRATED WORLD ECONOMY 313, 314 (Frederick M. Abbott et al. eds., 2d ed. 2011). 2. In the United States, it seems that RAND commi (...truncated)