This Article addresses a single problem: how can we allow engineers and scientists from different institutions to collaborate to set the best technical standards possible, not considering intellectual property (“IP”) rights, and then establish the royalty rates for each patent owner after the standard is set? The current system attempting to solve this problem requires patent owner participants to sign a Reasonable and Non-Discriminatory (“RAND”) commitment. These RAND commitments require the participants to agree an ante, i.e., before the standard is actually set, to license whatever patent rights they may ultimately have in the standard on terms that are reasonable and non-discriminatory. However, RAND commitments do not elaborate on what it means for a license to be reasonable and non-discriminatory, or how the reasonableness determination is different from the non-discriminatory determination. Too often rent seeking patent owners cannot agree on how to split the royalty payments and end up in court. Nastiness ensues. Through the current Georgia Pacific fifteen factor balancing test for determining whether a licensing agreement (or lack thereof) satisfies the RAND commitment, court decisions are almost as unpredictable as if the RAND commitment was not in place. As such, over the past decade, a number of more predictable methods for courts to use to split royalty profits in RAND commitments have been suggested. This Article is not concerned with analyzing which alternative system should replace the current system, however. Using any of three alternative methods for interpreting RAND commitments discussed in this Article would be better than the current system. Thus, this Article differs from others in the literature because it addresses the standards setting problem from a procedural standpoint. Because RAND commitments do not elaborate as to their meaning at all, I recommend RAND commitments elaborate by telling courts what RAND commitments do not mean. By adding a clause strictly rejecting the Georgia Pacific test in RAND commitments, courts would be free to use any new test they find fit and would be more inclined to strike down the Georgia Pacific factors test in the standards setting context.
Modifying RAND Commitments to Better Price Patents in the Standards Setting Context,
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