Private Law, Conflict of Laws, and a Lex Mercatoria of Standards-Development Organizations

Abstract

Technical standards created by industry standards-development organizations (SDOs) enable interoperability among products manufactured by different vendors. Over the years, SDOs have developed policies to reduce the risk that SDO participants holding patents covering the SDO’s standards will disrupt or hinder the development and deployment of these standards. These policies, including commitments to license standards-essential patents (SEPs) on terms that are fair, reasonable and non-discriminatory (FRAND), gain transnational application given the international character of SDO activities and are most effectively interpreted and applied on the basis of private law (contractual) principles. However, SDO policies are typically embodied in an SDO’s governing documents, which are in turn regulated by the law of the jurisdiction in which the SDO is based. This somewhat arbitrary linkage of SDO policies to national and state law has created inconsistencies in their interpretation and threatens to spark jurisdictional competition in an unproductive race to the bottom. This paper poses the question whether it would be possible to decouple SDO policy interpretation from the patchwork of national and state laws that purport to govern such policies in favor of a common lexicon of interpretive principles derived from the shared understanding of SDO participants: a “lex mercatoria” of standardization.

Keywords: Standards, FRAND, patent, private ordering