Standard-essential patent (SEP) disputes in which both parties have the same jurisdictional preference for a global FRAND (fair, reasonable and non-discriminatory) rate determination are hard to come by. Interjurisdictional turf wars are far more common. Case in point, even mighty Amazon has now realized that it went too far in seeking to undermine the jurisdiction of the Unified Patent Court (UPC), and is backing down (at least for now).
There have been a couple of cases recently where SEP holders offered adjustable licenses after implementers brought FRAND actions in the UK. But on the other end of the spectum there is a dispute in which one party brought scattershot FRAND litigation in multiple venues and even attempted to turn the European Telecommunication Standards Institute (ETSI) into a FRAND forum.
Chances are limited that two parties to a dispute will agree to refrain from gamesmanship in the form of leveraging jurisdictional overreach. Most of the time, someone will think there is something to gain from global FRAND determinations, antisuit injunctions, or similar instruments.
Parties could reduce interjurisdictional friction to zero by agreeing not to employ certain tactics. It may actually be in a party’s interest to make such a proposal to the other side and point courts in one or more jurisdictions to a refusal. Such a proposal can serve as a litmus test for who wanted to leverage different jurisdictions against each other and who would rather have avoided it in the first place.
The below should not be viewed as a draft contract. The parties to SEP disputes are more sophisticated than the drafter of the below. This structure was chosen only for clarity. It’s meant to be food for thought.
Please note that Section 2.9 contains a mechanism for arriving at a worldwide license agreement (including back-royalties) based on the outcomes in three or more jurisdictions. Therefore, there would be closure without having to prevail in an unlimited number of countries. But there would be no cross-jurisdictional gamesmanship.
Cross-border procedural agreement
This procedural agreement (“the Agreement”) is entered into between … (“Party A”) and … (“Party B”) (collectively “the Parties”) … on … (“the Effective Date”).
Capitalized terms used in the recitals or thereafter have the meaning ascribed to them in § 1.
Recitals
WHEREAS the Parties have previously entered into a license agreement …, which will expire on … [optionally: with a post-contractual standstill period ending on …], [alternatively: the Parties have not previously entered into a patent license agreement];
WHEREAS the Parties are, or may during the Term of this Agreement be, embroiled in Litigation over alleged infringements and/or licensing terms of Allegedly Essential IPRs;
WHEREAS the Parties desire to conserve court and party resources and to avoid any negative impact of their Litigation on comity; AND
WHEREAS the Parties, notwithstanding the foregoing, recognize that it is impracticable to assert IPRs in every single jurisdiction.
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Parties agree as follows:
§ 1 Defined Terms
1.1 Allegedly Essential IPRs: IPRs (as defined in this Section) which have been declared, or have been or may be alleged to be, essential to industry standards. [if necessary for clarity, use definitions of, or make reference to, relevant industry standards; if the scope is disputed, reference to a standards policy is preferable over importing the definition]
1.2 Damages: Monetary relief awarded on the basis of acts prohibited by law or contract, including without limitation theories that can have the same effect such as unjust enrichment.
1.3 Extraterritorial IPRs: IPRs (as defined in this Section) registered and enforceable without resorting to long-arm jurisdiction outside the Sovereign Territory (as defined in this Section) of a Forum (as defined in this Section) that made or is called upon to make a decision relating to those IPRs.
1.4 Forum: Any judicial, administrative, regulatory, or quasi-judicial body in which two or more parties with opposing interests submit evidence and/or legal arguments to a neutral decision-maker for the purpose of obtaining declaratory, monetary, or injunctive relief.
1.5 FRAND: Fair, reasonable and non-discriminatory licensing terms. For the purposes of this Agreement, FRAND includes RAND. The Parties remain free to argue that there are differences between FRAND and RAND in other contexts.
1.6 Intellectual Property Rights (“IPRs”): For the purposes of this Agreement, IPRs are patents, excluding design patents, as well as patent-like rights covering claimed technical inventions, such as utility models.
1.7 Litigation: Any unilaterally-initiated adversarial proceeding, action, suit, or hearing initiated before any Forum in any jurisdiction worldwide. For the avoidance of doubt, this term specifically includes civil actions (any lawsuit, countersuit, claim, countersuit, or appeal related to the infringement or enforceability of IPRs), rate-setting proceedings (any action brought to determine, adjudicate, or declare FRAND royalty rates or licensing terms), and trade and border actions (any proceeding before the United States International Trade Commission (“USITC”) under Section 337 of the Tariff Act of 1930, as amended (19 U.S.C. § 1337), or equivalent proceedings before any national or regional customs or border protection agency aimed at the seizure, detention, or exclusion of goods).
1.8 Sovereign Territory: The territory over which a judicial, administrative, regulatory, or quasi-judicial body has non-long-arm patent enforcement and/or validity jurisdiction, either based on the laws of the country in which it is based or on an intergovernmental treaty conferring jurisdiction over the territories of contracting member states.
1.9 Term: The Term commences on the Effective Date and ends on […] unless the Parties amend this Agreement to modify the Term or rescind or terminate this Agreement by mutual consent.
1.10 Withdraw: To take the necessary steps to terminate an ongoing Litigation in its entirety or with respect to one or more claims raised in a Litigation, whichever is necessary in order to fully achieve the purposes of this Agreement, and to consent to such steps. If there is a reasonable choice between withdrawal with or without prejudice, withdrawal without prejudice shall suffice. Such withdrawal furthermore includes any appeals. If the objectives of this Agreement are fully achieved by narrowing a claim in a specific way, including but not limited to territorially defined carve-outs, such narrowing shall be deemed a withdrawal. For the purposes of this Agrement, to Withdraw includes not to enforce any such decision already obtained and to cease any such ongoing enforcement.
§ 2 Mutual covenants
2.1 No court-imposed license agreements with extraterritorial effect
2.1.1 During the Term, the Parties covenant to refrain from initiating, or to immediately Withdraw if initiated, any Litigation aimed at having a Forum order a Party to grant or take, or to have an officer execute in a Party’s name and without that Party’s consent, a license agreement covering any IPRs registered outside the Sovereign Territory of the jurisdiction in which such Litigation is brought or pending.
2.1.2 Notwithstanding the foregoing, the Parties are not restricted in the pursuit of declaratory relief, however, provided that (i) its effect outside the Sovereign Territory of the declaring Forum is merely advisory and (ii) there is no coercive effect on the other Party with respect to the enforcement or licensing of IPRs registered and valid outside that Sovereign Territory. Such declaratory relief is not merely advisory if a Party has a reasonable apprehension that the actions it takes or declines to take with respect to any Extraterritorial IPRs could be deemed an act of contempt of court, could give rise to breach-of-contract or other claims resulting in damages awards or any other harm, could adversely affect the enforceability of the Party’s lawful rights, including but not limited to IPRs, in the Forum’s Sovereign Territory, or could in any other way impair that Party’s free will with respect to its disposition over Extraterritorial IPRs.
2.2 No Extraterritorial Damages
During the Term, the Parties covenant not to initiate, or to immediately Withdraw if initiated, any Litigation aimed at having a Forum award a Party damages over another Party’s actions, including but not limited to IPR enforcement and the refusal to enter into an IPR license agreement, to the extent that Extraterritorial IPRs are necessary elements of a damages claim.
2.3 No anti-suit, anti-enforcement, or anti-interference injunctions
2.3.1 Except for the purpose of enforcing the terms of this Agreement or of any other mutual agreement between the Parties, which does not include agreements to which a Party is at best a third-party beneficiary, the Parties covenant during the Term to refrain from seeking, to immediately Withdraw any such Litigation, aimed at having a Forum order a Party to take, cease to take, or desist from taking actions in Litigation brought or pending outside its Sovereign Territory [optionally it is also possible to omit the last four words, in which case one could bring such a claim in U.S. district court against a USITC proceeding].
2.3.2 The previous section equally applies to anti-anti-suit, anti-anti-enforcement and anti-anti-interference injunctions, or any similar derivatives and retaliatory or pre-emptive instruments.
2.4 Competition enforcement
If a Party brings or has brought a complaint over another Party’s conduct with a competition enforcement authority or in a Forum, it shall limit the scope of its complaint, with respect to market definition, acucsed conduct, and remedies, to IPRs registered and valid in that authority’s or Forum’s Sovereign Territory.
2.5 No complaints with standard-setting organizations (“SSOs”)
During the Term, and subsequently with respect to any act or other occurrence during the Term, the Parties covenant not to complain of a Party’s enforcement of IPRs and proposed licensing terms to any SSO. The Parties will not take any other steps to bar, impede, or impair a Party’s participation in the development of industry standards.
2.6 No long-arm IPR enforcement
During the Term, and subsequently with respect to damages relating to the Term or any part thereof, the Parties covenant to refrain from asserting, to immediately withdraw if assertions have been made, not to enforce any related decision, and to immediately cease the enforcement of any related decision, IPRs outside a Forum’s Sovereign Territory, including but not limited to long-arm claims under the February 25, 2025 BSH Hausgeräte v. Electrolux decision by the European Court of Justice.
2.7 Injunctions against infringement
During the Term, the Parties covenant to refrain from initiating, or to immediately Withdraw if initiated, any Litigation aimed at obtaining an injunction or other exclusionary order over any IPRs if the deciding Forum holds that the Party enjoined or to be enjoined is entitled to a license on FRAND terms and the IPR-asserting Party argues in the Forum that (i) it discharged its FRAND licensing obligation through a licensing offer that non-optionally covered some or all of its Extraterritorial IPRs and/or that (ii) the other Party is an unwilling licensee because it opts for a license confined in scope to the Forum’s Sovereign Territory.
2.8 No restrictions on patent exhaustion defense
To the extent that a jurisdiction allows patent exhaustion theories based on acts (such as a first sale) outside the Forum’s Sovereign Territory,1 the Parties are not restricted by this Agreement in raising such a defense.
2.9 Worldwide dispute resolution based on outcomes in three or more Sovereign Territories
2.9.1 If, during the Term, a multijurisdictional IPR dispute between the Parties has been resolved in at least three jurisdictions in which one Party (“the Enforcing Party”) asserted IPRs and in the aggregate of which the other Party (“the Defending Party”) generates more than thirty percent of its worldwide sales or more than fifty percent of its sales outside the jurisdiction in which it is domiciled, either Party is entitled to the other Party’s immediate entry into a worldwide license agreement settling all of the disputes that are mooted by means of a license (“Global License-Based Settlement”) as set forth in the following subsections of this Section. For the purposes of the foregoing, resolution in a single jurisdiction may be achieved by a final judgment that cannot be or is not appealed further or by an agreement between the parties settling the dispute with respect to the given Forum (“Single-Jurisdiction Outcome”). If resolution has been achieved in a court of multinational competence as well as in one or more of its contracting member states, the Single-Jurisdiction Outcome in a national Forum shall apply to that contracting member state, thereby overriding the multinational outcome with respect to that Sovereign Territory. For the geographic distribution of the Defending Party’s sales, the Enforcing Party can assume that it is equivalent to the share of global GDP of the given jurisdiction unless the Defending Party, within two weeks of executing this Agreement, discloses to the Enforcing Party the geographic distribution of the sales of its products relevant to this dispute.
2.9.2 In cases where the Parties cannot agree on which of the Enforcing Party’s IPRs are subject to a contractually owed or compulsory license for a particular type of use (“IPR-Use Combination”), the Enforcing Party, in its sole discretion, may either require the Defending Party to take a license with respect to all IPR-Use Combinations to which it claimed, in any forum, an entitlement to a license. The Enforcing Party is under no obligation to grant a license covering IPR-Use Combinations in a given jurisdiction if this entitlement has not been confirmed by the relevant Single-Jurisdiction Outcome. As long as there is a dispute over this entitlement in any jurisdiction, the Defending Party may continue to seek court rulings in that jurisdiction on that particular entitlement, but not with respect to Extraterritorial IPRs.
2.9.3 The term of the Global License-Based Settlement shall commence on the date that a prior license agreement between the Parties began [alternatively: set a specific date] and last five years from that date or three years from the date on which the Global License-Based Settlement is last signed, whichever is later.
2.9.4 Royalty rates for the term of the Global License-Based Settlement shall be derived from the Single-Jurisdiction Outcomes by calculating a weighted average based on the geographic distribution of the Defending Party’s relevant sales. The portion for each Sovereign Territory with respect to which no resolution has been achieved shall be based on the outcome in the economically most comparable jurisdiction.
2.9.5 The Parties agree that back-royalties on past sales are owed by a willing licensee for the full period of any past use of the licensed IPRs without regard to statutes of limitation for the pursuit of infringement damages in a given jurisdiction.
2.9.6 The interest rate on delayed payments, be it for past use or future royalty obligations, is one percent above U.S. Prime for each portion of the period of delay, and interest is compounded annually.
2.9.7 Except with respect to jurisdictions whether the parties have otherwise agreed or where a Forum has decided on a final basis that is not appealable or was not appealed, the Parties shall not seek a recovery of litigation expenses from each other and shall, to the extent possible, split court fees evenly.
2.9.8 For the non-monetary contract terms, the Enforcing Party may in its reasonable discretion choose the contract language of any of the Single-Jurisdiction Outcomes.2
2.9.9 If between two Parties either Party is required to take a patent license from the other, the terms are determined separately, but for a given portion of the term of a license, the Party entitled to the greater amount may deduct its own obligations and seek a balancing payment from the other Party.
FURTHER CLAUSES
Obviously to be added: boilerplate clauses such as severability, jurisdiction, and forum selection.