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Washington Law Review

Abstract

Information is crucial to the functioning of the patent system, as it is for other markets. Nevertheless, patent licensing terms are often subject to confidentiality agreements. On the one hand, this is not surprising: sellers and buyers do not normally publicize the details of their transactions. On the other hand, explicit confidentiality agreements are not common in other markets, and they may be particularly problematic for patents. Several United States Supreme Court cases have condemned agreements that suppress market information, and those cases could be applied to confidentiality agreements in the patent context. Of course, confidentiality may sometimes be pro-competitive, particularly when it involves only private negotiations. In other contexts, however, and notably in arbitration, which is a substitute for open court proceedings, the competitive balance is more problematic. Indeed, U.S. patent law mandates that patent arbitration awards be made public through the Patent and Trademark Office, though this requirement is generally ignored. Information about licensing terms is particularly important in one of today’s most important patent licensing contexts. The standard-setting organizations that define the technologies used in products like smartphones typically require their members to commit to license patented technologies that are adopted in standards on fair, reasonable, and nondiscriminatory (FRAND) terms. The non-discriminatory element of this commitment is difficult for potential licensees to enforce without information about the licensing terms to which other licensees have agreed. This Article describes the value of patent licensing information and discusses the antitrust implications of agreements to keep that information confidential, particularly in the FRAND context and in arbitration. The Article also offers several ways in which parties, standardsetting organizations, and arbitration bodies could seek to avoid the anticompetitive effects of confidentiality.

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