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Unwired Planet v Huawei [2020] UKSC 37: The UK Supreme Court Declared Competence to Determine Global FRAND Licensing Rate
- Background
The UK Supreme Court delivered the landmark judgment on Unwired Planet v Huawei and Conversant v Huawei and ZTE, [2020] UKSC 37 on 26 Aug 2020. In 2014, the US company Unwired Planet sued Huawei and other smartphone manufacturers for infringing its UK patents obtained from Ericsson. Some of these patents are essential to the 2G, 3G and 4G wireless telecommunication standards set by the European Telecommunications Standards Institute (ETSI), an international standards setting organization (SSO). Since Ericsson and Nokia are subject to various ETSI policies including patent policies, these policies continue to apply after they are acquired by Unwired Planet. The ETSI patent policy requires that holder of patents that are indispensable for the implementation of ETSI standards, referred to as standard essential patents (SEP) , must grant licence to implementers (such as the smartphone manufacturers) on “fair, reasonable and non-discriminatory ” (FRABD) terms. In 2017, Canadian company Conversant filed similar lawsuits against Huawei and ZTE.
Unwired Planet and Conversant proposed to grant the worldwide licence, but Huawei proposed a UK only licence. Huawei believes that the UK litigation only concerns the UK licence and the licence fees paid to resolve disputes under the UK procedure should cover only British patents and not global patents. The UK Supreme Court upheld the High Court and Court of Appeal judgments, ruling that the FRAND licence will need to be global between large multinational companies. If Huawei refuses to pay the FRAND global licence rate determined by the court, the court will issue an injunction restraining Huawei’s sale of infringing products in the UK.
- Legal Issues
The Supreme Court answers five legal questions: 1. Does the English court have the power or jurisdiction without the parties’ agreement to require the parties to enter into a global licence under a multinational patent portfolio? 2. Is England the proper forum for such a claim? 3. What is the meaning and effect of the non-discrimination component of the FRAND undertaking? 4. Does the CJEU’s decision in Huawei v ZTE mean that a SEP owner is entitled to seek an injunction restraining infringement of those SEPs in circumstances such as those of the Unwired case? 5. Should Court grant damages in lieu of an injunction?
Given our focus on private international law, this note only focuses on the private international law related issue, namely the English court’s “long arm” jurisdiction to grant a global licence for dispute concerning the infringement of the UK patent and to issue an injunction if the global licence rate is not complied.
- Territoriality of Patents and Globalisation of Telecommunication
Telecommunication industry faces the conflict between territoriality of patents and globalisation of telecom products and equipment. Products made in different countries should be able to communicate and inter-operate and keep operational in different jurisdictions. It would be unrealistic to require patent holders to defend their patent country by country. It is also harmful to the industry if SEP holders demand unreasonable licence fees and prohibit the use of its invention within a national jurisdiction. It is unreasonable for consumers if they cannot use their mobiles smartphones or other telecom devices when travel abroad. To reconcile the conflict, the ETSI policy requires the SEP holders to irrevocably license their SEP portfolios on fair, reasonable and non-discriminatory (“FRAND”) terms. The policy reconciles conflict of interest between SEP holders and SEP implementers but does not, at least directly, resolve the conflict between territoriality and globalisation. In terms of the later, the industry practice shows that multinational SEP holders and implementers usually negotiate worldwide licences, bearing in mind that the SEP holders and implementers cannot test validity of each patent of the portfolio in each country. The licence rate is thus based on the understanding that some patents may be invalid in some countries.
The Supreme Court confirmed the territoriality principle. English court only has jurisdiction to determine validity and infringement of the UK patent. But the English court, based on the jurisdiction on the UK patent, has the competence to grant a global licence rate.
This judgment includes a few private international law matters. Firstly, the granting of global licence rate is a matter in relation to applicable law instead of jurisdiction from the private international law perspective. The case concerns the infringement and validity of the UK patents and the English court has no problem to take jurisdiction. After ruling the defendant indeed infringed the valid UK patents the English court moved to remedy. The remedy to the infringement of SEPs is the grant of FRAND rate pursuant to the ETSI policy and industry practice. This, however, does not mean the English court directly treats business custom or ETSI policy as the governing law, which, standing alone, may not be able to acquire the status as other non-state norms under the current legal framework. (Rome I Regulation) They are applied pursuant to the contract principle. The judgment heavily relies on the ETSI policy, including its language and purpose. The court concludes that the ETSI policy creates a contractual arrangement between SEP holders and implementers and it is the intention of the policy to grant global licences for SEP portfolios taking into account of industry practices and the purpose. English courts’ power to determine a global FRAND licence rate is inherently consistent with the ETSI policy, given there is no alternative international forum available. There is no much consideration of any choice of law rules, except the clarification that the ETSI policy was governed by French law. The court nevertheless does not consider the French law principle in interpreting contracts. Instead, the court naturally applies these non-state norms as part of the contract between the parties. Relying on contract to seise the power to determine the global rate helps the court to avoid the necessity to determine the validity of foreign patents of the same patent family.
The Supreme Court also considered the forum non conveniens in Conversant case (forum non conveniens was not plead in Unwired Planet). The court refused to accept that China would be the more appropriate alternative forum. Although 64% of Huawei’s sales occur in China and only 1% in the UK and 60% of the ZTE’s operating revenue in the first six months of 2017 was from China and only 0.07% from the UK, the Supreme court held that Chinese courts might not assume jurisdiction to determine the global FRAND term. It seems possible that if China, or any other country, which maybe the most important global market for the disputed patents, follows the UK approach to grant global licence for SEP portfolios, the English court may apply forum non conveniens to decline jurisdiction. In fact, Chinese law does not prevent a Chinese court from issuing licence with broader territorial coverage, though there is not yet any case on this matter. The “Working Guidance for Trial of SEP disputes by the Guangdong Province Higher People’s Court (for Trial Implementation)” of 2018 provides in Art 16 that if the SEP holder or implementer unilaterally applies for the licence covering areas exceeding the court’s territory, and the other party does not expressly oppose or the opposition is unreasonable, the court could determine the applied licence rate with broader geographic coverage.
A more controversial point of the judgment is that the Supreme Court concludes that the ESTI policy would allow the court to issue injunction if the implementer refuses to pay the global licence rate. It is important to know that the ESTI policy does not expressly state such an effect. The UK court believes that an injunction would serve as a strong incentive for the patentee to accept a global licence. Damages, on the other hand, may encourage implementers to infringe patents until damages are applied and received in each jurisdiction. This conclusion is rather surprising as the injunction of SEPs in one jurisdiction may have the potential to disturb the whole telecommunication market for the given manufacturer. There is even argument that the purpose of ESTI is to prohibit injunction for SEPs (here; and here) The use of injunction may not “balance” the conflicting interests, but significantly favours the SEP holders to the disadvantage of the implementers
- Forum Shopping and Conflict of Jurisdiction
It is important to note that regardless of the current geopolitical tension between the US and China, the UK Supreme Court’s judgment should not be interpreted as one that has taken the political stance against China’s High-Tech companies. (here) It upholds the judgments of the lower courts dated back to 2017. It is also consistent with the principle of judicial efficiency, protection of innovation and business efficacy. Although the final result protects the patent holders more than the implementers, it is hard to argue anything wrong in terms of policy. Furthermore, since Huawei and Unwired Planet had already settled and the rate set by the court had been paid, this judgment will not result in additional payment obligations or an injunction. (here) Finally, although Huawei lost this case as the implementer, Huawei is also the biggest 5G SEP holder. Pursuant to this judgment, although Huawei has been banned from the UK’s 5G network, it can still require other 5G implementers for a global FRAND licence rate and apply for injunction upon a refusal.
If there is any political drive, it may be the intention to become an international litigation centre for patent disputes after Brexit. This judgment allows the English court jurisdiction to determine a global licence rate simply based on the infringement of a UK patent, no matter how small the UK market is. The one-stop solution available in the English court would be particularly welcome by patent holders, especially SEP holders, who would no longer need to prove validity in each jurisdiction. This judgment also enhances the negotiation power of the SEP holders versus implementers. It is likely that more FRAND litigation would be brought to the UK.
On the other hand, some implementers may decide to give up the UK market, especially those with small market share in the UK. Some companies may decide to accept the injunction instead of paying high global licence rate. This may also suggest that the UK consumers may find it slower and more expensive to access to some high-tech products.
Furthermore, the Supreme Court’s judgment does not depend on any unique domestic legislation but the ETSI contractual arrangement which applies to its members and the industry practice and custom. There is no barrier for other countries, including China, to follow the same reasoning. It is possible many other countries may, fully or partly, follow this judgment. If the courts of multiple countries can set the global FRAND rate and they apply different standards to set this rate, forum shopping and conflict of jurisdictions may be inevitable. Anti-suit injunction and anti-enforcement injunction may be more frequently applied and issued. The China Supreme Court IP Tribunal recently restrained the Conversant from applying the German court to enforce the German judgment in a related case, which awards Conversant the FRAND rate 18.3 times of the rate awarded by the Chinese courts on the infringement of the Chinese patents of the same family. This is called act preservation in China with the similar function as the anti-enforcement injunction. ((2019) Supreme Court IP Tribunal Final One of No 732, 733 and 734) This case suggests Chinese courts would be ready to issue the similar act preservation order or injunction to prevent the other party from enforcing a global FRAND rate set by the foreign court against the Chinese implementers, whether or not Chinese court could issue the global FRAND licence. The long term impact of the Unwired Planet v Huawei may be the severer competition in jurisdiction between different courts which may require reconciliation either through judicial cooperation arrangement or through the establishment of a global tribunal by the relevant standard setting organisation.
Ruth Bader Ginsburg and the Conflict of Laws
by Tobias Lutzi, University of Cologne
Since the sad news of her passing, lawyers all around the world have mourned the loss of one of the most iconic and influential members of the legal profession and a true champion of gender equality. Through her work as a scholar and a justice, just as much as through her personal struggles and achievements, Ruth Bader Ginsburg has inspired generations of lawyers.
On top of being a global icon of women’s rights and a highly influential voice on a wide range of issues, Ginsburg has also expressed her views on questions relating to the interaction between different legal systems, both within the US and internationally, on several occasions. In fact, two of her early law-review articles focus entirely on two perennial problems of private international law.
Accordingly, readers of this blog may enjoy to go through some of her writings in this area, both judicial and extra-judicial, in an attempt to pay tribute to her work.
Jurisdiction
In one of Ginsburg’s earliest publications, The Competent Court in Private International Law: Some Observations on Current Views in the United States (20 (1965) Rutgers Law Review 89), she retraces the approach to the adjudication of persons outside the forum state in US law by reference to both the common law and continental European approaches. She argues that
[t]he law in the United States has […] moved closer to the continental approach to the extent that a relationship between the defendant or the particular litigation and the forum, rather than personal service, may function as the basis of the court’s adjudicatory authority.
Ginsburg points out, though, that each approach includes ‘exorbitant’ bases of judicial competence, which ‘provide for adjudication resulting in a personal judgment in cases in which there may be no connection of substance between the litigation and the forum state.’
Bases of judicial competence found in the internal laws of certain continental states, but generally considered undesirable in the international sphere, include competence founded exclusively on the nationality of the plaintiff – for example, Article 14 of the French Civil Code – and competence (to render a personal judgment) based on the mere presence of an asset of the defendant when the claim has no connection with that asset-a basis found in the procedural codes of Germany, Austria, and the Scandinavian countries. Equally undesirable in the view of continental jurists is the traditional Anglo-American rule that personal service within the territory of the forum confers adjudicatory authority upon a court even in the case of a defendant having no contact with the forum other than transience
The ‘most promising currently feasible remedy’ for improper use of these ‘internationally undesirable’ bases of jurisdiction, she argues, is the doctrine of forum non conveniens.
At the least, a plaintiff who chooses such a forum should be required to show some reasonable justification for his institution of the action in the forum state rather than in a state with which the defendant or the res, act or event in suit is more significantly connected.
Applicable Law
As a Supreme Court justice, Ginsburg also had numerous opportunities to rule on conflicts between federal and state law.
In Honda Motor Co v Oberg (512 U.S. 415 (1994)), for instance, Ginsburg dissented from the Court’s decision that an amendment to the Oregon Constitution that prevented review of a punitive-damage award violated the Due Process Clause of the federal Constitution, referring to other protections against excessive punitive-damage awards in Oregon law. In BMW of North America, Inc v Gore (517 US 559 (1996)), she dissented from another decision reviewing an allegedly excessive punitive-damages award and argued that the Court should ‘resist unnecessary intrusion into an area dominantly of state concern.’
According to Paul Schiff Berman (who provided a much more complete account of Ginsburg’s relevant writings than this post can offer in Ruth Bader Ginsburg and the Interaction of Legal Systems (in Dodson (ed), The Legacy of Ruth Bader Ginsburg (CUP 2015) 151)), her ‘willingness to defer to state prerogatives in interpreting state law […] may surprise those who focus on Justice Ginsburg’s Fourteenth Amendment jurisprudence in gender-related cases.’
The same deference can also be found in some of her writings on the interplay between US law and other legal systems, though. In a speech to the International Academy of Comparative Law, she argued in favour of taking foreign and international experiences into account when interpreting US law and concluded:
Recognizing that forecasts are risky, I nonetheless believe the US Supreme Court will continue to accord “a decent Respect to the Opinions of [Human]kind” as a matter of comity and in a spirit of humility. Comity, because projects vital to our well being […] require trust and cooperation of nations the world over. And humility because, in Justice O’Connor’s words: “Other legal systems continue to innovate, to experiment, and to find . . . solutions to the new legal problems that arise each day, [solutions] from which we can learn and benefit.”
Recognition of Judgments
Going back to another one of Ginsburg’s early publications, in Judgments in Search of Full Faith and Credit: The Last-in-Time Rule for Conflicting Judgments (82 (1969) Harvard Law Review 798), Ginsburg discussed the problem of the hierarchy between conflicting judgments from different states and made a case for ‘the unifying function of the full faith and credit clause’. As to whether anti-suit injunctions should also the clause, she expressed a more nuanced view, though, explaining that
[t]he current state of the law, permitting the injunction to issue but not compelling any deference outside the rendering state, may be the most reasonable compromise […].
The thesis of this article, that the national full faith and credit policy should override the local interest of the enjoining state, would leave to the injunction a limited office. It would operate simply to notify the state in which litigation has been instituted of the enjoining state’s appraisal of forum conveniens. That appraisal, if sound, might induce respect for the injunction as a matter of comity.
Ginsburg had an opportunity to revisit a similar question about thirty years later, when delivering the opinion of the Court in Baker v General Motor Corp (522 US 222 (1998)). Although the Full Faith and Credit Clause was not subject to a public-policy exception (as held by the District Court), an injunction stipulated in settlement of a case in front of a Michigan court could not prevent a Missouri court from hearing a witness in completely unrelated proceedings:
Michigan lacks authority to control courts elsewhere by precluding them, in actions brought by strangers to the Michigan litigation, from determining for themselves what witnesses are competent to testify and what evidence is relevant and admissible in their search for the truth.
This conclusion creates no general exception to the full faith and credit command, and surely does not permit a State to refuse to honor a sister state judgment based on the forum’s choice of law or policy preferences. Rather, we simply recognize that, just as the mechanisms for enforcing a judgment do not travel with the judgment itself for purposes of Full Faith and Credit […] and just as one State’s judgment cannot automatically transfer title to land in another State […] similarly the Michigan decree cannot determine evidentiary issues in a lawsuit brought by parties who were not subject to the jurisdiction of the Michigan court.
According to Berman, this line of reasoning is testimony to Ginsburg’s judicial vision of ‘a system in which courts respect each other’s authority and judgments.’
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The above selection has been created rather spontaneously and is evidently far from complete; please feel free to use the comment section to highlight other interesting parts of Justice Ginsburg’s work.
The Bee That’s Buzzing in Our Bonnets. Some Thoughts about Characterisation after the Advocate General’s Wikingerhof Opinion
Last week, AG Saugmandsgaard Øe rendered his Opinion on Case C-59/19 Wikingerhof, which we first reported in this post by Krzysztof Pacula. The following post has been written by Michiel Poesen, PhD Candidate at KU Leuven, who has been so kind as to share with us some further thoughts on the underlying problem of characterisation.
Characterisation is not just a bee that has been buzzing in conflicts scholars’ bonnets, as Forsyth observed in his 1998 LQR article. Given its central role in how we have been thinking about conflicts for over a century, it has pride of place in jurisprudence and literature. The Wikingerhof v Booking.com case (C-59/19) is the latest addition to a long string of European cases concerning the characterisation of actions as ‘matters relating to a contract’ under Article 7(1) of the Brussels Ia Regulation n° 1215/2012.
Earlier this week, Krzysztof Pacula surveyed Advocate General Saugmandsgaard Øe’s opinion in the Wikingerhof case on this blog (Geert Van Calster also wrote about the opinion on his blog). Readers can rely on their excellent analyses of the facts and the AG’s legal analysis. This post has a different focus, though. The Wikingerhof case is indicative of a broader struggle with characterising claims that are in the grey area surrounding a contract. In this post, I would like to map briefly the meandering approaches to characterisation under the contract jurisdiction. Then I would like to sketch a conceptual framework that captures the key elements of characterisation.
1. Not All ‘Matters Relating to a Contract’ Are Created Equal
There are around 30 CJEU decisions concerning the phrase ‘matters relating to a contract’. Three tests for characterisation are discernible in those decisions. In the first approach, characterisation depends on the nature of the legal basis relied on by the claimant. If a claim is based on an obligation freely assumed, then the claim is a matter relating to a contract to which the contract jurisdiction applies. Statutory, fiduciary, or tortious obligations arising due to the conclusion of a contract are also contractual obligations for private international law purposes. I will call this approach the ‘cause of action test’, because it centres on the nature of the cause of action pleaded by the claimant. In recent decisions, for example, the cause of action test has been used to characterise claims between third parties as contractual matters (C-337/17 Feniks, blogged here; C-772/17 Reitbauer, blogged here; joined cases C-274/16, C-447/16 and C-448/16 flightright).
The second approach to characterisation is to focus on the relationship between the litigants. From this standpoint, only claims between litigants who are bound by a contract can be characterised as ‘matters relating to a contract’. This approach has for example been used in the Handte and Réunion européenne decisions. We will call it the ‘privity test’. Sometimes scholars relied on this test to argue that all claims between contracting parties are to be characterised as matters relating to a contract.
The third and final approach emphasises the nature of the facts underlying the claim brought by the claimant. This approach was first developed in the Brogsitter decision (C-548/12). However, it is predated by AG Jacob’s opinions in the Kalfelis (C-189/87) and Shearson Lehmann Hutton (C-89/91) cases (which since have been eagerly picked up by the Bundesgerichtshof of Germany). The Brogsitter decision provided that a claim is a contractual matter if the defendant’s allegedly wrongful behaviour can reasonably be regarded to be a breach of contract, which will be the case if the interpretation of the contract is indispensable to judge. I will dub this approach the ‘factual breach test’, since it directs attention to factual elements such as the defendant’s behaviour and the indispensability to interpret the contract. It is plain to see that this is by far the most complicated of the three approaches to characterisation we discussed here (among other things because of the unclear relation between the different layers of which the test is composed, an issue that AG Saugmandsgaard Øe entertained in Wikingerhof, [69]–[70], and C-603/17 Bosworth v Arcadia).
The use in practice and literature of the three approaches laid out above demonstrates a tale of casuistry. Similar claims have been subjected to different approaches, and approaches developed in a specific setting have been applied to entirely different contexts. For example, a few CJEU decisions characterised claims between litigants who are not privy to consensual obligations as non-contractual in nature under the privity test. Other decisions characterised such claims as contractual in nature, applying the cause of action test. A similar dichotomy underlies the characterisation of claims between contracting parties. Initially, the CJEU jurisprudence applied the cause of action test, focussing on the nature of the legal basis relied on (see C-9/87 Arcado v Haviland). Later, the Brogsitter decision adopted the factual breach test, which shifted the focus to the nature of the facts underlying the claim.
It is difficult to understand why these divergences have occurred. How can they be explained?
2. The Theories Underlying Characterisation
A good way to start is to conceptualise characterisation further along the lines of this scheme:
Seen from the perspective of this scheme, the previous section described three ‘tests for characterisation’. A ‘test for characterisation’ refers to the interpretational exercise that lays down the conditions under which a claim can be characterised as a matter relating to a contract. Each test elevates different elements of a ‘claim’ as relevant for the purpose of characterisation and disregards others. Those elements are the identity of the litigants, the claim’s legal basis, or the dispute underlying the claim. As such, it concretises an idea about the broader purpose the contract jurisdiction should serve, which is called a ‘theory’. The divergences among the tests for characterisation outlined above is explained by the reliance on different theories.
The AG’s considerations about Brogsitter in the Wikingerhof opinion illustrate the scheme. The AG observed that the factual breach test is informed by what I will dub the ‘natural forum theory’. According to that theory, the contract jurisdiction offers the most appropriate and hence natural forum for all claims that are remotely linked to a contract (for the sake of proximity and avoiding multiple jurisdictional openings over claims relating to the same contract). This theory explains why the factual breach test provides such a broad, hypothetical test for characterisation that captures all claims that could have been pleaded as a breach of contract. Opining against the use of the factual breach test and underlying natural forum theory, the AG suggested that the cause of action test be applied. He then integrated the indispensability to interpret the contract (originally a part of the factual breach test) into the cause of action test as a tool for determining whether a claim is based on contract ([90] et seq). Essentially, his approach was informed by what I will call the ‘ring-fencing theory’. In contrast to the natural forum theory, this theory presumes that the contract jurisdiction should be delineated strictly for two reasons. First, the contract jurisdiction is a special jurisdiction regime that cannot fulfil a broad role as a natural forum contractus ([84]–[85]). Second, a strict delineation promotes legal certainty and efficiency, since it does not require judges to engage in a broad, hypothetical analysis to determine whether a claim is contractual or not ([76]–[77]). The scheme was applied succinctly here, but the analysis could be fleshed out for example by integrating the role of the parallelism between the Brussels Ia and Rome I/II Regulations.
The scheme can be used to understand and evaluate the CJEU’s eventual judgment in Wikingerhof. I hope that the decision will be a treasure trove that furthers our understanding of the mechanics of characterisation in EU private international law.
News
Dutch Journal of PIL (NIPR) – issue 2023/2
The latest issue of the Dutch Journal on Private International Law (NIPR) has been published.
NIPR 2023 issue 2
Editorial
C.G. van der Plas / p. 197
Articles
K.C. Henckel, Issues of conflicting laws – a closer look at the EU’s approach to artificial intelligence / p. 199-226
Abstract
While newly emerging technologies, such as Artificial intelligence (AI), have a huge potential for improving our daily lives, they also possess the ability to cause harm. As part of its AI approach, the European Union has proposed several legislative acts aiming to accommodate and ensure the trustworthiness of AI. This article discusses the potential private international law impact of these legislative proposals. In doing so, it – inter alia – addresses how the newly proposed legislative acts interact with existing private international law instruments, such as the Rome II Regulation. In addition, it questions whether there is a need for specific rules on the private international law of AI.
Out Now: Interim Measures in Cross-Border Civil and Commercial Disputes
A new volume by Deyan Draguiev on Interim Measures in Cross-Border Civil and Commercial Disputes, based on his PhD thesis supervised by Peter Mankowski, has just been published with Springer.
The blurb reads as follows:
The book focusses on applying a holistic overview of interim measures and associated procedures in the context of cross-border private law (civil and commercial) disputes that are the subject of international litigation and arbitration proceedings. It reexamines key features of said problem and outlines novel findings on interim relief in the area of international dispute resolution. The book analyses the rules of EU law (EU law regulations such as the Regulation Brussels Ibis and the rest of the Brussels regime) as the single system of cross-border jurisdictional rules, as well as the rules of international arbitration (both commercial and investment). In the process, it conducts a complete mapping of interim measures problems and explores the criteria for granting relief under national laws. For this purpose, it includes an extensive comparative law overview of many jurisdictions in Europe, Asia, Africa, the Americas, etc., to reveal common standards for granting interim relief.
Interim relief is a salient problem in dispute resolution, and serious international disputes usually require requests for such measures. This makes a more complete understanding all the more important. For scholars and practitioners alike, there are various ways to seek relief; precisely this complexity calls for a more complex and multilayered analysis, which does not (as is usually the case) adopt the perspective of either litigation or arbitration, but instead weighs the pros and cons and considers the viability and reliability of the different options, viewed from all angles.
Law Matters—Less Than We Thought, by Holger Spamann & Daniel M. Klerman
Holger Spamann and Daniel Klerman recently conducted a most interesting experiment on judicial behavior in the context of conflict of laws, the results of which have been pre-published by the Journal of Law, Economics, and Organization. They have kindly provided the following summary for the readers of this blog (who may access the full paper here):
Modern American choice of law has been much criticized for giving judges too much discretion. In particular, Brilmayer and others predict that the use of open-ended standards, such as the Restatement Second’s “most significant relationship” test, will enable judges to decide disputes in biased ways, including a bias in favor of plaintiffs. In contrast, critics argue that the more rules-based approach – such as the lex loci delicti principle that prevailed in America before the 1960s and that, in large part, continues to apply in much of the world – would be more predictable and less subject to bias. We designed an experiment involving US federal judges to test whether the modern American, standards-based approach is, in fact, less predictable and more subject to bias. We find that the rules-based approach may constrain more than the modern standards-based approach, although even under seemingly clear rules judicial decisions were less predictable than we expected. Judges under neither the lex loci rule nor that “most significant relationship” standard exhibited a bias towards the more sympathetic party, although we did detect some pro-plaintiff bias under both the rule and the standard. Somewhat surprisingly, we also found that judges who were supposed to apply the modern “most significant relationship” standard tended to decide according to lex loci delicti rule.