Reference

Josh Lerner, and Jean Tirole, Standard-Essential Patents, IDEI Working Paper, n. 803, November 5, 2013, revised March 13, 2014.

Abstract

A major policy issue in standard setting is that patents that are ex-ante not that important may, by being included into a standard, become standard-essential patents (SEPs). In an attempt to curb the monopoly power that they create, most standard-setting organizations require the owners of patents covered by the standard to make a loose commitment to grant licenses on reasonable terms. Such commitments unsurprisingly are conducive to intense litigation activity. This paper builds a framework for the analysis of SEPs, identifies several types of ine¢ ciencies attached to the lack of price commitment, shows how structured price commitments restore competition, and analyzes whether price commitments are likely to emerge in the marketplace.

Keywords

Standards; licensing commitments; standard-essential patents; royalty stacking; FRAND; hold ups and reverse hold ups;

JEL codes

  • D43: Oligopoly and Other Forms of Market Imperfection
  • L24: Contracting Out • Joint Ventures • Technology Licensing
  • L41: Monopolization • Horizontal Anticompetitive Practices
  • O34: Intellectual Property and Intellectual Capital

Research partnerships

Orange
Toulouse Network for Information Technology (TNIT)

Replaced by

Josh Lerner, and Jean Tirole, Standard-Essential Patents, Journal of Political Economy, vol. 123, n. 3, June 2015, pp. 547–586.