Patent Disclosure in Standard Setting

Abstract

We present a model of industry standard setting with two-sided asymmetric information about the existence of intellectual property. We provide an equilibrium analysis of (a) firms' incentives to communicate ideas for improvements of an industry standard, and (b) firms' decisions to disclose the existence of intellctual property to other participants of the standardization process.JEL classification: D71, L15, O34

Licensing Policy and Technology Adoption in Standard Setting Organizations

“…As the commercial stakes attached to standards have become very important, strategic tensions often undermine the work in standard‐setting committees. A major source of disagreement stems from the conflicting interests that operators with different business structures put forward in the process of standard definition (e.g., DeLacey et al ; Feldman, Graham, and Simcoe ; Sherry and Teece ), particularly when firms are competitors and patent‐protected technologies are involved (Chiao, Lerner, and Tirole ; Ganglmair and Tarantino ; Ganglmair and Tarantino ). In this paper, it is proposed a model that studies the impact of these conflicts on the SSO's participant's decisions regarding (1) the technological specification of the standard and (2) the licensing rule of the organization.…”

“…Part of the theoretical literature has highlighted the tensions arising from the presence of competing interests and strategic motives in standard setting (e.g., Chiao, Lerner, and Tirole ; Farrell and Simcoe ; Ganglmair and Tarantino ). In this article, it is shown that “exclusionary effects” may influence the choice of a technology standard by looking at how technology adoption interacts with licensing decisions and product‐market competition.…”

“…These assumptions imply that all technologies have been disclosed by the SSO's licensors. For an analysis of the impact of patent disclosure on firms' incentives to participate in that standardization process, see Ganglmair and Tarantino () and Ganglmair and Tarantino ().…”

Conversation with secrets

“…If shared, an idea has a positive impact on both agents' payoffs. However, the holder of an idea 5 Our results do not change qualitatively when asymmetric information is two-sided, that is, both agents may have a secret (Ganglmair and Tarantino, 2012 may have a private incentive to conceal if the payoff increase from sharing is lower than from not sharing. For conversation to take place in each period, the sharing of this private information must be incentive compatible.…”

Complementary Patents and Market Structure

“…Simcoe () and Farrell and Simcoe () analyze how strategic considerations can significantly delay the adoption of a standard. Ganglmair and Tarantino () discuss the incentives to contribute to the development and improvement of a standard. Tarantino () studies the inefficiencies of technology adaption if there are vertically integrated and nonintegrated technology providers.…”