Patent Hold‐Up and Antitrust: How A Well‐Intentioned Rule Could Retard Innovation

Ganglmair, Bernhard; Froeb, Luke M.; Werden, Gregory J.

doi:10.1111/j.1467-6451.2012.00480.x

Cited by 57 publications

(22 citation statements)

References 24 publications

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“…The patent on the technology then becomes standard essential , and its holder gains market power because the standard effectively eliminates substitute technologies. This may allow the patent holder to charge higher royalties than those that would have been negotiated ex ante, that is, before the adoption of the standard (Dewatripont & Legros, ; Farrell, Hayes, Shapiro, & Sullivan, ; Ganglmair, Froeb, & Werden, ) . Standard‐setting organizations (SSOs) have responded to this concern by imposing commitments to license on ‘fair, reasonable, and nondiscriminatory’ (FRAND) terms, which has been interpreted as reflecting an ex ante view (Swanson & Baumol, ).…”

Section: Introductionmentioning

confidence: 99%

Repeated interaction in standard setting

Larouche

Schuett

2018

Economics Manag Strategy

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Standardization may allow the owners of standard‐essential patents to charge higher royalties than would have been negotiated ex ante. In practice, however, standard‐setting efforts are often characterized by repeated interaction and complementarities among technologies. These features give firms that contribute technology to standards both the ability and the incentive to avoid excessive royalties by threatening to exclude other technology contributors from future rounds of standardization if they charge royalties exceeding ‘fair, reasonable, and nondiscriminatory’ (FRAND) levels. We show that such an outcome can be sustained as a subgame‐perfect equilibrium of a repeated standard‐setting game and examine how the decision‐making rules of standard‐setting organizations (SSOs) affect the sustainability of FRAND royalties. Our analysis provides a novel justification for super‐majority requirements and other rules frequently adopted by SSOs.

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Section: Introductionmentioning

confidence: 99%

Repeated interaction in standard setting

Larouche

Schuett

2018

Economics Manag Strategy

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“…5 One of the most discussed proposals has been to cap a patent holder's licensing payments to the "incremental value" the patent contributes to the standard. 7 Alternatively, Ganglmair et al (2012) propose a solution based on an ex ante commitment by innovators in the form of an option-to-license that manufacturers can exercise at a prespecified price if they want to include their IP in the final product. Swanson and Baumol (2005) make this proposal operational through the use of an ex-ante auction.…”

Section: Introductionmentioning

confidence: 99%

Payments and Participation: The Incentives to Join Cooperative Standard Setting Efforts

2011

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Formal, cooperative standard setting continues to grow in importance for the global economy. And as standards become more pervasive, the stakes rise for all participants. It is not surprising then that many standards are covered by intellectual property rights, that battles over the licensing of those rights have reached a fevered pitch in several industries, and that competition agencies around the globe are seriously weighing whether and how to intervene in the standard setting process. One suggestion for such an intervention is the imposition of a licensing cap, referred to as the incremental value rule. We evaluate this proposal and find that even in contexts where this rule is efficient from an ex‐post point of view, it induces important distortions in the decisions of firms to innovate and participate in standard setting organizations (SSO). Such a rule reduces the R&D investment that a firm makes in relevant technologies and lowers the probability that it will join the SSO. We characterize a variation of the incremental value rule for defining fair, reasonable, and nondiscriminatory that accounts for both investment and participation incentives.

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“…However, a growing number of papers allows for any bargaining power 2 [0; 1], see e.g. Farrell and Gibbons (1995), Nöldeke andSchmidt (1998), Schmitz (2006), Antràs and Staiger (2008), Ohlendorf (2009), Hoppe andSchmitz (2010), Ganglmair et al (2012), or Schmitz (2013. These papers are focused on di¤erent problems (e.g., private information, sequential investments, public goods, or applications to international trade, privatization, or law and economics), but do not explore 2 See e.g.…”

Section: Bargaining Position and Bargaining Powermentioning

confidence: 99%

Bargaining position, bargaining power, and the property rights approach

Schmitz¹

2013

Economics Letters

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In the property rights approach to the theory of the …rm (Hart, 1995), parties bargain about whether or not to collaborate after non-contractible investments have been made. Most contributions apply the regular Nash bargaining solution. We explore the implications of using the generalized Nash bargaining solution. A prominent …nding regarding the suboptimality of joint ownership turns out to be robust. However, in contrast to the standard property rights model, it may well be optimal to give ownership to a party whose investments are less productive, provided that this party's ex-post bargaining power is relatively small.

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Patent Hold‐Up and Antitrust: How A Well‐Intentioned Rule Could Retard Innovation

Cited by 57 publications

References 24 publications

Repeated interaction in standard setting

Repeated interaction in standard setting

Payments and Participation: The Incentives to Join Cooperative Standard Setting Efforts

Bargaining position, bargaining power, and the property rights approach

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