Standard Setting Organizations Can Help Solve the Standard Essential Patents Licensing Problem

Posted by D. Daniel Sokol

Kai-Uwe Kuhn (DG Comp), Fiona Scott Morton (DOJ), & Howard Shelanski (FTC) discuss how Standard Setting Organizations Can Help Solve the Standard Essential Patents Licensing Problem

ABSTRACT: Intellectual property rights were established in both the United States and Europe to protect inventors, to stimulate innovation, and to benefit consumers. We are concerned that specific circumstances affecting some industries like the information and communication technology (“ICT”) sector may limit the effectiveness of intellectual property rights in achieving these goals. In particular, in the case of standard essential patents (“SEPs”), ambiguities in the definition of licensing restrictions as well as weaknesses in the process of intellectual property enforcement appear to contribute to what economists call “holdup” problems that may threaten innovation incentives and harm consumers.

While these problems are generally difficult to resolve, intellectual property policies of standard setting organizations (“SSOs”) could play a special role by setting up intellectual property rights (“IPR”) policies that would limit hold-up more effectively. In this article we propose reforms to the current intellectual property policies that we believe would greatly improve efficiency in patent licensing.