Tying and Bundling Involving Standard-Essential Patents

Posted by Social Science Research Network

Tying and Bundling Involving Standard-Essential Patents

By Koren W. Wong-Ervin, Evan Hicks & Ariel Slonim (George Mason University)

Abstract:        Competition agencies around the world, including in Canada, China, India, Japan, Korea, and the United States (at least prior to the current administration), have taken the unwarranted position that antitrust enforcement involving standard-essential patents (SEPs) upon which a patent holder has made an assurance to license on fair, reasonable, and nondiscriminatory (FRAND) terms should be subject to special rules or unique presumptions and burdens of proof. Recently, this approach has manifested itself in contentions (and in the case of the Korea Fair Trade Commission, an administrative decision) that it is somehow “unfair” (and therefore unlawful) for a SEP holder to license its patents, including both SEPs and non-SEPs, on a portfolio basis. This is because, as the contention goes, the SEP holder is either unfairly forcing implementers to license more than they desire or evading its FRAND assurance through package licensing. This article explains that neither of these are economically sound theories of harm, particularly in jurisdictions like the United States that do not punish the mere extraction of monopoly profits, but instead focus on the unlawful acquisition or maintenance of monopoly power. We set forth the mainstream alternative theories of harm — namely lever…

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