Concerns and evidence for ex-post hold-up with essential patents

Research output: Working paperAcademic

Abstract

Patented technologies may add significant value to technical standards. But the owners of patents that are necessary required in order to implement a standard (“essential patents”) obtain a particularly powerful position. One of the widely recognized risks here is patent holdup, where the patent owner demands inflated prices, much beyond the value of their specific patented technology, knowing that implementers are locked in and have no other choice than to obtain a license. Many standard setting organisations have “FRAND” patent policies in place that aim to avoid hold-up, among other things.

While it has been argued that hold-up is a theoretical risk only, and does not manifest itself in 'real world' scenarios, this paper discusses a number of recent, seminal court cases in which the judge determined that for essential patents, fees were demanded that wildly exceeded what the court ultimately deemed to be a FRAND royalty rate. In other cases, competition authorities have issued decision in which they ruled that for a patent owner, seeking injunctive relief for essential patents can be an illegal act as such, considering that such conduct further increases the risk for hold-up.

The risk for hold-up is recognised by standard setting bodies, witnessed by the many discussions taken place in these organisations, in the past but especially over the last two years. Yet, possible policy changes are often hard to agree upon, given the strongly divergent interests of the members of such organisations. IEEE is the first standard setting body to make significant changes to its policy, aiming to mitigate hold up risks. As pointed out by the US Department of Justice in their review, IEEE’s new policy has some significant potential benefits.
LanguageEnglish
PublisherSocial Science Research Network (SSRN)
Number of pages34
DOIs
StatePublished - 22 Sep 2015

Publication series

NameSSRN Working Paper

Fingerprint

patent
evidence
technical standard
license
fee
justice
scenario
Values

Cite this

Bekkers, R. N. A. (2015). Concerns and evidence for ex-post hold-up with essential patents. (SSRN Working Paper). Social Science Research Network (SSRN). DOI: 10.2139/ssrn.2663939
Bekkers, R.N.A./ Concerns and evidence for ex-post hold-up with essential patents. Social Science Research Network (SSRN), 2015. (SSRN Working Paper).
@techreport{22fe8ad3bb3b488aa0ab58e97cdb29cc,
title = "Concerns and evidence for ex-post hold-up with essential patents",
abstract = "Patented technologies may add significant value to technical standards. But the owners of patents that are necessary required in order to implement a standard (“essential patents”) obtain a particularly powerful position. One of the widely recognized risks here is patent holdup, where the patent owner demands inflated prices, much beyond the value of their specific patented technology, knowing that implementers are locked in and have no other choice than to obtain a license. Many standard setting organisations have “FRAND” patent policies in place that aim to avoid hold-up, among other things. While it has been argued that hold-up is a theoretical risk only, and does not manifest itself in 'real world' scenarios, this paper discusses a number of recent, seminal court cases in which the judge determined that for essential patents, fees were demanded that wildly exceeded what the court ultimately deemed to be a FRAND royalty rate. In other cases, competition authorities have issued decision in which they ruled that for a patent owner, seeking injunctive relief for essential patents can be an illegal act as such, considering that such conduct further increases the risk for hold-up. The risk for hold-up is recognised by standard setting bodies, witnessed by the many discussions taken place in these organisations, in the past but especially over the last two years. Yet, possible policy changes are often hard to agree upon, given the strongly divergent interests of the members of such organisations. IEEE is the first standard setting body to make significant changes to its policy, aiming to mitigate hold up risks. As pointed out by the US Department of Justice in their review, IEEE’s new policy has some significant potential benefits.",
author = "R.N.A. Bekkers",
year = "2015",
month = "9",
day = "22",
doi = "10.2139/ssrn.2663939",
language = "English",
series = "SSRN Working Paper",
publisher = "Social Science Research Network (SSRN)",
type = "WorkingPaper",
institution = "Social Science Research Network (SSRN)",

}

Bekkers, RNA 2015 'Concerns and evidence for ex-post hold-up with essential patents' SSRN Working Paper, Social Science Research Network (SSRN). DOI: 10.2139/ssrn.2663939

Concerns and evidence for ex-post hold-up with essential patents. / Bekkers, R.N.A.

Social Science Research Network (SSRN), 2015. (SSRN Working Paper).

Research output: Working paperAcademic

TY - UNPB

T1 - Concerns and evidence for ex-post hold-up with essential patents

AU - Bekkers,R.N.A.

PY - 2015/9/22

Y1 - 2015/9/22

N2 - Patented technologies may add significant value to technical standards. But the owners of patents that are necessary required in order to implement a standard (“essential patents”) obtain a particularly powerful position. One of the widely recognized risks here is patent holdup, where the patent owner demands inflated prices, much beyond the value of their specific patented technology, knowing that implementers are locked in and have no other choice than to obtain a license. Many standard setting organisations have “FRAND” patent policies in place that aim to avoid hold-up, among other things. While it has been argued that hold-up is a theoretical risk only, and does not manifest itself in 'real world' scenarios, this paper discusses a number of recent, seminal court cases in which the judge determined that for essential patents, fees were demanded that wildly exceeded what the court ultimately deemed to be a FRAND royalty rate. In other cases, competition authorities have issued decision in which they ruled that for a patent owner, seeking injunctive relief for essential patents can be an illegal act as such, considering that such conduct further increases the risk for hold-up. The risk for hold-up is recognised by standard setting bodies, witnessed by the many discussions taken place in these organisations, in the past but especially over the last two years. Yet, possible policy changes are often hard to agree upon, given the strongly divergent interests of the members of such organisations. IEEE is the first standard setting body to make significant changes to its policy, aiming to mitigate hold up risks. As pointed out by the US Department of Justice in their review, IEEE’s new policy has some significant potential benefits.

AB - Patented technologies may add significant value to technical standards. But the owners of patents that are necessary required in order to implement a standard (“essential patents”) obtain a particularly powerful position. One of the widely recognized risks here is patent holdup, where the patent owner demands inflated prices, much beyond the value of their specific patented technology, knowing that implementers are locked in and have no other choice than to obtain a license. Many standard setting organisations have “FRAND” patent policies in place that aim to avoid hold-up, among other things. While it has been argued that hold-up is a theoretical risk only, and does not manifest itself in 'real world' scenarios, this paper discusses a number of recent, seminal court cases in which the judge determined that for essential patents, fees were demanded that wildly exceeded what the court ultimately deemed to be a FRAND royalty rate. In other cases, competition authorities have issued decision in which they ruled that for a patent owner, seeking injunctive relief for essential patents can be an illegal act as such, considering that such conduct further increases the risk for hold-up. The risk for hold-up is recognised by standard setting bodies, witnessed by the many discussions taken place in these organisations, in the past but especially over the last two years. Yet, possible policy changes are often hard to agree upon, given the strongly divergent interests of the members of such organisations. IEEE is the first standard setting body to make significant changes to its policy, aiming to mitigate hold up risks. As pointed out by the US Department of Justice in their review, IEEE’s new policy has some significant potential benefits.

U2 - 10.2139/ssrn.2663939

DO - 10.2139/ssrn.2663939

M3 - Working paper

T3 - SSRN Working Paper

BT - Concerns and evidence for ex-post hold-up with essential patents

PB - Social Science Research Network (SSRN)

ER -

Bekkers RNA. Concerns and evidence for ex-post hold-up with essential patents. Social Science Research Network (SSRN). 2015 Sep 22, (SSRN Working Paper). Available from, DOI: 10.2139/ssrn.2663939