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Incentive Effects From Different Approaches To Holdup Mitigation Surrounding Patent Remedies And Standard-Setting Organizations

Author

Listed:
  • F. Scott Kieff
  • Anne Layne-Farrar

Abstract

Debates about patent policy often focus on the potential for the threat of a court-imposed remedy for patent infringement to cause manufacturing entities and others to suffer patent holdup, especially when standardized industries are involved. This article uses lessons from the broader economics and political science literatures on holdup to explore various approaches to setting remedies for patent infringement—namely injunctions and monetary damages in the form of lost profits or reasonable royalties—with an eye toward the nature and extent of various forms of holdup they each might generate. In so doing, the article contrasts various narrower sub-categories of the broad holdup problem, including patent holdup, reverse patent holdup, and government holdup. The article elucidates a number of existing legal institutions and organizations that significantly mitigate the threat of patent holdup, including particular doctrines in the law of patent remedies and particular private ordering arrangements such as Standard-Setting Organizations (SSOs). It also highlights some of the unfortunate unintended consequences of currently popular suggestions for mitigating patent holdup. It then explores the economic incentives driving the actions by both patent holder and licensee to show different categories of holdup risk they create. It closes by introducing a suggested framework for courts and administrative agencies to use to directly target the identified categories of holdup risk, and thereby limit harmful side effects.

Suggested Citation

  • F. Scott Kieff & Anne Layne-Farrar, 2013. "Incentive Effects From Different Approaches To Holdup Mitigation Surrounding Patent Remedies And Standard-Setting Organizations," Journal of Competition Law and Economics, Oxford University Press, vol. 9(4), pages 1091-1123.
  • Handle: RePEc:oup:jcomle:v:9:y:2013:i:4:p:1091-1123.
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    File URL: http://hdl.handle.net/10.1093/joclec/nht030
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    Citations

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    Cited by:

    1. Alexander Galetovic & Stephen Haber & Ross Levine, 2015. "An Empirical Examination Of Patent Holdup," Journal of Competition Law and Economics, Oxford University Press, vol. 11(3), pages 549-578.
    2. Justus Baron & Jorge Contreras & Martin Husovec & Pierre Larouche, 2019. "Making the Rules: The Governance of Standard Development Organizations and their Policies on Intellectual Property Rights," JRC Research Reports JRC115004, Joint Research Centre.
    3. Love, Brian J. & Helmers, Christian, 2023. "Patent hold-out and licensing frictions: Evidence from litigation of standard essential patents," International Journal of Industrial Organization, Elsevier, vol. 89(C).

    More about this item

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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