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Just-in-time inventions and the development of standards: How firms use opportunistic strategies to obtain standard-essential patents (SEPs)

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  • Byeongwoo Kang
  • Rudi Bekkers

    ()

Abstract

Recent years have seen large-scale litigation of standard-essential patents between companies like Apple, Samsung, Google, Motorola and Microsoft. Such patents are particular because they are, by definition, indispensable to any company wishing to implement a technical standard. Firms that do not own such patents are prepared to spend billions of dollars purchasing them. It is an interesting question how firms obtain such patents in the first place, and to what degree this depends on those firms’ strategies at the time of standardization. This paper presents an in-depth investigation on the standardization process of the successful W CDMA and LTE standards for mobile telecommunications. We studied the first 77 meetings where these standards took shape, covering a period of over 12 years, and identified the patenting behavior of each of the 939 individual participants attending these meetings, as well as the patenting behavior by non-participants, together resulting in over 14,000 patents for this technology. Our data reveals a strong relationship between patent timing and the occurrence of meetings. We observed a remarkable phenomenon that we call ‘just-in-time-inventions’: the patent intensity of about-to-become claimed essential patents is much higher during or just before these meetings than in other periods. At the same time, they are of considerably lower technical value (‘merit’). This suggests that the just-in-time inventions are only beneficial to their owners, whereas for the public they merely invoke unnecessary costs. Finally, we observed that the phenomenon of just-in-time inventions is highly concentrated among specific types of firms, above all vertically integrated ones, and the incumbent champions of the previous technology standard. We believe our findings have several implications for standard setting organizations and policy makers alike.

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Bibliographic Info

Paper provided by Eindhoven Center for Innovation Studies in its series Working Papers with number 13-01.

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Date of creation: Feb 2013
Date of revision: Feb 2013
Handle: RePEc:ein:tuecis:1301

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Keywords: essential patents; SEP;

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References

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  1. Benjamin Chiao & Josh Lerner & Jean Tirole, 2005. "The Rules of Standard Setting Organizations: An Empirical Analysis," NBER Working Papers 11156, National Bureau of Economic Research, Inc.
  2. Marc Rysman & Tim Simcoe, 2005. "Patents and the Performance of Voluntary Standard Setting Organizations," Working Papers 05-22, NET Institute, revised Oct 2005.
  3. Lemley, Mark A & Shapiro, Carl, 2007. "Patent Hold-Up and Royalty Stacking," Competition Policy Center, Working Paper Series qt8638s257, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
  4. Karki, M. M. S., 1997. "Patent citation analysis: A policy analysis tool," World Patent Information, Elsevier, vol. 19(4), pages 269-272, December.
  5. Fischer, Timo & Henkel, Joachim, 2012. "Patent trolls on markets for technology – An empirical analysis of NPEs’ patent acquisitions," Research Policy, Elsevier, vol. 41(9), pages 1519-1533.
  6. Berger, Florian & Blind, Knut & Thumm, Nikolaus, 2012. "Filing behaviour regarding essential patents in industry standards," Research Policy, Elsevier, vol. 41(1), pages 216-225.
  7. Carpenter, Mark P. & Narin, Francis & Woolf, Patricia, 1981. "Citation rates to technologically important patents," World Patent Information, Elsevier, vol. 3(4), pages 160-163, October.
  8. Bekkers, Rudi & Bongard, René & Nuvolari, Alessandro, 2011. "An empirical study on the determinants of essential patent claims in compatibility standards," Research Policy, Elsevier, vol. 40(7), pages 1001-1015, September.
  9. Gambardella, Alfonso & Harhoff, Dietmar & Verspagen, Bart, 2008. "The Value of European Patents," CEPR Discussion Papers 6848, C.E.P.R. Discussion Papers.
  10. Aija Elina Leiponen, 2008. "Competing Through Cooperation: The Organization of Standard Setting in Wireless Telecommunications," Management Science, INFORMS, vol. 54(11), pages 1904-1919, November.
  11. Manuel Trajtenberg, 1990. "A Penny for Your Quotes: Patent Citations and the Value of Innovations," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 172-187, Spring.
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