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Competing on Standards? Entrepreneurship, Intellectual Property and the Platform Paradox

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Author Info
Timothy S. Simcoe
Stuart J.H. Graham
Maryann Feldman

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Abstract

This paper studies the intellectual property strategy of firms that participate in the formal standards process. Specifically, we examine litigation rates in a sample of patents disclosed to thirteen voluntary Standard Setting Organizations (SSOs). We find that SSO patents have a relatively high litigation rate, and that SSO patents assigned to small firms are litigated more often than those of large publicly-traded firms. We also estimate a series of difference-in-differences models and find that small-firm litigation rates increase following a patent's disclosure to an SSO while those of large firms remain unchanged or decline. We interpret this result as evidence of a "platform paradox" -- while small entrepreneurial firms rely on open standards to lower the fixed cost of innovation, these firms are also more likely to pursue an aggressive IP strategy that may undermine the openness of a new standard.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13632.

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Date of creation: Nov 2007
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Handle: RePEc:nbr:nberwo:13632

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Find related papers by JEL classification:
L0 - Industrial Organization - - General
L17 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Open Source Products and Markets
L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
O34 - Economic Development, Technological Change, and Growth - - Technological Change - - - Intellectual Property Rights

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