IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/13632.html
   My bibliography  Save this paper

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

Author

Listed:
  • Timothy S. Simcoe
  • Stuart J.H. Graham
  • Maryann Feldman

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.

Suggested Citation

  • Timothy S. Simcoe & Stuart J.H. Graham & Maryann Feldman, 2007. "Competing on Standards? Entrepreneurship, Intellectual Property and the Platform Paradox," NBER Working Papers 13632, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:13632
    Note: IO PR
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w13632.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Lanjouw, Jean O & Schankerman, Mark, 2001. "Characteristics of Patent Litigation: A Window on Competition," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 129-151, Spring.
    2. Timothy F. Bresnahan & Shane Greenstein, 1999. "Technological Competition and the Structure of the Computer Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 47(1), pages 1-40, March.
    3. Joseph Farrell & Garth Saloner, 1985. "Standardization, Compatibility, and Innovation," RAND Journal of Economics, The RAND Corporation, vol. 16(1), pages 70-83, Spring.
    4. Bronwyn H. Hall & Adam Jaffe & Manuel Trajtenberg, 2005. "Market Value and Patent Citations," RAND Journal of Economics, The RAND Corporation, vol. 36(1), pages 16-38, Spring.
    5. Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 577-598.
    6. Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-131, March.
    7. Jean Lanjouw & Josh Lerner, 1998. "The Enforcement of Intellectual Property Rights: A Survey of the Empirical Literature," Annals of Economics and Statistics, GENES, issue 49-50, pages 223-246.
    8. Marc Rysman & Timothy Simcoe, 2008. "Patents and the Performance of Voluntary Standard-Setting Organizations," Management Science, INFORMS, vol. 54(11), pages 1920-1934, November.
    9. Benjamin Chiao & Josh Lerner & Jean Tirole, 2007. "The rules of standard-setting organizations: an empirical analysis," RAND Journal of Economics, RAND Corporation, vol. 38(4), pages 905-930, December.
    10. Bekkers, Rudi & Duysters, Geert & Verspagen, Bart, 2002. "Intellectual property rights, strategic technology agreements and market structure: The case of GSM," Research Policy, Elsevier, vol. 31(7), pages 1141-1161, September.
    11. Carl Shapiro, 2001. "Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting," NBER Chapters, in: Innovation Policy and the Economy, Volume 1, pages 119-150, National Bureau of Economic Research, Inc.
    12. Bronwyn H. Hall & Adam B. Jaffe & Manuel Trajtenberg, 2001. "The NBER Patent Citation Data File: Lessons, Insights and Methodological Tools," NBER Working Papers 8498, National Bureau of Economic Research, Inc.
    13. Dietmar Harhoff & Francis Narin & F. M. Scherer & Katrin Vopel, 1999. "Citation Frequency And The Value Of Patented Inventions," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 511-515, August.
    14. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 249-275.
    15. Wooldridge, Jeffrey M., 1999. "Distribution-free estimation of some nonlinear panel data models," Journal of Econometrics, Elsevier, vol. 90(1), pages 77-97, May.
    16. Galasso, Alberto, 2007. "Broad cross-license agreements and persuasive patent litigation: theory and evidence from the semiconductor industry," LSE Research Online Documents on Economics 6718, London School of Economics and Political Science, LSE Library.
    17. Farrell, Joseph & Weiser, Philip J., 2003. "Modularity, Vertical Integration, and Open Access Policies: Towards a Convergence of Antitrust and Regulation in the Internet Age," Department of Economics, Working Paper Series qt4dh7q2dd, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    18. Barry Nalebuff, 1987. "Credible Pretrial Negotiation," RAND Journal of Economics, The RAND Corporation, vol. 18(2), pages 198-210, Summer.
    19. Alberto Galasso, 2007. "Broad Cross-License Agreements andPersuasive Patent Litigation: Theory andEvidence from the Semiconductor Industry," STICERD - Economics of Industry Papers 45, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    20. Carliss Y. Baldwin & Kim B. Clark, 2000. "Design Rules, Volume 1: The Power of Modularity," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262024667, December.
    21. Annabelle Gawer & Rebecca Henderson, 2007. "Platform Owner Entry and Innovation in Complementary Markets: Evidence from Intel," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(1), pages 1-34, March.
    22. Joseph Farrell & Carl Shapiro, 2008. "How Strong Are Weak Patents?," American Economic Review, American Economic Association, vol. 98(4), pages 1347-1369, September.
    23. repec:adr:anecst:y:1998:i:49-50:p:08 is not listed on IDEAS
    24. Carmen Matutes & Pierre Regibeau, 1988. ""Mix and Match": Product Compatibility without Network Externalities," RAND Journal of Economics, The RAND Corporation, vol. 19(2), pages 221-234, Summer.
    25. Josh Lerner & Jean Tirole & Marcin Strojwas, 2003. "Cooperative Marketing Agreements Between Competitors: Evidence from Patent Pools," NBER Working Papers 9680, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Miller, Amalia R. & Tucker, Catherine, 2014. "Health information exchange, system size and information silos," Journal of Health Economics, Elsevier, vol. 33(C), pages 28-42.
    2. Catherine Tucker & Amalia Miller, 2009. "System Size, Lock-in and Network Effects for Patient Records," Working Papers 09-07, NET Institute, revised Sep 2009.
    3. Galasso, Alberto & Schankerman, Mark, 2008. "Patent thickets and the market for innovation: evidence from settlement of patent disputes," LSE Research Online Documents on Economics 25474, London School of Economics and Political Science, LSE Library.
    4. Anne Layne‐Farrar & Gerard Llobet & Jorge Padilla, 2014. "Payments and Participation: The Incentives to Join Cooperative Standard Setting Efforts," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(1), pages 24-49, March.
    5. Munirul Nabin & Pasquale Sgro & Surjasama Lahiri, 2023. "The role of standard‐setting organizations in deciding product quality and process innovation," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(4), pages 767-786, December.
    6. Fehder, Daniel C. & Murray, Fiona & Stern, Scott, 2014. "Intellectual property rights and the evolution of scientific journals as knowledge platforms," International Journal of Industrial Organization, Elsevier, vol. 36(C), pages 83-94.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Timothy S. Simcoe & Stuart J.H. Graham & Maryann P. Feldman, 2009. "Competing on Standards? Entrepreneurship, Intellectual Property, and Platform Technologies," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(3), pages 775-816, September.
    2. Marc Rysman & Timothy Simcoe, 2008. "Patents and the Performance of Voluntary Standard-Setting Organizations," Management Science, INFORMS, vol. 54(11), pages 1920-1934, November.
    3. Cameron D. Miller & Puay Khoon Toh, 2022. "Complementary components and returns from coordination within ecosystems via standard setting," Strategic Management Journal, Wiley Blackwell, vol. 43(3), pages 627-662, March.
    4. Hussinger, Katrin & Schwiebacher, Franz, 2013. "The value of disclosing IPR to open standard setting organizations," ZEW Discussion Papers 13-060, ZEW - Leibniz Centre for European Economic Research.
    5. Baron, Justus, 2020. "Counting standard contributions to measure the value of patent portfolios - A tale of apples and oranges," Telecommunications Policy, Elsevier, vol. 44(3).
    6. Vitor Trindade & Johannes Moenius, 2007. "Networks, Standards and Intellectual Property Rights," Working Papers 0705, Department of Economics, University of Missouri.
    7. Filippo Mezzanotti, 2021. "Roadblock to Innovation: The Role of Patent Litigation in Corporate R&D," Management Science, INFORMS, vol. 67(12), pages 7362-7390, December.
    8. Wen, Wen & Forman, Chris & Jarvenpaa, Sirkka L, 2022. "The effects of technology standards on complementor innovations: Evidence from the IETF," Research Policy, Elsevier, vol. 51(6).
    9. Pfister, Curdin & Koomen, Miriam & Harhoff, Dietmar & Backes-Gellner, Uschi, 2021. "Regional innovation effects of applied research institutions," Research Policy, Elsevier, vol. 50(4).
    10. Adam B. Jaffe & Gaétan de Rassenfosse, 2017. "Patent citation data in social science research: Overview and best practices," Journal of the Association for Information Science & Technology, Association for Information Science & Technology, vol. 68(6), pages 1360-1374, June.
    11. Paola Giuri & Myriam Mariani & Stefano Brusoni & Gustavo Crespi & Dominique Francoz & Alfonso Gambardella & Walter Garcia-Fontes & Aldo Geuna & Raul Gonzales & Dietmar Harhoff & Karin Hoisl & Christia, 2005. "Everything you Always Wanted to Know about Inventors (but Never Asked): Evidence from the PatVal-EU Survey," LEM Papers Series 2005/20, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    12. Amore, Mario Daniele & Schneider, Cédric & Žaldokas, Alminas, 2013. "Credit supply and corporate innovation," Journal of Financial Economics, Elsevier, vol. 109(3), pages 835-855.
    13. Mukherjee, Abhiroop & Singh, Manpreet & Žaldokas, Alminas, 2017. "Do corporate taxes hinder innovation?," Journal of Financial Economics, Elsevier, vol. 124(1), pages 195-221.
    14. Aditi Mehta & Marc Rysman & Tim Simcoe, 2006. "Identifying the Age Profile of Patent Citations," Boston University - Department of Economics - Working Papers Series WP2006-022, Boston University - Department of Economics.
    15. Kevin Boudreau, 2010. "Open Platform Strategies and Innovation: Granting Access vs. Devolving Control," Management Science, INFORMS, vol. 56(10), pages 1849-1872, October.
    16. 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.
    17. Deng, Xin & Li, Qian Cher & Mateut, Simona, 2022. "Participation in setting technology standards and the implied cost of equity," Research Policy, Elsevier, vol. 51(5).
    18. Mohd Shadab Danish & Pritam Ranjan & Ruchi Sharma, 2021. "Identification of “Valuable” Technologies via Patent Statistics in India: An Analysis Based on Renewal Information," BASE University Working Papers 13/2021, BASE University, Bengaluru, India.
    19. Raven, Michael & Blind, Knut, 2017. "The characteristics and impacts of scientific publications in biotechnology research referenced in standards," Technological Forecasting and Social Change, Elsevier, vol. 115(C), pages 167-179.
    20. Hur, Wonchang & Oh, Junbyoung, 2021. "A man is known by the company he keeps?: A structural relationship between backward citation and forward citation of patents," Research Policy, Elsevier, vol. 50(1).

    More about this item

    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, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:13632. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.