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

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  • 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.

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Bibliographic Info

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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Publication status: published as Competing on Standards? Entrepreneurship, Intellectual Property and Platform Technologies , Timothy S. Simcoe, Stuart J.H. Graham, Maryann P. Feldman. in Entrepreneurship: Strategy and Structure , Hellmann and Stern. 2009
Handle: RePEc:nbr:nberwo:13632

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  1. Chiao, Benjamin & Lerner, Josh & Tirole, Jean, 2007. "The Rules of Standard Setting Organizations: An Empirical Analysis," CEPR Discussion Papers 6141, C.E.P.R. Discussion Papers.
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  16. Jaffe, A.B. & Trajtenberg, M., 1992. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," Papers 14-92, Tel Aviv.
  17. 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 129-51, Spring.
  18. Marc Rysman & Tim Simcoe, 2006. "Patents and Performance of Voluntary Standard Setting Organizations," Boston University - Department of Economics - Working Papers Series WP2006-031, Boston University - Department of Economics.
  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.
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Cited by:
  1. Anne Layne-Farrar & Gerard Llobet & Jorge Padilla, 2012. "Payments And Participation: The Incentives To Join Cooperative Standard Setting Efforts," Working Papers wp2012_1203, CEMFI.
  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. Alberto Galasso & Mark Schankerman, 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.

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