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Standard-Essential Patents

Listed author(s):
  • Josh Lerner
  • Jean Tirole

A major policy issue in standard setting is that patents that are ex ante not that important, by being included into a standard, may become standard-essential patents. In an attempt to curb the monopoly power that they create, most standard-setting organizations require the owners of patents covered by the standard to make a loose commitment to grant licenses on reasonable terms. Such commitments unsurprisingly are conducive to litigation. This paper builds a framework for the analysis of these patents, identifies several types of inefficiencies attached to the lack of price commitments, and shows how structured price commitments restore competition and why such commitments may not arise spontaneously in the marketplace.

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File URL: http://dx.doi.org/10.1086/680995
Download Restriction: Access to the online full text or PDF requires a subscription.

File URL: http://dx.doi.org/10.1086/680995
Download Restriction: Access to the online full text or PDF requires a subscription.

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Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 123 (2015)
Issue (Month): 3 ()
Pages: 547-586

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Handle: RePEc:ucp:jpolec:doi:10.1086/680995
Contact details of provider: Web page: http://www.journals.uchicago.edu/JPE/

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  1. 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, 03.
  2. Josh Lerner & Marcin Strojwas & Jean Tirole, 2007. "The design of patent pools: the determinants of licensing rules," RAND Journal of Economics, RAND Corporation, vol. 38(3), pages 610-625, 09.
  3. Jonathan Levin & Steven Tadelis, 2005. "Profit Sharing and the Role of Professional Partnerships," The Quarterly Journal of Economics, Oxford University Press, vol. 120(1), pages 131-171.
  4. Timothy Simcoe, 2012. "Standard Setting Committees: Consensus Governance for Shared Technology Platforms," American Economic Review, American Economic Association, vol. 102(1), pages 305-336, February.
  5. Shapiro, Carl, 2003. " Antitrust Limits to Patent Settlements," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 391-411, Summer.
  6. Rey, Patrick & Tirole, Jean, 2013. "Price Caps as Welfare-Enhancing Coopetition," TSE Working Papers 13-439, Toulouse School of Economics (TSE), revised Apr 2017.
  7. 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.
  8. Rey, Patrick & Tirole, Jean, 2013. "Cooperation vs. Collusion: How Essentiality Shapes Co-opetition," IDEI Working Papers 801, Institut d'Économie Industrielle (IDEI), Toulouse.
  9. Layne-Farrar, Anne & Llobet, Gerard, 2014. "Moving beyond simple examples: Assessing the incremental value rule within standards," International Journal of Industrial Organization, Elsevier, vol. 36(C), pages 57-69.
  10. Gastón Llanes & Joaquín Poblete, 2014. "Ex Ante Agreements in Standard Setting and Patent-Pool Formation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(1), pages 50-67, 03.
  11. Marc Rysman & Timothy Simcoe, 2008. "Patents and the Performance of Voluntary Standard-Setting Organizations," Management Science, INFORMS, vol. 54(11), pages 1920-1934, November.
  12. Gilbert, Richard J., 2011. "Deal or No Deal? Licensing Negotiations in Standard-Setting Organizations," Competition Policy Center, Working Paper Series qt6kv798tf, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
  13. Guesnerie, Roger & Laffont, Jean-Jacques, 1984. "A complete solution to a class of principal-agent problems with an application to the control of a self-managed firm," Journal of Public Economics, Elsevier, vol. 25(3), pages 329-369, December.
  14. Nancy Gallini, 2011. "Private agreements for coordinating patent rights: the case of patent pools," ECONOMIA E POLITICA INDUSTRIALE, FrancoAngeli Editore, vol. 2011(3), pages 5-30.
  15. Nagaoka, Sadao & Shimbo, Tomoyuki & Tsukada, Naotoshi, 2006. "The structure and the evolution of essential patents for standards: Lessons from three IT standards," IIR Working Paper 06-08, Institute of Innovation Research, Hitotsubashi University.
  16. Steffen Brenner, 2009. "Optimal formation rules for patent pools," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 40(3), pages 373-388, September.
  17. Maskin, Eric & Tirole, Jean, 2001. "Markov Perfect Equilibrium: I. Observable Actions," Journal of Economic Theory, Elsevier, vol. 100(2), pages 191-219, October.
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