Working Paper: NBER ID: w19664
Authors: Josh Lerner; Jean Tirole
Abstract: A major policy issue in standard setting is that patents that are ex-ante not that important may, by being included into the standard, become standard-essential patents (SEPs). 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 intense litigation activity. This paper builds a framework for the analysis of SEPs, identi.es several types of inefficiencies attached to the lack of price commitment, shows how structured price commitments restore competition, and analyzes whether price commitments are likely to emerge in the marketplace.
Keywords: standard-essential patents; market competition; price commitments; patent pools
JEL Codes: D43; L24; L41; O34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Structured price commitments (G13) | Reduced monopoly power (D42) |
| Standard-setting process (L15) | Increased monopoly power (D42) |
| Absence of structured price commitments (D49) | Reduced market efficiency (G14) |