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Technology Standards, Patents and Antitrust

Competition and Regulation in Network Industries, Vol. 9, No. 1, 2008

22 Pages Posted: 16 May 2008 Last revised: 2 Jul 2014

Francois Leveque

École Nationale Supérieure des Mines de Paris - Centre d'Économie Industrielle (CERNA)

Yann Ménière

Mines ParisTech

Abstract

From the perspective of antitrust authorities, the multiplication of patents embodied in technology standards is a source of concerns. Certainly it is necessary and efficient that patents owners derive a revenue from the use of the standard. Yet by their function - ensuring compatibility between different products by promoting a common technology platform in a particular industry - standards generate potential for market power far beyond the legal protection conferred by patents. Patent holders may thus be tempted to leverage their position to make illegal profits. Such concerns arise in two different cases that have fueled antitrust debates and economic research during the last decade. On the one hand, patent owners may be tempted to collude by coordinating their licensing policies. The difficulty here is that some coordination between them within a patent pool may actually be pro-competitive. After a brief introduction, we explain in the first part why, and on what conditions, patent pools should be accepted by antitrust authorities. On the other hand, patent owners may be tempted to manipulate the standard setting process by waiting for the wide adoption of the standard before charging excessive royalties to its users. We present this hold-up problem in the second part, and show how appropriate rules for standard setting processes can help mitigate it.

Keywords: Antitrust, Hold-up, Innovation, Licensing, Patent, Patent Pool, Royalty, Standard

JEL Classification: K00, L00

Suggested Citation

Leveque, Francois and Ménière, Yann, Technology Standards, Patents and Antitrust. Competition and Regulation in Network Industries, Vol. 9, No. 1, 2008. Available at SSRN: https://ssrn.com/abstract=1133834

Francois Leveque

École Nationale Supérieure des Mines de Paris - Centre d'Économie Industrielle (CERNA) ( email )

60, boulevard Saint Michel
75272 Paris Cedex 06, 75272
France

Yann Ménière (Contact Author)

Mines ParisTech ( email )

60, bd St Michel
Paris, 75006
France

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