Incentive Effects from Different Approaches to Holdup Mitigation Surrounding Patent Remedies and Standard-Setting Organizations

25 Pages Posted: 20 Sep 2013 Last revised: 29 Dec 2013

See all articles by F. Scott Kieff

F. Scott Kieff

George Washington University - Law School; Stanford University - Hoover Institution on War, Revolution and Peace; McKool Smith

Anne Layne-Farrar

Charles River Associates; Northwestern University

Date Written: 2013

Abstract

Debates about patent policy often focus on the potential for the threat of a court-imposed remedy for patent infringement to cause manufacturing entities and others to suffer patent holdup, especially when standardized industries are involved. This article uses lessons from the broader economics and political science literatures on holdup to explore various approaches to setting remedies for patent infringement — namely injunctions and money damages in the form of lost profits or reasonable royalties — with an eye towards the nature and extent of various forms of holdup they each might generate. In so doing, the article contrasts various narrower sub-categories of the broad holdup problem, including patent holdup, reverse patent holdup, and government holdup. The article elucidates a number of existing legal institutions and organizations that significantly mitigate the threat of patent holdup, including particular doctrines in the law of patent remedies and particular private ordering arrangements such as Standard Setting Organizations (SSOs). It also highlights some of the unfortunate unintended consequences of currently popular suggestions for mitigating patent holdup. It then explores the economic incentives driving the actions by both patent holder and licensee to show different categories of holdup risk they create. It closes by introducing a suggested framework for courts and administrative agencies to use to directly target the identified categories of holdup risk, and thereby limit harmful side effects.

Keywords: patent, intellectual property, IP, antitrust, competition, standard setting organizations, SSO, holdup, remedies, damages, RAND, innovation, property, contract, coordination, private ordering, new institutional economics

JEL Classification: A12, B25, D23, D45, K4, K11, K20, L41, L44, O31, O33, O34

Suggested Citation

Kieff, F. Scott and Layne-Farrar, Anne, Incentive Effects from Different Approaches to Holdup Mitigation Surrounding Patent Remedies and Standard-Setting Organizations (2013). Journal of Competition Law & Economics, 2013, Forthcoming; GWU Legal Studies Research Paper No. 2013-116; GWU Law School Public Law Research Paper No. 2013-116. Available at SSRN: https://ssrn.com/abstract=2327882

F. Scott Kieff (Contact Author)

George Washington University - Law School ( email )

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Stanford University - Hoover Institution on War, Revolution and Peace ( email )

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McKool Smith ( email )

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HOME PAGE: http://https://www.mckoolsmith.com/professionals-Scott_Kieff

Anne Layne-Farrar

Charles River Associates ( email )

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Chicago, IL 60606
United States
312-377-9238 (Phone)

HOME PAGE: http://www.crai.com

Northwestern University ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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