Standards, Intellectual Property Rights, and Strategic Patenting: Evidence from the IETF

Abstract

How does the development of formal standards for information and communication technologies shape the behavior of firms that may need the technologies to develop new products and services? We argue that standardization lowers the search costs of identifying important intellectual property rights (IPR) for standards users and reduces uncertainty related to licensing terms. These changes can clarify the risks of IPR infringement for standards-related technologies and thus decrease strategic patenting by standards users. Using data from the Internet Engineering Task Force (IETF) to study the behavior of firms who use but do not contribute to standards, we find that an increase in the number of IETF standards in a technological area is associated with a decline in strategic patenting in the area. The effects become larger in environments where patent rights have been strengthened or when standards-contributing firms hold a larger proportion of related patents.

Keywords: defensive patenting, intellectual property rights, standardization, standards, strategic patenting

JEL Classification: L15, L86, O34