Essential Patents and Standard Dynamics

32 Pages Posted: 14 Dec 2014

See all articles by Justus Baron

Justus Baron

Northwestern University - Center on Law, Business, and Economics

Tim Christoph Pohlmann

Berlin University of Technology, Chair of Innovation Economics

Knut Blind

Technische Universität Berlin (TU Berlin)

Date Written: 2013

Abstract

We investigate the effect of patents on the rate and direction of subsequent technological progress of standards. In particular, we focus upon the effect of including standard-essential patents. A recent stream of literature cautions against the negative effects of patents on subsequent innovation in complex technologies. We confront this idea with empirical evidence drawn from a large database of 3.500 ICT standards. In our analysis, we highlight more differentiated effects. First, the effect of patents depends upon the degree of fragmentation of ownership. Including essential patents on a standard has a strong positive effect on continuous technological progress of the standard. However, this effect weakens if ownership over patents is increasingly fragmented. Second, patents have opposite effects on continuous and discontinuous technological change of standards. While the inclusion of essential patents (in case of sufficiently concentrated ownership) encourages continuous technological progress, it significantly delays discontinuous standard replacements.

Keywords: Technology standards, standard essential patents, cumulative innovation

JEL Classification: O31, O33, O34

Suggested Citation

Baron, Justus and Pohlmann, Tim Christoph and Blind, Knut, Essential Patents and Standard Dynamics (2013). Available at SSRN: https://ssrn.com/abstract=2537593 or http://dx.doi.org/10.2139/ssrn.2537593

Justus Baron (Contact Author)

Northwestern University - Center on Law, Business, and Economics ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States

HOME PAGE: http://justusbaron.org/

Tim Christoph Pohlmann

Berlin University of Technology, Chair of Innovation Economics ( email )

Berlin, 10585
Germany
+49 (0) 30 314 76624 (Phone)

HOME PAGE: http://www.inno.tu-berlin.de

Knut Blind

Technische Universität Berlin (TU Berlin) ( email )

Straße des 17
Berlin
Germany

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