Five Reasons Why Patent Disclosure in Standards-Setting Organizations Doesn't Work (And What to Do Instead)
8 Pages Posted: 6 Oct 2015
Date Written: May 1, 2015
Patent “hold up” is a risk associated with standard- setting, and requiring or encouraging disclosure of relevant patents by standards developers is one tool used to mitigate this risk. Disclosure has an intuitive appeal and a strong theoretical justification as a method for addressing an informational asymmetry. This paper argues that disclosure simply does not work as a practical matter, however. The paper makes five key assertions: 1. Disclosure rules create an over-disclosure problem. Only a small percentage of patents declared as essential by patent owners are in fact essential for implementation of the standard — an unsurprising fact given the incentives of some parties to err on the side of disclosure. 2. Disclosure rules also result in an under-disclosure problem. For various reasons, certain key parties will have essential patent claims but will not disclose. 3. Disclosure rules suffer from a timing problem. Information is frequently available only after critical decisions have been made. 4. Disclosure rules create an action problem: that is, standards setting organizations are ill-equipped to use the disclosed information in a productive way. 5. Disclosure rules present a complexity and cost problem. Disclosure requirements are complex, ambiguous, and differ widely across SSOs. Participants in the standards development process must bear significant associated costs.
The paper concludes that disclosure is not an effective tool to address patent hold up, and suggests that other tools (such as enhanced “F/RAND” licensing obligations and improved patent valuation methodologies) should be used instead.
Keywords: standards, patents, disclosure, SEPs
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