The Smallest Salable Patent-Practicing Unit ('SSPPU') Experiment, General Purpose Technologies and the Coase Theorem
University of Liege - School of Law; International Center for Law & Economics (ICLE)
February 18, 2016
In the last years, some Standard-Setting Organizations (“SSOs”) active in wireless communications have experimented new pricing principles for standard essential patents (“SEPs”). One of those experiments is the “SSPPU” rule. Under SSPPU, the licensing rates paid to owners of SEPs for the use of their technology shall reflect the “value that the functionality of the claimed invention or inventive feature…contributes to the value of the relevant functionality of the smallest saleable Compliant Implementation that practices the Essential Patent Claim”. This paper reviews the SSPPU experiment through the lenses of the Coase theorem. It finds that SSPPU interferes with the efficient operation of the price system, and is likely to reduce investment in socially beneficial activities, including in General Purpose Technologies (“GPTs”) which are key drivers of economic growth.
Number of Pages in PDF File: 8
Keywords: Patents, standards, antitrust, intellectual property, innovation, Coase theorem
JEL Classification: O31, O32, O33, O34, K00, K20, K21, K40, K42, L40, L41
Date posted: February 20, 2016