The Smallest Salable Patent-Practicing Unit ('SSPPU') Experiment, General Purpose Technologies and the Coase Theorem

8 Pages Posted: 20 Feb 2016

See all articles by Nicolas Petit

Nicolas Petit

University of Liege - School of Law; Hoover Institution

Date Written: February 18, 2016

Abstract

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.

Keywords: Patents, standards, antitrust, intellectual property, innovation, Coase theorem

JEL Classification: O31, O32, O33, O34, K00, K20, K21, K40, K42, L40, L41

Suggested Citation

Petit, Nicolas, The Smallest Salable Patent-Practicing Unit ('SSPPU') Experiment, General Purpose Technologies and the Coase Theorem (February 18, 2016). Available at SSRN: https://ssrn.com/abstract=2734245 or http://dx.doi.org/10.2139/ssrn.2734245

Nicolas Petit (Contact Author)

University of Liege - School of Law ( email )

B-4000 Liege
Belgium

Hoover Institution ( email )

Stanford, CA 94305
United States

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