Much Ado About Holdup
27 Pages Posted: 22 Feb 2018 Last revised: 28 Feb 2019
Date Written: February 13, 2018
The policy debate surrounding patent hold-up in markets for standardized products is now well into its second decade with no end in sight. Fundamental questions including the definition of hold-up, whether it exists in the marketplace, and what impact it has on innovation, continue to bedevil scholars, policy makers and industry. Yet it is not clear that this debate needs to continue. Patent hold-up is a pattern of market behavior, not a legally-cognizable wrong. Whether it is commonplace or rare is largely irrelevant to liability in any given case. To the extent that hold-up behavior constitutes an abuse of market power, with resulting harms to competition, longstanding doctrines of antitrust and competition law exist to sanction it. To the extent that hold-up impedes the efficient operation of standard-setting processes, SDOs can, and have, adopted internal procedures, including disclosure and licensing requirements, to curtail that behavior. Thus, the ongoing hunt for empirical evidence of systemic patent hold-up in standardized product markets, or a lack thereof, seems a fruitless academic exercise. The absence of systemic hold-up actually tells us little about individual firm behavior that can and should be sanctioned by the law, and it may thus be time to close the debate over the systemic prevalence of this form of behavior.
Keywords: FRAND, standards, SEP, patent, holdup, holdout
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