Do Standard-Essential Patent Owners Behave Opportunistically? Evidence from U.S. District Court Dockets

American Law & Economics Review, Vol. 25(1), pp. 300-37, 2023

39 Pages Posted: 20 Nov 2020 Last revised: 30 May 2024

See all articles by Brian J. Love

Brian J. Love

Santa Clara University - School of Law

Yassine Lefouili

University of Toulouse 1 - Toulouse School of Economics (TSE)

Christian Helmers

Santa Clara University - Leavey School of Business; Charles III University of Madrid

Date Written: February 7, 2023

Abstract

To what extent and with what effect do owners of standard-essential patents (SEPs) “hold-up” companies that produce standard-compliant products? To explore this question, we construct measures of opportunistic patent licensing behaviors using detailed information collected from the dockets of U.S. patent cases filed (2010-2019) to enforce SEPs and a matched sample of non-SEPs. Overall, we find evidence of opportunistic behavior by the patent enforcer in approximately 77% of SEP and 65% of non-SEP assertions in court. The figures mask important heterogeneity. There is significantly more opportunistic conduct aimed at increasing a potential licensee’s loss if the patent enforcer prevails in court: 35% of SEP assertions vs. 10% of non-SEP assertions. In contrast, conduct that increases a potential licensee’s litigation costs is less common and the difference between SEP assertions (8%) and non-SEP assertions (6%) is small. We also show that opportunistic behavior is associated with case outcomes, with the effect on settlement depending on the type of opportunistic behavior. Behavior that increases a potential licensee’s litigation costs is associated with an increase in the probability of settlement, while behavior that increases a potential licensee’s loss if the patent enforcer prevails in court is negatively associated with settlement.

Keywords: Litigation, standards, patents, holdup, U.S.

JEL Classification: K41, L96, O34

Suggested Citation

Love, Brian J. and Lefouili, Yassine and Helmers, Christian and Helmers, Christian, Do Standard-Essential Patent Owners Behave Opportunistically? Evidence from U.S. District Court Dockets (February 7, 2023). American Law & Economics Review, Vol. 25(1), pp. 300-37, 2023, Available at SSRN: https://ssrn.com/abstract=3727085 or http://dx.doi.org/10.2139/ssrn.3727085

Brian J. Love (Contact Author)

Santa Clara University - School of Law ( email )

500 El Camino Real
Santa Clara, CA 95053
United States

Yassine Lefouili

University of Toulouse 1 - Toulouse School of Economics (TSE)

1 Esplanade de l’Université
Toulouse, F-31000
France

Christian Helmers

Charles III University of Madrid ( email )

CL. de Madrid 126
Madrid, Madrid 28903
Spain

Santa Clara University - Leavey School of Business ( email )

500 El Camino Real
Santa Clara, CA California 95053
United States

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