Designing SEP Licensing Negotiation Groups to Reduce Patent Holdout in 5G/IoT Markets

Forthcoming in 5G and Beyond: Intellectual Property and Competition Policy in the Internet of Things (eds. Jonathan M. Barnett and Sean M. O’Connor, Cambridge University Press 2022)

21 Pages Posted: 5 Mar 2022

See all articles by Ruud Peters

Ruud Peters

Peters IP Consultancy B.V.

Igor Nikolic

European University Institute

Bowman Heiden

University of California, Berkeley - Haas School of Business; Center for Intellectual Property, University of Gothenburg

Date Written: March 1, 2022

Abstract

In response to concerns that inefficiencies in SEP licensing may have a negative systemic impact on the development of emerging 5G and IoT Markets, the European Commission (EC) convened an Expert Group on Licensing and Valuation of Standards Essential Patents (SEP Expert Group), resulting in a report including seventy-nine proposals aimed at improving the SEP licensing market. A proposal formulated by an individual member of the SEP Expert Group regarding License Negotiation Groups (LNGs) has recently generated a renewed interest in the topic in the context of IoT, where a large increase in the amount of SEP licensing activity is predicted as connectivity becomes ubiquitous across most industries. While LNGs have been previously promoted to solve the perceived problems of patent holdup (i.e. seller bargaining power), the authors’ have instead proposed that LNGs should be used to solve the primary concern of patent holdout, which is facilitated by the collective action problem among similar situated IoT implementers. Applying a bespoke set of legal, economic, and management principles and norms, the resulting LNG design seeks to significantly reduce transaction costs and the threat of patent holdout while at the same time curtailing potential antitrust risks, especially regarding SEP implementors in the long tail of new IoT markets.

Keywords: Patents; antitrust; standard-essential patents; collective action; license negotiation groups; patent holdout; 5G; IoT

JEL Classification: L15, L24, K21, O31, O34

Suggested Citation

Peters, Ruud and Nikolic, Igor and Heiden, Bowman, Designing SEP Licensing Negotiation Groups to Reduce Patent Holdout in 5G/IoT Markets (March 1, 2022). Forthcoming in 5G and Beyond: Intellectual Property and Competition Policy in the Internet of Things (eds. Jonathan M. Barnett and Sean M. O’Connor, Cambridge University Press 2022), Available at SSRN: https://ssrn.com/abstract=4046554 or http://dx.doi.org/10.2139/ssrn.4046554

Ruud Peters

Peters IP Consultancy B.V. ( email )

Munthof 9
Valkenswaard, 5551XG
Netherlands
+31622803170 (Phone)

Igor Nikolic

European University Institute ( email )

Villa Schifanoia
133 via Bocaccio
Firenze (Florence), Tuscany 50014
Italy

Bowman Heiden (Contact Author)

University of California, Berkeley - Haas School of Business

Institute for Business Innovation
2220 Piedmont Avenue
Berkeley, CA 94720
United States

Center for Intellectual Property, University of Gothenburg ( email )

Vasagatan 1
Gothenburg, 40530
Sweden

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