The Role of Antitrust in Preventing Patent Holdup PDF Download
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Author: Carl Shapiro
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Patent holdup has proven one of the most controversial topics in innovation policy, in part because companies with a vested interest in denying its existence have spent tens of millions of dollars trying to debunk it. Notwithstanding a barrage of political and academic attacks, both the general theory of holdup and its practical application in patent law remain valid and pose significant concerns for patent policy. Patent and antitrust law have made significant strides in the past fifteen years in limiting the problem of patent holdup. But those advances are currently under threat from the Antitrust Division of the Department of Justice, which has reversed prior policies and broken with the Federal Trade Commission to downplay the significance of patent holdup while undermining private efforts to prevent it. Ironically, the effect of the Antitrust Division's actions is to create a greater role for antitrust law in stopping patent holdup. We offer some suggestions for moving in the right direction.
Author: Carl Shapiro
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Patent holdup has proven one of the most controversial topics in innovation policy, in part because companies with a vested interest in denying its existence have spent tens of millions of dollars trying to debunk it. Notwithstanding a barrage of political and academic attacks, both the general theory of holdup and its practical application in patent law remain valid and pose significant concerns for patent policy. Patent and antitrust law have made significant strides in the past fifteen years in limiting the problem of patent holdup. But those advances are currently under threat from the Antitrust Division of the Department of Justice, which has reversed prior policies and broken with the Federal Trade Commission to downplay the significance of patent holdup while undermining private efforts to prevent it. Ironically, the effect of the Antitrust Division's actions is to create a greater role for antitrust law in stopping patent holdup. We offer some suggestions for moving in the right direction.
Author: Anne Layne-Farrar
Publisher:
ISBN:
Category :
Languages : en
Pages : 42
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Book Description
The quote in the title refers to a recurring principle in the Antitrust Guidelines for the Licensing of Intellectual Property, issued jointly by the US Department of Justice and the Federal Trade Commission in 1995. That report states that The Agencies' general approach in analyzing a licensing restraint under the rule of reason is to inquire whether the restraint is likely to have anticompetitive effects and, if so, whether the restraint is reasonably necessary to achieve procompetitive benefits that outweigh those anticompetitive effects. We apply this standard of evaluation to recent proposals for joint licensing negotiations in standard setting contexts, which have been offered as a solution to the problem of opportunistic licensing and patent hold up. We find that, to the contrary, joint negotiations are not reasonably necessary to prevent hold up. Instead, other more moderate policy solutions that take advantage of existing institutional features within standard setting bodies have a greater likelihood of preventing hold up without running the risk of anticompetitive licensee collusion that is present with joint negotiations. In particular, we posit that standard setting bodies should set voting rules to obtain majority support in the selection of technologies for a standard and should consider means of encouraging ex ante bilateral negotiations. In addition, competition authorities could focus on the enforcement of non-discriminatory licensing as a means of preventing anticompetitive opportunistic hold up.
Author: Anne Layne-farrar
Publisher:
ISBN:
Category : Intellectual property
Languages : en
Pages : 34
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Book Description
Author: Thomas F. Cotter
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Commentators on antitrust and patent law over the past decade have advanced the view that "patent holdup" poses a serious threat to innovation and consumer welfare. In recent months, however, a more skeptical literature has emerged to challenge patent holdup on both theoretical and empirical grounds. This article responds to the skeptics' theoretical challenge, by placing patent holdup within the broader class of holdup or holdout behavior as discussed in mainstream law and economics. Defining patent holdup as a type of opportunistic behavior that threatens substantial harms to both static and dynamic efficiency, I argue that both the law of patent remedies and the law of antitrust should play a role (albeit a limited one) in responding to, or enabling private efforts to avoid, patent holdup. As for remedies, I argue, among other things, that consistent with the Supreme Court's decision in eBay Inc. v. MercExchange, L.L.C. courts should award damages in lieu of injunctive relief in a subset of patent infringement cases involving serious risks of holdup-generated harm to either static or dynamic welfare. On the antitrust side, I argue, contrary to the D.C. Circuit's holding in Rambus, Inc. v. FTC, that a patent owner's deceptive conduct that results in the adoption of its patented technology or that enables the patent owner to avoid a RAND licensing commitment can be actionable as a violation of Sherman Act ¿ 2. I also argue that, consistent with the recommendations of many recent observers (including the Antitrust Modernization Commission), joint bargaining between standard setting organization members, on the one hand, and individual members/patent owners, on the other, over the price terms of patent licenses should be evaluated under the rule of reason-though only to the extent that such collective bargaining is reasonably necessary to avoid the threat that holdup poses to dynamic efficiency.
Author: C. Bradford Biddle
Publisher: Cambridge University Press
ISBN: 1108426751
Category : Business & Economics
Languages : en
Pages : 379
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Book Description
Through a collaboration among twenty legal scholars from North America, Europe and Asia, this book presents an international consensus on the use of patent remedies for complex products such as smartphones, computer networks, and the Internet of Things. This title is also available as Open Access on Cambridge Core.
Author: National Research Council
Publisher: National Academies Press
ISBN: 0309293154
Category : Political Science
Languages : en
Pages : 181
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Book Description
Patent Challenges for Standard-Setting in the Global Economy: Lessons from Information and Communication Technology examines how leading national and multinational standard-setting organizations (SSOs) address patent disclosures, licensing terms, transfers of patent ownership, and other issues that arise in connection with developing technical standards for consumer and other microelectronic products, associated software and components, and communications networks including the Internet. Attempting to balance the interests of patent holders, other participants in standard-setting, standards implementers, and consumers, the report calls on SSOs to develop more explicit policies to avoid patent holdup and royalty-stacking, ensure that licensing commitments carry over to new owners of the patents incorporated in standards, and limit injunctions for infringement of patents with those licensing commitments. The report recommends government measures to increase the transparency of patent ownership and use of standards information to improve patent quality and to reduce conflicts of laws across countries.
Author: Mark A. Lemley
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
We study several interconnected problems that arise under the current U.S. patent system when a patent covers one component or feature of a complex product, This situation is common in the information technology sector of the economy. First, we show using bargaining theory that the threat to obtain a permanent injunction greatly enhances the patent holder's negotiating power, leading to royalty rates that exceed a natural benchmark level based on the value of the patented technology and the strength of the patent. Such royalty overcharges are especially great for weak patents covering a minor feature of a product with a sizable price/cost margin. These royalty overcharges do not disappear even if the allegedly infringing firm is fully aware of the patent when it initially designs its product. However, the holdup problems caused by the threat of injunctions are reduced if courts regularly grant stays to permanent injunctions to give defendants time to redesign their products to avoid infringement when this is possible. Second, we show how holdup problems are magnified in the presence of royalty stacking, i.e., when multiple patents read on a single product. Third, using third-generation cellular telephones and Wi-Fi as leading examples, we illustrate that royalty stacking has become a very serious problem, especially in the standard-setting context where hundreds or even thousands of patents can read on a single product standard. Fourth, we discuss the use of reasonable royalties to award damages in patent infringement cases. We report empirical results regarding the measurement of reasonable royalties by the courts and identify various practical problems that tend to lead courts to over-estimate reasonable royalties in the presence of royalty stacking. Finally, we make suggestions for patent reform based on our theoretical and empirical findings.
Author: J. Gregory Sidak
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
"Patent holdup" is described by its critics as occurring when a patent-holder uses a court's issuance of an injunction (or merely the threat of an injunction) to block an infringer's use of the patented invention unless the infringer, who has made sunk investments in expectation of using the patented invention, pays a royalty that is, from the infringer's perspective, excessively high. "Royalty stacking" is described by its critics as occurring when a product sold to end users incorporates many separate patented inputs, and the holder of the patent to one such input - an input lacking immediate substitutes - demands a high royalty from the manufacturer of the end product without regard to the effect that this royalty will have on the total amount of royalties that the manufacturer must pay to all holders of patented inputs and, consequently, the price that the manufacturer must charge end users. Professors Mark Lemley and Carl Shapiro argue that patent holdup and royalty stacking are serious problems, and that legislators or courts (if not both) should limit the circumstances in which a patent-holder may avail himself of the existing statutory right to enjoin the infringer's use of the patent - essentially only if the patent protects an input that represents a "significant" portion of the final value of the product. I critique the Lemley-Shapiro model of patent law. I dispute its main finding that the threat of an injunction inflates royalty payments in many cases relative to a hypothetical benchmark royalty rate. The Lemley-Shapiro framework does not properly account for the relevant error costs associated with weakening the presumption of injunctive relief. In particular, Lemley and Shapiro fail to consider how removing the presumption of injunctive relief could decrease dynamic efficiency. Furthermore, even if their framework were correct, Lemley and Shapiro rely on biased parameters that preordain their result. This outcome follows for two reasons. First, because Lemley and Shapiro fail to account for the real option conferred on potential users of the patent when a patent-holder makes sunk investments in new technologies or products, their hypothetically reasonable royalty rate is biased downwards. Second, the Lemley-Shapiro model reaches its result not by deriving a general bargaining model, but by assigning all the bargaining power to the patent-holder and claiming a general result. Both factors bias Lemley's and Shapiro's results in favor of the infringing party.
Author: Gregory J. Werden
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Owners of standard essential patents (SEPs) are cast as villains for engaging in “patent hold-up,” i.e., taking advantage of the fact that they negotiate royalties with implementer-licensees that already have made sunk investments in the standard. In contrast to “patent ambush,” patent hold-up involves no standard-setting misconduct or harm to any competitive process, and thus cannot violate antitrust law. Commentators taking a contrary positions confuse the ends of antitrust law with its means. Antitrust law promotes consumer welfare only by protecting competition. Casting aside this core principle would expose business decisions, including ordinary price setting, to judicial oversight. Commitments made by SEP owners in the standard-setting process, however, should be enforced, and they are enforced. Without an antitrust cause of action, implementers invoke the powers of the courts to resolve royalty disputes over SEPs.
Author: A. Douglas Melamed
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
The antitrust laws can play an important role in ensuring that the rules established by standard setting organizations are effective in preventing the owners of standard-essential patents from engaging in patent holdup. We explain here that both standard-setting organizations and their members can violate Section 1 of the Sherman Act if the rules adopted are ineffective in preventing the owners of standard-essential patents from exploiting the monopoly power they gain as a result of the standard.
