Journal Article

INCENTIVE EFFECTS FROM DIFFERENT APPROACHES TO HOLDUP MITIGATION SURROUNDING PATENT REMEDIES AND STANDARD-SETTING ORGANIZATIONS

F. Scott Kieff and Anne Layne-Farrar

in Journal of Competition Law & Economics

Volume 9, issue 4, pages 1091-1123
Published in print December 2013 | ISSN: 1744-6414
Published online November 2013 | e-ISSN: 1744-6422 | DOI: https://dx.doi.org/10.1093/joclec/nht030
INCENTIVE EFFECTS FROM DIFFERENT APPROACHES TO HOLDUP MITIGATION SURROUNDING PATENT REMEDIES AND STANDARD-SETTING ORGANIZATIONS

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  • Property Law
  • History of Economic Thought (1925 onwards)
  • General Economics
  • Technological Change; Research and Development
  • Antitrust Issues and Policies
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  • Market Structure and Pricing
  • Law and Economics

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Debates about patent policy often focus on the potential for the threat of a court-imposed remedy for patent infringement to cause manufacturing entities and others to suffer patent holdup, especially when standardized industries are involved. This article uses lessons from the broader economics and political science literatures on holdup to explore various approaches to setting remedies for patent infringement—namely injunctions and monetary damages in the form of lost profits or reasonable royalties—with an eye toward the nature and extent of various forms of holdup they each might generate. In so doing, the article contrasts various narrower sub-categories of the broad holdup problem, including patent holdup, reverse patent holdup, and government holdup. The article elucidates a number of existing legal institutions and organizations that significantly mitigate the threat of patent holdup, including particular doctrines in the law of patent remedies and particular private ordering arrangements such as Standard-Setting Organizations (SSOs). It also highlights some of the unfortunate unintended consequences of currently popular suggestions for mitigating patent holdup. It then explores the economic incentives driving the actions by both patent holder and licensee to show different categories of holdup risk they create. It closes by introducing a suggested framework for courts and administrative agencies to use to directly target the identified categories of holdup risk, and thereby limit harmful side effects.

Keywords: A12; B25; D23; D45; K4; K11; K20; L41; L44; O31; O33; O34

Journal Article.  16313 words. 

Subjects: Property Law ; History of Economic Thought (1925 onwards) ; General Economics ; Technological Change; Research and Development ; Antitrust Issues and Policies ; Production and Organizations ; Market Structure and Pricing ; Law and Economics

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