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Standards, Patents and Policy (Public and Private) Tim Simcoe, University of Toronto Marc Rysman, Boston University
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Note : From pooled sample of 13 SSOs, within SSO trends are all positive. Increasing IPR Disclosure
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Potential Explanations Policy changes (patents & antitrust) Demand for standards (Internet) Demonstration effects (Dell and Rambus) Vertical dis-integration Open innovation (R&D outsourcing) => Greater reliance on technology input market => Higher stakes standard-setting process Is it becoming harder to “cooperate on standards and compete on implementation?”
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Some Facts About Disclosed Patents Overwhelmingly ICT patents Raw litigation probabilities SSO Patent9.7 percent “Average” Patent0.7 percent Selection vs. disclosure Disclosure => citation boost Network effects & technological significance Disclosure => litigation boost 8% go to jury vs. 2% for all litigated patents
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The Hold-up Problem Standards => coordinated investments Sunk costs : NRE, learning, installed base Patent-holders can capture “quasi-rents” Threat to markets and SSO reputation SSO Policy : Disclosure with RAND licensing Careful screening of proposals (F)RAND is a meaningless promise Difficult counterfactuals Adjudicating reasonable prices Contractual solution : Ex ante negotiation Firms worry : Thickets, submarines, validity, inertia SSOs worry : Antitrust (private suits), worse screening Adjudication, Legislation, Guidance (VITA Letter)
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A NAASTy Alternative to RAND Non-Assertion After Specified Time Unrestricted pricing, followed by royalty-free license Royalty-free (Time=0) vs. RAND (Time=patent-life) Benefits No price negotiation Solves antitrust & engineering problems Easy to adjudicate Implementation Incentives Innovation Incentives Costs NAASTy prices Mimics underlying patent system
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One Size Does Not Fit All Institutions evolve SDOs => consortia => open-source Private policy experiments RAND, Ex ante, GPL, NAAST? A role for public policy SSOs lack enforcement power Coordination “in the shadow of” public policy Active roles Consumer, “vendor neutral” participant, sponsor…
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Backup Slides
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(F)RAND is not Working Ambiguity (F)RAND is a meaningless promise Extremely difficult counterfactuals Adjudicating “reasonable” prices Economic regulation Smythe vs. Ames Homogenous goods / administrative expertise Collusion cases Addyston Pipe & Steel “Setting sail on a sea of doubt” Patent infringement Georgia Pacific Exception that proves the rule (Shapiro & Lemley 2006) Patent Awards
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Implementing NAAST Monopoly pricing for how long? That’s a good question… When to start the clock? Start vs. end of SSO process Incentive to move fast : patent-holders vs. vendors SSO Participation Same as RAND with teeth (W3C) What about “trolls”? Separate issue
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