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Further research project
Interdisciplinary Research

Standard-Essential Patents and the Role of Standard-Setting Organizations

In rapidly developing markets characterized by digital technologies, standards play a critical role. By establishing a common standard, interoperability of complementary or competing products becomes technically feasible and economically attractive. Standards reduce transaction costs, facilitate market entry, and contribute to the dissemination of new technologies. The success of a standard, however, depends significantly on the quality of the technologies it encompasses. If a standard is to be based on the technologies most suited for solving a given problem, the use of a patented technology may be indispensable for manufacturers to enter the market. The inclusion of patented inventions in a standard, however, entails risks for its widespread implementation, since the standard can no longer be used without making use of the protected teaching. Thus the proprietor of a so-called standard-essential patent (SEP) can in principle, on the basis of the exclusive right, prohibit the use of the technology or make it contingent upon licensing conditions that are favorable to him. This provides him with a powerful instrument to influence competition in standard-based markets. On the other hand, excessively restricting the rights of SEP holders may expose them to opportunistic behavior on the part of standard implementers, such as long-term refusal to pay reasonable royalties. In both cases, costly legal disputes could jeopardize the positive effects associated with standardization.

This interdisciplinary project investigates how these risks can be controlled and under which conditions standard-setting organizations (SSOs) can contribute to solving SEP-related problems.

SSOs play a key role in setting technological standards. They determine which technical solutions will be included in the standard and how the standard is to be implemented. Paired with their ability to manage the interplay between standards and intellectual property rights (IPRs) at an early stage and at their source, so to speak, SSOs’ potential to mediate between the highly diverging interests of the participants in the standardization process make them well-suited, at first glance, to solve SEP-related problems. On the other hand, SSOs not only have limited material and human resources, but they also run the risk of being captured by particular stakeholders.

SSOs differ considerably concerning their composition, organization and processes for setting standards. One of the goals of this project is to explain how SSOs acting under different and in some cases self-determined regulatory frameworks and structures set and implement standards and what role sector-specific, institutional and/or interest-driven factors play in this process.

SSOs also vary notably regarding their IPR policies. Although disclosure and licensing rules are core elements of most IPR policies, there is great diversity among their specific elements. What impact do different IPR rules have on the incentives of different standardization participants and, more broadly, on standard-based innovation? The project will also focus on these questions.

If SSOs are to contribute meaningfully to a welfare-maximizing standardization, their task must go beyond formulating disclosure requirements and FRAND licensing obligations. Other central questions to be addressed from both an economic and a legal perspective are:

  • How can SSO rules ensure effective competition between alternative technical solutions?

  • How can SSO rules reduce the risk of over- and/or under-declaration of SEPs?
  • How can reasonable licensing conduct on the part of SEP holders and standard users be defined and enforced?
  • Do SSOs dispose of the necessary legal means to address and control misconduct of SEP holders not taking part in the standardization process?

Persons

Project Manager

Prof. Dr. Josef Drexl, LL.M., Prof. Dietmar Harhoff, Ph.D.

Members

Pedro Batista, Dr. Beatriz Conde, Dr. Fabian Gaessler, Martin Husovec, Dr. Peter Picht, Dr. Gintarė Surblytė, Charalampos Tsilikas, Alina Wernick

Fields of Research

The social contribution and legitimacy of intellectual property law

Main Areas of Research

Ceilings of Intellectual Property Protection