Standards, Intellectual Property Disclosure, and Patent Royalties After Rambus

Stanley M. Besen, Senior Consultant, Charles River Associates, and Robert J. Levinson, Vice President in the Competition Practice, Charles River Associates

10/09/2009
(Original Publish Date: 3/1/2009)

The U.S. Federal Trade Commission (FTC or Commission) and the courts have recently grappled with the question of whether members of private voluntary standard-setting organizations (SSOs) may conceal their intellectual property rights while participating in a standards-setting process. These decisions consider whether an SSO member can escape antitrust liability when: (1) such conduct leads other SSO members to believe that one or more of the firm's proprietary technologies are nonproprietary; (2) the SSO adopts that technology as part of an industry standard while under such a false impression, causing that technology to become "essential" from the perspective of industry participants; and (3) the IP holder subsequently exploits these outcomes by asserting its hitherto concealed IP rights by requiring firms that practice the standard to pay supracompetitive royalties.