Standard-Essential Patents and the Problem of Hold-Up

Joe Kattan, and Chris Wood

4/23/2014
(Original Publish Date: 12/19/2013)

Standard-setting organizations typically require FRAND commitments from owners of standard-essential patents in order to ensure the availability of technologies needed to practice the standard. Failure to observe these FRAND commitments can lead to “patent hold-up” when implementers of a standard are confronted with supracompetitive royalty demands from SEP owners exploiting the market power associated with the standard. This article reviews empirical evidence from several recent cases suggesting that the problem of patent hold-up is real. We then analyze a number of arguments that have been advanced to downplay the risks of patent hold-up and demonstrate that they are flawed.