Assessing IPR Disclosure within Standard Setting

Anne-Layne Farrar, Compass Lexecon

11/10/2011
(Original Publish Date: 8/18/2011)

As part of its policy project to examine the legal and policy issues surrounding the problem of potential patent hold-up when patented technologies are included in collaborative standards, the Federal Trade Commission held an all-day workshop on June 21, 2011. The first panel of the day focused on patent disclosure rules and much of the discussion centered on the conditions required for patent hold up or patent ambush to occur. One of the conditions identified was early particularly before a standard is set disclosure of intellectual property rights. When patents are disclosed ex post, after a standard is defined, the patent holder may have enhanced bargaining power that it can exploit to charge excessive royalties (e.g., greater than the value the patented technology contributes to the standard). The theoretical debate over hold up and ambush often assumes that most standards participants disclose their patents ex ante, such that the few disclosing ex post can be considered to be bad actors at least considering hold up. In this paper, I take an empirical look at the timing of IPR disclosures within standard setting organizations. I find, contrary to the implicit assumption underlying the patent ambush debate, that most participants officially disclose their potentially relevant IPRs ex post, not ex ante, and sometimes considerably so. On the other hand, I also find that the delay in declaring IPRs to standards has been shrinking over time, with disclosures occurring closer to (although for the most part still after) the standard publication date for more recent standards as compared to earlier ones. This empirical finding has important policy implications for the treatment of patent hold up.