Why Antitrust Should Defer to the Intellectual Property Rules of Standard-Setting Organizations: A Commentary on Teece & Sherry

Michael A. Carrier

10/23/2005
(Original Publish Date: 2000)

This essay addresses the intellectual property rules of standard setting organizations (SSOs). Because owners may refuse to license intellectual property (IP) that is essential to the implementation of standards, many SSOs have adopted search, disclosure, and licensing rules that restrict their members' use of IP. In the essay, the author agrees with the limited antitrust scrutiny of SSOs' IP rules envisioned by David Teece and Edward Sherry, but arrives at that result not from a one-size-fits-all characterization of antitrust or an emphasis on the delay resulting from applying the discipline. Rather, the author focuses on the rationales underlying antitrust jurisprudence. In particular, the author emphasizes the lack of significant anticompetitive effects from the IP rules of SSOs: the organizations do not resemble the collusive cartel-type arrangements that historically have drawn antitrust scrutiny, and membership in the SSO is typically not necessary to practice the standard or to exclude members from access to essential patented inputs. This lack of significant anticompetitive effects is accompanied by powerful procompetitive justifications for the rules, which reduce the likelihood that patentees will hold up the implementation of the standard.