Standardization and Patent Pools: Using Patent Licensing to Lead the Market

This paper explains why profit-seeking companies participate in standardization activities and patent pools, even if the activities benefit their rival companies, paying special attention to the relation between standards and patents. The question from the perspective of economic theory using the concepts of the tragedy of the anti-commons and leapfrogging is examined. The tragedy of the anti-commons explains why companies cross-license their patents and the patent policies of standardization organizations imply cross-licensing. The leapfrogging describes why companies who own essential patents to implement standards license their patents to companies who have no related patent. By granting licenses to others, companies are rewarded in the short term with economic benefits, and in the long term with strategic opportunities to exert influence on market trends. In the final section, recommendations are given to private companies, based on the considerations given in this paper.

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Published:2006
Classification:Intellectual Property Rights (IPR)
AuthorsHajime Yamada (Tokyo University, Japan)
ISSN/ISBN:2-8318-8867-0
Other bibliographical information:International Electrotechnical Commission (IEC)