Carrier on Patent Holdup

Michael Carrier has posted a paper on ssrn titled Rescuing Antitrust’s Role in Patent Holdup, 168 U. Pa. L. Rev. Online (forthcoming).  Here is a link, and here is the abstract:

Standards, common platforms allowing products to work together, are ubiquitous in our economy. But imagine that a company:

(1) has a patent needed to use a standard,

(2) promises to license the patent on reasonable terms, and then

(3) says it was just kidding as it seeks to block the product or charge an exorbitant price.

In such a case, the users of the standard are stuck. They have invested in technologies based on the standard. And they may be forced to pay a price reflecting not the added value of the technology but the costs of switching to a new technology. In other words, they are subject to “patent holdup.”

The concerns threatened by patent holdup have consistently been acknowledged by officials in Republican and Democratic administrations. These concerns are front and center in Carl Shapiro and Mark Lemley’s excellent article, The Role of Antitrust in Preventing Patent Holdup. In contrast, they are neglected by the current Assistant Attorney General of the Department of Justice’s Antitrust Division, Makan Delrahim.

This Essay does four things. First, it explains why the Shapiro/Lemley article is important, particularly to situate today’s patent holdup debates in the larger context of transaction cost economics. Second, it raises questions related to standards organizations’ rules and antitrust law that the authors could more fully consider. Third, it offers additional support showing the radical nature of Delrahim’s position. And fourth, it opines on the nature of academic debate and its effect on antitrust enforcement. 

As the abstract indicates, Carl Shapiro and Mark Lemley have a paper on this topic coming out too.  I've read a draft and think it's very good, and will post a link when it becomes publicly available.

Meanwhile, in other FRAND news, as reported on FOSS Patents and on JUVE Patent earlier this week, the German Bundeskartellamt has requested that the Mannheim and Munich courts stay pending litigation between Nokia and Daimler, and in (FOSS's translation) "proposes to request the CJEU to opine on a set of specific legal questions: 1. The first question is whether it constitutes an abuse of a dominant position under EU competition law to pursue injunctive relief against an end-product maker while refusing to fully license its suppliers. 2. The second question relates to whether a SEP holder is 'entirely free' to choose the target of an infringement action regardless of its position in the supply chain. 3. The third question outlines specific cases in which the Federal Cartel Office is inclined to believe that suppliers are entitled to a license. 4. The fourth and final question raises the issue of whether SEP holders are free to offer a license only to a particular level of the supply chain."

So far, I haven't found the 24-page document, in which the Bundeskartellamt is said to have put forth its proposal, on its website.  For my own recent take on the license-to-all versus access-to-all debate, see here.