Download This PaperDo Standard-Essential Patent Owners Behave Opportunistically? Evidence from U.S. District Court Dockets
American Law & Economics Review, Vol. 25(1), pp. 300-37, 2023
39 Pages Posted: 20 Nov 2020 Last revised: 30 May 2024
Date Written: February 7, 2023
Abstract
To what extent and with what effect do owners of standard-essential patents (SEPs) “hold-up” companies that produce standard-compliant products? To explore this question, we construct measures of opportunistic patent licensing behaviors using detailed information collected from the dockets of U.S. patent cases filed (2010-2019) to enforce SEPs and a matched sample of non-SEPs. Overall, we find evidence of opportunistic behavior by the patent enforcer in approximately 77% of SEP and 65% of non-SEP assertions in court. The figures mask important heterogeneity. There is significantly more opportunistic conduct aimed at increasing a potential licensee’s loss if the patent enforcer prevails in court: 35% of SEP assertions vs. 10% of non-SEP assertions. In contrast, conduct that increases a potential licensee’s litigation costs is less common and the difference between SEP assertions (8%) and non-SEP assertions (6%) is small. We also show that opportunistic behavior is associated with case outcomes, with the effect on settlement depending on the type of opportunistic behavior. Behavior that increases a potential licensee’s litigation costs is associated with an increase in the probability of settlement, while behavior that increases a potential licensee’s loss if the patent enforcer prevails in court is negatively associated with settlement.
Keywords: Litigation, standards, patents, holdup, U.S.
JEL Classification: K41, L96, O34
Suggested Citation: Suggested Citation
Brian J. Love (Contact Author)
Santa Clara University - School of Law ( email )
500 El Camino Real
Santa Clara, CA 95053
United States