Edited by Ariel Ezrachi
During the past year the US Federal Trade Commission (‘FTC’) devoted significant resources to patent issues that affect competition, and particularly to the thorny problem of ‘hold-ups’ by firms seeking to obtain higher patent royalty payments from firms that have already made ‘sunk expenditures’ and thus have become ‘locked in’ to technologies based on standards that are covered by those patents. In March 2011, the FTC released a report on the ‘evolving IP marketplace’, which (among other topics) suggests a method for assessing patent infringement damages designed to discourage hold-ups made possible by widely adopted standards. Three months later, in June 2011, the FTC convened a one-day workshop to examine the legal and policy issues surrounding the problem of potential patent hold-ups when patented technologies are included in collaborative standards. In this chapter, we review these two FTC initiatives. We then place them in a broader international context by briefly assessing provisions designed to prevent standards-related hold-ups found in the European Commission’s (EC) January 2011 guidelines on ‘horizontal cooperation agreements’ (‘EC Horizontal Guidelines’). The FTC and EC initiatives may inspire further international efforts to devise efficient norms for avoiding competitive harm associated with standard setting.
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