Moving Past the SEP Rand Obsession: Some Thoughts on the Economic Implications of Unilateral Commitments and the Complexities of Patent Licensing
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MOVING PAST THE SEP RAND OBSESSION:
SOME THOUGHTS ON THE ECONOMIC IMPLICATIONS
OF UNILATERAL COMMITMENTS AND THE
COMPLEXITIES OF PATENT LICENSING
Anne Layne-Farrar
INTRODUCTION
Even a casual perusal of newspapers today will yield any number of
articles about so-called standards-essential patents (SEPs) and the
need for regulation,' legislation,2 and even White House intervention' in
the use and licensing of such patents. The heightened attention SEPs have
garnered is in many ways understandable: compatibility or interoperability
standards are increasingly important and highly beneficial for the modem
economy,' but the money at stake for the firms involved in developing and
commercializing these standards means the risks of opportunistic or anti-
competitive behavior are also high. On the other hand, a single-minded
focus on SEPs-the obligations attached to them and their potential for
abuse-is also lamentable. Such a narrow focus overlooks the fact that
firms' interactions over SEPs are but one element of their much larger li-
censing negotiations-not to mention the potentially even broader commer-
cial dealings-with one another, and as such cannot be meaningfully
viewed in isolation.
* Anne Layne-Farrar is a Vice President with Charles River Associates. She would like to thank
Damien Geradin, John Harkrider, Bob Harris, Ken Krechmer, and Russel Steinthal for helpful com-
ments and Vignesh Nathan for excellent research assistance. Funding for the research reflected in this
Paper was provided by Google. This Paper reflects the views of the Author alone; any errors are the
Author's alone as well. For comments, please contact the Author at alayne-farrar@crai.com.
I See, e.g., U.S. DEP'T OF JUSTICE & U.S. PATENT & TRADEMARK OFFICE, POLICY STATEMENT
ON REMEDIES FOR STANDARDS-ESSENTIAL PATENTS SUBJECT TO VOLUNTARY F/RAND COMMITMENTS
(2013) [hereinafter DOJ & PTO POLICY STATEMENT], available at http://www.justice.gov/atr/public/
guidelines/290994.pdf.
2 See, e.g., Standard Essential Patent Disputes and Antitrust Law: Hearing Before the Subcomm.
on Antitrust, Competition Policy & Consumer Rights of the S. Comm. on the Judiciary, 113th Cong.
(2013) (statement of Sen. Patrick Leahy), available at http://www.judiciary.senate.gov/pdf7-30-13
LeahyStatement.pdf.
3 See, e.g., Jon Swartz, Obama Nixes ITC Ban on Sale of Some Apple Products, USA TODAY
(Aug. 9, 2013, 6:21 PM), http://www.usatoday.com/story/money/business/2013/08/03/apple-samsung-
itc/2615101/.
4 While compatibility and interoperability are, in the strictest sense, different concepts, for sim-
plicity I use interoperability throughout this Paper to cover both concepts.
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Moving Past the SEP Rand Obsession: Some Thoughts on the Economic Implications of Unilateral Commitments and the Complexities of Patent Licensing