Patent Hold-out and Licensing Frictions: Evidence from Litigation of Standard Essential Patents
Christian Helmers, Associate Professor of Economics
Brian J. Love, Christian Helmers, Patent hold-out and licensing frictions: Evidence from litigation of standard essential patents, International Journal of Industrial Organization, Volume 89, 2023, 102978, ISSN 0167-7187, https://doi.org/10.1016/j.ijindorg.2023.102978.
Abstract
The theory of patent “hold-out” posits that frictions in the market for licensing standard-essential patents (SEPs) provide incentives for prospective licensees to opportunistically delay taking licenses with the goal of avoiding or reducing royalty payments. We construct measures of pre-and in-litigation hold-out from information disclosed in U.S. cases filed 2010-2019. Relying on both SEP and a matched control set of non-SEP disputes, we explore whether frictions in the market for licensing are associated with hold-out. We find some evidence of an association between hold-out and both SEP portfolio size and enforcement uncertainty; however, we find no evidence associating pre-or in-litigation hold-out with the international breadth of SEP rights.