Essentiality Checks for Standard Essential Patents

Florian Schuett and Chayanin Wipusanawan

No 746861, Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: There is widespread concern about the lack of transparency regard ing standard essential patents (SEPs). This paper examines the pro posal to introduce essentiality checks, a certification scheme for de clared SEPs. We develop a framework that allows us to evaluate how essentiality checks would impact licensing, litigation, and incentives to innovate. In our model, an upstream innovator invests in R&D and privately learns about the likely essentiality of its patents for a standard. The innovator then licenses the patents to a downstream implementer who can contest the essentiality of the patent in court. We identify a tradeoff whereby essentiality checks can reduce litiga tion but also provide excessive incentives for R&D investment. Their overall welfare effect depends on the level of the “fair, reasonable, and non-discriminatory” (FRAND) royalty rate.

Pages: 44
Date: 2023-12
New Economics Papers: this item is included in nep-com, nep-ipr, nep-law and nep-mic
Note: paper number DPS 23.21
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Forthcoming in FEB Research Report Department of Economics

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Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:746861

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