Patent News

Mar. 4, 2015

The Heritage Foundation: Patent Policy Change Would Undermine Property Rights and Innovation, by Alden Abbott

This report originally appeared in The Heritage Foundation website on March 4, 2015.

From the Report Abstract:

American standard-setting organizations (SSOs) are associations through which businesses set voluntary industrial standards. Many SSO participants hold “standard essential patents” (SEPs) that may be needed to implement individual SSO standards. SSOs rely on SEPs to provide the technical wizardry that underlies the high quality standards that underpin many key industries, from smartphones to semiconductors. The Institute of Electrical and Electronics Engineers (IEEE), one of the world’s largest and most influential SSOs, recently approved a new policy that will reduce the value of SEPs, discourage involvement by innovative companies in IEEE standard setting, and undermine support for strong patents, which are critical to economic growth and innovation. Rescinding this new patent policy would encourage firms to maintain their active involvement in beneficial IEEE standard setting and promote welfare-enhancing negotiations that spur the implementation of new and desirable technologies.


Devaluing SEPs and Undermining Innovation
Wholly aside from the question of whether it constitutes an antitrust violation, however, the new policy greatly devalues SEPs and thereby undermines incentives to make patents available for use in IEEE standards. All told, the new policy creates an imbalance between the rights of innovators (whose patents lose value) and implementers of technologies and interferes in market processes by inappropriately circumscribing the terms of licensing negotiations.