Much Ado About Hold-Up

The policy debate surrounding patent hold-up in markets for standardized products is well into its second decade with no end in sight. Fundamental questions, including the definition of hold-up, the extent to which it exists in the marketplace, and the impact it has on innovation, continue to bedevil scholars, policy makers, and industry. Yet it is not clear that this debate needs to continue. Patent hold-up is a form of market behavior, not a legal cause of action. Whether hold-up is commonplace or rare is largely irrelevant to liability in any given case. To the extent that hold-up behavior constitutes an abuse of market power, with resulting harms to competition, longstanding doctrines of antitrust and competition law exist to sanction it. To the extent that hold-up impedes the efficient operation of standard-setting processes, standards development organizations can, and have, adopted internal procedures, including disclosure and licensing requirements, to curtail that behavior. Thus, the ongoing debate over the empirical evidence for systemic patent hold-up in standardized product markets, or a lack thereof, seems a fruitless academic exercise. The presence or absence of systemic hold-up actually tells us little about individual firm behavior that can and should be sanctioned by the law, and it may thus be time to close the debate over the systemic prevalence of patent hold-up.

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