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Essentiality Checks for Standard Essential Patents

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  • Florian Schuett
  • Chayanin Wipusanawan

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.

Suggested Citation

  • Florian Schuett & Chayanin Wipusanawan, 2023. "Essentiality Checks for Standard Essential Patents," Working Papers of Department of Economics, Leuven 746861, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
  • Handle: RePEc:ete:ceswps:746861
    Note: paper number DPS 23.21
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