Open standards and the problem with submarine patents

Abstract

Standardization is essential in industries such as ICT in which network effects are strong, and product compatibility and interoperability have comprehensve benefits. The objective ofstandardization is to promote industry-wide acceptance ofnew technologies. Although non-proprietary standards are often preferred, proprietary technology may have technical benefits, and it may therefore be rational to choose that for a standard. Whenever someone can claim control over a technology, however, conflicts of interest are likely to result. Indeed,the relationship between patents and open standards is problematic. The patent policies of standards organizations aim to reduce these conflicts: participants are typically encouraged to disclose essential patents and to license them on a royalty-free basis or on reasonable and non-discriminatory terms. Unfortunately disclose and licensing requirements are often inadequate and it is possible that patents claiming standardized technology surface after the establishment of a standard. This paper examines whether U.S. antitrust and EC competition laws could be applied with a view to diminishing the submarine patent problem.