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Prohibiting discriminatory cross-licensing

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Two of the key objectives of standards setting organizations are to produce ‘unified’ technology and to engender fairness among competitors. Although most of these organizations require the participants to agree to reasonable and non-discriminatory license terms, it is surprising that most fail to address cross-licensing. In this article two discriminatory cross-licensing scenarios are provided; demonstrating the adverse effects this practice can have on competition. Subsequent analysis shows that the licensor may be in breach of the licensing contract, liable for violation of antitrust, and potentially with an unenforceable patent due to patent misuse. To improve the equity of these scenarios, a solution is proposed where a licensor would be subject to different cross-licensing rules depending primarily upon the size and complexity of the standards organization. Under small entity status, ex post cross-licenses would be effectively banned. Under large entity status, the patent pool would be administered by a third party agency responsible for evaluating and ensuring equity in all cross-licensing transactions. In view of the contemporary importance and prevalence of standards setting organizations, it is clear that stronger cross-licensing rules need to be imposed, ensuring equity among competitors.

Keywords: antitrust; cross-licensing; discrimination; intellectual property; patent; patent misuse; reasonable and non-discriminatory; standards setting organizations

Document Type: Research Article


Affiliations: Pulse Electronics Corporation, San Diego, California

Publication date: March 1, 2012

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