On Technology Choice in Standardization: Implications for Patent Valuation

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The valuation of patents included in standards and their reasonable license fees is affected by two competing views about how and why standards are developed. One view, which emphasizes that standardization is foremost about choosing a technical solution, assumes the availability of roughly equivalent alternatives; the other emphasizes that standardization is foremost about picking the best technical solution, assuming distinctly different alternatives. These views affect patent valuations but often remain implicit in economic and legal studies. This paper examines which view is more accurate from the perspective of standardizers using data from expert interviews and literature study. While the study suggests that the availability of roughly equivalent alternatives is generally more accurate, neither view well-captures the reality of standard development. Typically, the relative technical merit of competing solutions is an important selection criterion, but it is secondary to other critical factors. The findings highlight the interrelatedness of the many technical design choices usually at stake; the negotiability of and trade-offs between multiple performance criteria determining the value of technical solutions; the filtering effect of consensus versus voting committees on actual technology choice; and, not least, the influence of non-technical factors on technology choice. Given these caveats, valuating patents-in-standards on their technical, innovative merit will remain contentious. To better account for the influence of the dynamics of standards processes on technology choice, a valuator’s line of reasoning should address, among other factors, existing alternative technical solutions and multiple performance dimensions. Follow-up research is recommended that examines the implications of patent inclusion for these dynamics.

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this article starts by discussing the nature of European formal telecommunications standards. A new classification of the different types of standards is proposed, and the instutional framework for formal standards in Europe is described. The next section deals with the relevant property rights. We distinguish the strategeis for three different phases in the standardisation process. The next section explains how the instutional field reacted to possible problems of IPRs within telecommunication standard. The subjects of the two final sections, firm strategy and the standardisation bodies' policy, are illustrated in the GSM case.
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Patent trolls have many faces, since the media uses this expression in various ways. The patent troll phenomenon thus seems to be an ambiguous term that is discussed in several directions. This paper reveals that a patent troll as such has no distinct shape or appearance. Our analysis redeems a troll classification solely from firms’ market position, such as being non-practicing, and shows that a patent troll business can only be defined by the respective practice to enforce IPR. Using 10 case studies, of which five are treated in detail, the analysis reveals a distinct typology of IPR enforcement mechanisms and suggests a framework to assess the troll business. This paper is furthermore able to identify the nature of troll behavior to be: a) a best practice to enforce IP rights and b) a strategy that may create costs for affected industries. The differentiated troll analysis further reveals negative but also positive effects of the troll business on incentives to innovate.
A plethora of definitions for innovation types has resulted in an ambiguity in the way the terms ‘innovation’ and ‘innovativeness’ are operationalized and utilized in the new product development literature. The terms radical, really-new, incremental and discontinuous are used ubiquitously to identify innovations. One must question, what is the difference between these different classifications? To date consistent definitions for these innovation types have not emerged from the new product research community. A review of the literature from the marketing, engineering, and new product development disciplines attempts to put some clarity and continuity to the use of these terms. This review shows that it is important to consider both a marketing and technological perspective as well as a macrolevel and microlevel perspective when identifying innovations. Additionally, it is shown when strict classifications from the extant literature are applied, a significant shortfall appears in empirical work directed toward radical and really new innovations. A method for classifying innovations is suggested so that practitioners and academics can talk with a common understanding of how a specific innovation type is identified and how the innovation process may be unique for that particular innovation type. A recommended list of measures based on extant literature is provided for future empirical research concerning technological innovations and innovativeness. “A rose is a rose is a rose. And a rose by any other name would smell just as sweet.” Gertrude Stein & William Shakespeare
When companies decide to engage in technology transfer through exclusive licensing to other firms, they have two basic options: to use standard licensing contracts or to set-up more elaborate partnership-embedded licensing agreements. We find that broader partnership-embedded licensing agreements are preferred with higher levels of technological sophistication of industries, with greater perceived effectiveness of secrecy as a means of appropriability, and when licensors are smaller than their licensees. Innovative differential between companies, innovative supremacy of the licensor and market and technological overlap between partners appear to have no effect on the preference for a particular form of licensing. Copyright 2009 , Oxford University Press.
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