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Demystifying Patent Holdup, Thomas F. Cotter, Erik Hovenkamp, Norman Siebrasse
Demystifying Patent Holdup, Thomas F. Cotter, Erik Hovenkamp, Norman Siebrasse
Washington and Lee Law Review
Patent holdup can arise when circumstances enable a patent owner to extract a larger royalty ex post than it could have obtained in an arms length transaction ex ante. While the concept of patent holdup is familiar to scholars and practitioners—particularly in the context of standard-essential patent (SEP) disputes—the economic details are frequently misunderstood. For example, the popular assumption that switching costs (those required to switch from the infringing technology to an alternative) necessarily contribute to holdup is false in general, and will tend to overstate the potential for extracting excessive royalties. On the other hand, some commentaries mistakenly presume …