Academic journal article Santa Clara High Technology Law Journal

Intellectual Property in Standards: Does Antitrust Law Impose a Duty to Disclose (Even If the Standards-Setting Organization Does Not)?

Academic journal article Santa Clara High Technology Law Journal

Intellectual Property in Standards: Does Antitrust Law Impose a Duty to Disclose (Even If the Standards-Setting Organization Does Not)?

Article excerpt


Antitrust law "protects competition and the competitive process by preventing certain types of conduct that threaten a free market." (1) The primary objective is "to maximize consumer welfare by promoting competition among firms." (2) Antitrust law protects competition by prohibiting competitors from agreeing on the prices they will charge consumers, prohibiting "predatory" practices that exclude competitors from the market, and limiting the behavior of companies with market power. (3)

Most cases considering whether antitrust law imposes a duty to disclose IP to SSOs concern instances of non-disclosure or misleading disclosure to SSOS that have disclosure policies. (4) Likewise, most commentators considering the problem either presume the SSO imposes a duty or they recommend that SSOs implement disclosure policies. (5) In contrast, this paper considers whether antitrust law itself imposes a duty to disclose one's IP to a standards-setting organization, even if the SSO does not have any policy requiring such a disclosure. In particular, the paper examines whether a failure to disclose IP to an SSO can ever constitute a Sherman Act violation. The paper concludes that a patent holder's failure to disclose its essential patents, followed by its refusal to license those essential patents to other parties, can constitute a violation of Section 2 of the Sherman Act if the patent holder is the only holder of essential IP who refuses to license. The paper then proposes the essential facilities doctrine as a remedy for such a Section 2 violation.


A standard is a set of rules for implementing a technology. (6) A standards-setting organization is an official body, such as a government agency, (7) an industry working group, (8) or an academic consortium, (9) that promulgates standards. Participants in SSOS are typically engineers and scientists working in government or private industry. (10) Companies who send representatives to SSO meetings tend to be those whose business interests overlap with the focus of the standardization effort. (11) Many of these companies are competitors. (12)

To generate a standard, interested parties meet regularly, in many cases four to six times a year for several years, to debate the merits and disadvantages of various proposed technical solutions to a particular problem. (13) SSOs strive to create industry standards that will be widely adopted. (14) The standards promulgated by an SSO may enhance public health and safety, or they may be so-called interoperability standards, which ensure equipment manufactured by different producers is compatible. (15)

The Effect of a Standard on Competition

In the absence of a standard, competing companies have the freedom to produce exactly the products they believe consumers will want. For example, in the field of digital televisions, (16) one company may choose to make televisions that use liquid crystal display (LCD) technology, another may build televisions that use plasma displays, and yet another may choose to build projection systems using digital light processor (DLP[R]) technology. A company's eventual success with its digital television in the consumer market will depend on a number of variables, including price, picture quality, size, technology, features, and design. Thus, companies making products that do not incorporate standards compete entirely in the consumer market. Their success or failure results directly from the choices they make in their product offerings.

When a product incorporates a standardized technology, the competition model differs somewhat. Instead of having only one phase of competition that takes place entirely in the consumer market and requires companies to compete simultaneously on all the merits of their products, a standard adds an earlier phase of competition that concerns only a subset of the merits of competing solutions. …

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