Patent Holdup, Patent Remedies, and Antitrust Responses

By Cotter, Thomas F. | Journal of Corporation Law, Summer 2009 | Go to article overview

Patent Holdup, Patent Remedies, and Antitrust Responses

Cotter, Thomas F., Journal of Corporation Law

     A. Patent Holdup as a Type of Market Failure
     B. Other Necessary Elements of Patent Holdup
     A. Patent Ambush as an Antitrust Offense
     B. Collective Bargaining as to Patent Terms and Conditions


In recent years, influential scholars, (1) practicing lawyers, (2) government officials, (3) government commissions, (4) enforcement agencies, (5) and courts (6) have all identified the phenomenon of "patent holdup" as a serious problem that may require various reforms to both patent and antitrust law. Within the last year or so, however, critics of this view have become increasingly vocal. In two recent papers, for example, Damien Geradin and his coauthors argue that, as an empirical matter, the frequency and magnitude of patent holdup costs are exaggerated. (7) A second line of attack, taken up in recent work by scholars including Einer Elhauge, (8) John Golden, (9) and J. Gregory Sidak, (10) focuses more on perceived theoretical vulnerabilities of the patent holdup literature--arguing, for example, that holdup is not necessarily inefficient, (11) and that neither patent law nor economic theory provides a baseline from which to evaluate whether patentees' royalty demands are so excessive as to constitute holdups. (12) Third, some of these same critics (and others) argue that the reforms sometimes proposed to remedy patent holdup-such as eliminating the presumption of injunctive relief in patent infringement cases, changing the method by which courts calculate reasonable royalties, and permitting standard setting organizations (SSOs) (13) to engage in collective bargaining with member patent owners over proposed licensing terms-threaten worse harms than the harms they would deter. (14)

In this Article, I address critiques two and three above (leaving the assessment of the empirical case against patent holdup to others, for now at least); 15 and I focus on two sets of policy tools in particular, the law of antitrust (generally) and the law of patent remedies. (16) In particular, I will argue, first, that many of the difficulties the critics claim to have uncovered in patent holdup theory may be due to their failure to appreciate patent holdup as a variation on other types of "holdup" or "holdout" behavior as discussed in the law-and-economics literature. My analysis leads to a proposed definition of patent holdup as occurring (1) when a component patent owner (17) (2) is able to exploit its bargaining power vis-a-vis downstream users (3) due to the possibility that the patent owner will be able to enjoin the manufacture, use, or sale of an end product that incorporates the patented invention, (4) in such a way as to threaten either (a) static deadweight losses far out of proportion to any likely increases in dynamic efficiency, or (b) dynamic efficiency losses due to downstream users' reduced incentives to invest in standard-specific technology or to engage in follow-up innovation. (18) Second, I will argue that patent law is generally more appropriate than antitrust law to deal with patent holdup, when it occurs, subject to two possible exceptions. (19) Third, potential error costs should play a large role in deciding how aggressively courts should police patent holdup. Courts' abilities to discern the presence of serious static or dynamic efficiency losses, and to respond appropriately, may be subject to reasonable dispute-though, I will argue, these limitations are not so profound as to counsel against any reforms.

Part II centers my analysis as part of a larger project that seeks to delimit the proper relationship between patent and antitrust based on three interrelated principles: first, that the ideal patent law would be structured so as to maximize the surplus of cognizable social benefits over cognizable social harms; second, that antitrust law should condemn the willful acquisition or maintenance of monopoly power but not its mere exercise; and third, that courts applying patent remedies or antitrust doctrine should take the substance of patent law as a given, and not fashion patent remedies or the law of antitrust to correct for errors that they perceive in that substance. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Cite this article

Cited article

Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25,

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Patent Holdup, Patent Remedies, and Antitrust Responses


Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25,

    New feature

    It is estimated that 1 in 10 people have dyslexia, and in an effort to make Questia easier to use for those people, we have added a new choice of font to the Reader. That font is called OpenDyslexic, and has been designed to help with some of the symptoms of dyslexia. For more information on this font, please visit

    To use OpenDyslexic, choose it from the Typeface list in Font settings.

    OK, got it!

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search


    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.