Standard-Setting Policies and the Rule of Reason: When Does the Shield Become a Sword?

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Jennifer Driscoll, May 06, 2008

The rewards and pitfalls of standard setting conjure images of the legend of Damocles. From afar, the benefits of a “collaborative standard-setting process [that] enable[s] industry participants to share knowledge and develop a best-of-breed product or process” (Barnett, 2006) appear enormously attractive. The widespread acceptance of a standard that promotes product interoperability “may expand the availability of a technology and ancillary products and services by enabling more firms to rapidly enter and serve the market, thus “impart[ing] pro-competitive benefits to markets and their participants, both producers and consumers, by capitalizing on the  network effects’ at play in an advanced industrial economy” (Carvill & Khoja, 2003). Despite these substantial rewards, the specter of patent holdup looms as an ever-present threat. Subscribers can download the entire article available in the column on the left.