Patent and the Royalty Gap: Exploring the Nature and Impact of Patent Holdouts

January 3, 2018

This paper suggests that a new concept -- “patent trespass” -- should replace the “patent holdout” concept. This new concept, which conforms with mainstream economic theory, is a better characterization for technology implementers’ attempt to evade the conclusion of licensing agreements. “Patent trespass” also captures the idea that the product of a technology implementer involves a relatively gross invasion over a technology developer’s patent claims. The two authors conduct an industry survey and show that “patent trespass” is a significant phenomenon, which deserves as much attention from courts and policy-makers as the “patent holdup” narrative.

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