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3 Eur. Competition J. 101 (2007)
Can Standard-Setting Lead to Exploitative Abuse? A Dissonant View on Patent Hold-up, Royalty Stacking and the Meaning of FRAND

handle is hein.journals/eurcompet3 and id is 101 raw text is: June 2007 European Competition Journal CAN STANDARD-SETTING LEAD TO EXPLOITATIVE ABUSE? A DISSONANT VIEW ON PATENT HOLD-UP, ROYALTY STACKING AND THE MEANING OF FRAND DAMIEN GERADIN AND MIGUEL RATO* A. INTRODUCTION Standard-setting activities, which aim to achieve device interoperability and product compatibility, play a fundamental role in fostering innovation and competition in a variety of markets. Such activities, typically carried out by armies of engineers, would generally not be expected to fascinate lawyers and economists. But they do-and they have recently received much attention as a result of high-profile cases,1 complaints lodged with competition authorities,2 and attempts by members of standard-setting organisations (SSOs) to have their rules and procedures modified to prevent allegedly anti-competitive outcomes. There seems to be a growing perception, largely fed by certain interest groups, that current standard-setting procedures generally based on the so-called FRAND licensing regime4 unduly allow opportunistic holders of * Damien Geradin is Professor of Competition Law and Economics and member of the Tilburg Law and Economics Center (TILEC) at Tilburg University and Professor at the College of Europe in Bruges. He is also Partner at Howrey LLP. Miguel Rato is an Associate at Howrey LLP and a former rifdrendaire at the Court of First Instance of the European Communities. Both of them are part of a team that represents Qualcomm Inc. in the context of a pending competition case before the European Commission. The views expressed in this paper cannot be attributed to Qualcomm Inc. or any other client of Howrey LLP. The authors would like to thank, in no particular order, Anne Layne-Farrar, Michael Hartogs, Trevor Soames, A. Jorge Padilla, Richard Taffet, Alison Oldale, Roy Hoffmger and Nicolas Petit for their valuable comments and suggestions. 1 See, eg DT Beddow and GH Vicinanza, FTC Charges Rambus With Abuse of Standard Setting Process, Electronic Newsletter of the Intellectual Property Committee, American Bar Association (ABA) Section of Antitrust Law, 21 June 2002, available at http://www.abanet.org/antitrust/ committees/intell property/june21.html; for a recapitulation of the well-documented Rambus saga, see the Federal Trade Commission's (FTC's) decision In the Matter ofRambus, Inc, Docket No 9302, available at http://www.ftc.gov/os/adjpro/d9302/060802commissionopinion.pdf. 2 See, eg European Panel Investigates DVD-Standards Rivalry, New York Times, 9 August 2006; Qualcomm Rivals Take Case to EU, Financial Times, 28 October 2005. 3 See, eg Robert McLeod, ETSI Talks Failure Puts Onus on EC to resolve Mobile Telephone Patent Disputes, Mlex Comment, 13 November 2006. 4 See part C infra.

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