Dual tragedies: IP rights in industry standards

Abstract

Companies often participate in a cooperative standard-setting effort to minimize research and development risks. However, the industry's aggressive use of patents forces standard-setting organizations (SSOs) to struggle with producing the best standard technically while encouraging its widespread adoption by limiting the proprietary technology that users must license. To balance these interests, many SSOs require members to disclose any patents related to a proposed standard. These disclosures potentially expose technical and market strategies to competitors. By illuminating this problem, the "tragedy of the commons" and "tragedy of the anticommons" can help SSOs implement disclosure policies that reduce member burdens and risks, thereby encouraging participation in creating high-quality standards.