Non-Discriminatory Pricing: What is Different (and What is Not) about IP Licensing in Standard Setting

Abstract

To date, the majority of the debate surrounding a RAND licensing promise (for reasonable and non-discriminatory licensing) made in the context of standard setting has focused on what the R means; far less attention has been given to what is implied by the ND. Not surprisingly, then, some important questions still remain. The primary goal of this paper is to offer courts and competition agencies guidance on evaluating whether a license offer made within a standard setting context is indeed discriminatory. To that end, the paper reviews the existing literatures on price in traditional markets for goods and services and on licensing intellectual property (IP) outside of standard setting in order to identify lessons that can be applied to licensing within standards. There are a number of important and relevant teachings: price is not necessarily harmful, and in some cases can even increase consumer welfare; most IP licensing is characterized by discrimination in that rates and terms tend to differ across licensees; proof of market power must remain the first step in any inquiry on allegations of anticompetitive IP licensing discrimination; and as of yet, no widely applicable benchmarks or rules for distinguishing harmful from beneficial or non-harmful licensing have emerged, meaning that a careful, quantitative effects-based analysis remains the best approach.