The Value of Disclosing IPR to Open Standard Setting Organizations

Abstract

In light of the increased demand for interoperability, fragmented ownership of intellectual property and high costs for communicating new technologies, open standard-setting activities emerged as an important coordination and diffusion mechanism. Little is known about the value of contributions to standard setting organizations (SSOs) for technology providers. This paper provides a large-scale empirical assessment of the value of disclosures to SSOs for technology sponsors. Our findings show that disclosures referring explicitly to patents are evaluated positively by the market while this is not the case for blanket disclosures. This indicates that the expected benefits of participating in SSOs outweigh potential disadvantages from making patented technologies available to the market under SSO licensing conditions. The market does not appreciate disclosures to SSOs if there is uncertainty about the associated technologies.

Global outlook of the multiplier effect of research and development on environmental sustainability

“…Thus, more inventions are made from the R&D expenditure to help solve societal problems; this has a direct effect on the achievement of the ESDGs. The result is in line with the findings of [ 43 ] that intellectual property protection is important in development, and hence countries must standardize their inventions and innovations for scientific acceptability as they seek exclusive rights to their inventions. This is also re-echoed by [ 44 , 45 ] who found a significant relationship between R&D expenditure and patent application.…”

Drivers for Companies’ Entry Into Standard-Setting Organizations

“…Conversely, firms may strategically decide whether to enter SSOs at all and which efforts to take in shaping standards, especially, if they are very innovative and want to penetrate the market with new products. Moreover, Hussinger and Schwiebacher [56] find that disclosure of standard-relevant IP ownership is positively related with company valuation if associated patent rights are referred to explicitly which has recently been confirmed by Pohlmann et al [78]. Following this line of argument, firms that conduct successful product or service innovations have higher incentives to join formal SSOs and to shape the relevant standards in order to gain product market advantages rather than enforcing their IP exclusively.…”

“…Hence, patenting can be a prerequisite for entering into an SSO. Another important reason for patenting companies to join standardization is to introduce standard essential patents in the standard to gain licensing revenues according to FRAND 5 terms from all standard users [67] which may outweigh the loss of exclusivity [56]. This is not necessarily true for companies joining technical committees at DIN, but mainly for the information and communication technologies (ICT) sectors [15], [85], which are in general active in international SSOs or even consortia (e.g., [9] and [65]).…”

Joining Standards Organizations: The Role of R&D Expenditures, Patents, and Product-Market Position

“…7 The value of participation in standards development is thus more likely to increase in R&D efforts for firms relying on patents. Inclusion of a patented technology into a standard may significantly increase its value (Rysman and Simcoe, 2008) and thereby provide additional financial returns to their owners (Hussinger and Schwiebacher, 2015;. The prospect of these additional returns may serve as an incentive for firms relying on patents to reap a return on R&D efforts to actively participate in standards development in order to increase the chances that their patented technology is included in the standard.…”