The Optimal Patent Portfolio of The Technology Standards Alliances in Innovation Competition

Lou, Zhaohui; Yao, Shujie; Zhang, Xinwen

Abstract

Unlike the dominant theories based on the rigid assumption that “technology standards must contain only essential patents”, this paper discusses the standard alliances that are engaged in their cumulative innovation. Its focus is particularly on a more realistic setting that a standard alliance should contain both the essential and the non-essential patents. We use the essential-patent’s ratio, which denotes the percentage of the essential patents in the total patents in a standard, as the cumulative innovation model’s core variable. The mathematical analysis illustrates that the essential-patent’s ratio performs an important role in the arguments’ standards. There is an optimal portfolio that maximizes the alliances’ efficiency in an innovation competition. It implies that the social welfare effects depend on the dynamic trade-off between the long-term technical gap caused by the technological upgrades’ missing opportunities and the short-term welfare losses that consumers may suffer. The patents’ and antitrust laws should tolerate a certain number of non-essential patents being contained by the technology standards.

Citation

Lou, Z., Yao, S., & Zhang, X. (2021). The Optimal Patent Portfolio of The Technology Standards Alliances in Innovation Competition. Emerging Markets Finance and Trade, 58(6), 1794-1805. https://doi.org/10.1080/1540496x.2021.1918544

• Journal Article Type: Article
• Acceptance Date: Apr 14, 2021
• Online Publication Date: May 7, 2021
• Publication Date: May 7, 2021
• Deposit Date: Apr 26, 2022
• Publicly Available Date: Apr 26, 2022
• Journal: Emerging Markets Finance and Trade
• Print ISSN: 1540-496X
• Electronic ISSN: 1558-0938
• Publisher: Taylor and Francis Group
• Peer Reviewed: Peer Reviewed
• Volume: 58
• Issue: 6
• Pages: 1794-1805
• DOI: https://doi.org/10.1080/1540496x.2021.1918544
• Keywords: General Economics, Econometrics and Finance, Finance
• Publisher URL: https://www.tandfonline.com/doi/full/10.1080/1540496X.2021.1918544