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Abstract

Leading competition authorities such as DG Competition (“DG COMP”) and the U.S. agencies have recently expressed concern about the potential for injunctions to be used by owners of patents declared essential to a standard (SEP) to extract excessive royalties from licensees (that is, hold up). This was a central issue in the agencies’ review of the acquisition of Motorola Mobility by Google in 2011, following which DG COMP opened investigations against Samsung and Motorola Mobility in early 2012 to assess whether these companies may have abused some of their essential patents. This article aims to contribute to the debate on the merit of the availability of injunctions for SEPs. We address the perception that the current system contains inadequate protection for licensees against the risk of hold up on the part of SEP owners through the application for injunctions. We provide an overview of court procedures currently in place across key jurisdictions and argue that the risk of hold up is overstated and that serious consideration should be given in the policy debate to the risk of reverse hold up by the licensees before contemplating change. Importantly, our analysis takes into account the possibility of opportunistic behavior by prospective licensees. This feature has been noted before but not explicitly modeled so far.

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