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Patents and Royalties: Stifling or Promoting Innovation in ICT?

11/25/2015 @ 12:00 - 14:00

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The patent system is never out of the spotlight. Do patents achieve their ultimate goal of incentivising innovation, or actually stifle it? The debate is especially heated in the ICT sector, where problems with weak patents, litigation threats and patent trolls are said to clog the system.

One particularly contentious issue is royalty stacking – the spiraling cost of bringing a new product to market if it involves multiple patented technologies or processes. The nature of ICT innovation, where various complementary technologies often need to be combined in one end product, makes royalty stacking a major hazard in the ICT sector. The danger is that patent owners, particularly those holding standard-essential patents, will charge excessive royalties. This can lead to higher prices for consumers and reduced incentives for innovation.

The problem is already on the radar for competition authorities, who intervene by, for example, requiring royalty schemes to be fair, reasonable and non-discriminatory (FRAND). But just how big is the problem of royalty stacking, and how could competition policy address it? Are FRAND conditions the best way to improve the situation?

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