Reference : Smallest Salable Patent Practicing Unit and Component Licensing: Why $1is not $1
Scientific journals : Article
Business & economic sciences : Multidisciplinary, general & others
Smallest Salable Patent Practicing Unit and Component Licensing: Why $1is not $1
Gautier, Axel mailto [Université de Liège - ULiège > HEC Liège : UER > Economie industrielle >]
Petit, Nicolas mailto [Université de Liège - ULiège > Département de droit > Droit européen de la concurrence >]
Journal of Competition Law and Economics
Oxford University Press
Yes (verified by ORBi)
United Kingdom
[en] Standard essential patents ; Royalty negotiation ; SSPPU
[en] The smallest salable patent pricing unit (SSPPU) is a valuation method used as a preliminary step toward the calculation of fair, reasonable, and nondiscriminatory royalties for licenses over standard-essential patents (SEPs). Under SSPPU, royalties should reflect the value added to the smallest salable component implementing the patented invention. In this paper, we discuss policy-making proposals to convert SSPPU into a pricing rule that not only assists the assessment of SEPs’ added value but also forces the specification of royalties terms as a share of component costs in SEP licensing negotiations. We call this new rule SSPPU+ and we show that it distorts the distribution of surplus between SEP owners and implementers by laying down a revenue cap on standardized technologies. Therefore, a change in the royalty basis is not neutral and $1 is not $1. Furthermore, SSPPU+ imposes uniform pricing of SEPs across different industries and does not allow SEP owners to take advantage of complementarities between technologies. This pleads against a generalization of SSPPU+ at early standardization and negotiation stages.
Liège Competition and Innovation Institute - LCII
Researchers ; Professionals

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