NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Competing on Standards? Entrepreneurship, Intellectual Property and the Platform Paradox

Timothy S. Simcoe, Stuart J.H. Graham, Maryann Feldman

NBER Working Paper No. 13632
Issued in November 2007
NBER Program(s):   IO   PR

This paper studies the intellectual property strategy of firms that participate in the formal standards process. Specifically, we examine litigation rates in a sample of patents disclosed to thirteen voluntary Standard Setting Organizations (SSOs). We find that SSO patents have a relatively high litigation rate, and that SSO patents assigned to small firms are litigated more often than those of large publicly-traded firms. We also estimate a series of difference-in-differences models and find that small-firm litigation rates increase following a patent's disclosure to an SSO while those of large firms remain unchanged or decline. We interpret this result as evidence of a "platform paradox" -- while small entrepreneurial firms rely on open standards to lower the fixed cost of innovation, these firms are also more likely to pursue an aggressive IP strategy that may undermine the openness of a new standard.

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Document Object Identifier (DOI): 10.3386/w13632

Published: Competing on Standards? Entrepreneurship, Intellectual Property and Platform Technologies, Timothy S. Simcoe, Stuart J.H. Graham, Maryann P. Feldman. in Entrepreneurship: Strategy and Structure, Hellmann and Stern. 2009

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