Friday 24 May 2013

Theories of harm with SEP licensing do not stack up

In this guest posting authored by regular IP Finance contributor Keith Mallinson (WiseHarbor), Keith debunks economic theories of effects and harm due to alleged royalty stacking with numerous patents essential to cellular standards. He does this by assessing the development of these technologies, products and services, market entry, competition and prices over the last six years or so. Keith shows that the sector is thriving and fast-growing. Evidence reveals that aggregate patent royalties paid are nothing like as high as is commonly alleged and are not detrimental. By comparing technologies and their performance over several years, identifying increasing product choice and new market entrants, and tracking key metrics with reducing price indices, decreasing Herfindahl-Hirschman market concentration indices and stellar market growth figures, Keith shows that the dire predictions of academics including Mark A. Lemley and Carl Shapiro in their 2006 and 2013 papers are incorrect, unfounded and based on inapplicable theories.

Exponential global growth in cellular data with mobile broadband

Source: Ericsson Mobility Report, November 2012

Cellular prices flat or falling versus the rising CPI

Source: U.S. BLS indices

Herfindahl-Hirschman Index tracking declining manufacturer market share concentration

Sources: WiseHarbor analysis on figures from Gartner,
Strategy Analytics and WiseHarbor using company disclosures
Keith observes that these inapplicable theories and assertions are also troublingly being adopted by judges and government agencies in their smartphone patent war rulings, despite the weight of so much evidence to the contrary.

For ease of reading, Keith's contribution (which is rather longer than usual) can be accessed here as a PDF document.

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