Standard Essential Patents to Boost Financial Returns

19 Pages Posted: 28 Jul 2016

See all articles by Tim Christoph Pohlmann

Tim Christoph Pohlmann

Berlin University of Technology, Chair of Innovation Economics

Peter Neuhäusler

Fraunhofer Institute for Systems and Innovation Research ISI ; Berlin Universtity of Technology

Knut Blind

Technische Universität Berlin (TU Berlin)

Date Written: July 2016

Abstract

Numerous innovative applications build upon standardized technologies. These technologies increasingly incorporate standard essential patents (SEPs). It is crucial to own SEPs in order to achieve and maintain significant market shares. We test the influence of owning SEPs on a firm's financial performance. In our analysis, we use a unique dataset of firms participating in international standard setting organizations (SSOs). Our results indicate a curvilinear (inverse U‐shaped) relationship of owning SEPs on a firm's return on assets. The curvilinear relationship suggests that firms should balance their patent portfolio by holding a share of patents, which are essential for standards, and by holding a share of patents on technologies that are not standardized. Our results further show that the effects of owning SEPs depend on the specific SSO as well as on the size of the patent portfolio. Our findings are a first step toward identifying and assessing the financial impact of patents essential to standards. Our empirical tests suggest that companies should pursue a common strategy for patenting and standardization to exploit patented inventions in technology fields where standards matter.

Suggested Citation

Pohlmann, Tim Christoph and Neuhäusler, Peter and Blind, Knut, Standard Essential Patents to Boost Financial Returns (July 2016). R&D Management, Vol. 46, Issue S2, pp. 612-630, 2016, Available at SSRN: https://ssrn.com/abstract=2815223 or http://dx.doi.org/10.1111/radm.12137

Tim Christoph Pohlmann (Contact Author)

Berlin University of Technology, Chair of Innovation Economics ( email )

Berlin, 10585
Germany
+49 (0) 30 314 76624 (Phone)

HOME PAGE: http://www.inno.tu-berlin.de

Peter Neuhäusler

Fraunhofer Institute for Systems and Innovation Research ISI ( email )

Breslauer Str. 48
Karlsruhe, 76139
Germany

Berlin Universtity of Technology ( email )

Straße des 17
Berlin
Germany

Knut Blind

Technische Universität Berlin (TU Berlin) ( email )

Straße des 17
Berlin
Germany

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