The story of hold-up has seduced many who believe patents stand in the way of innovation, but what product or service has ever been held up by patent owners, or patent wars? Even in the area of smartphones or telecommunications, we can reliably predict that next year’s technology will be superior to this year’s technology, as devices and the services that power them advance unabated. Not exactly a narrative that supports the existence of hold-up, but still the myth persists in some corners of the industry.
What is a problem, however, is patent holdout, which has emerged over the last decade to pose the single greatest risk to the efficient licensing of standard essential patents. Holdout creates a very real cash flow problem for innovative companies that need funds to be able to survive and to reinvest in innovation that will lead to the technologies of tomorrow.
More courts are recognizing the problems posed by holdout and the asymmetry that exists between innovators and implementers, but it is not clear that we have yet seen any wholesale change in the behavior of many implementers, who continue to infringe first, and demand innovators engage in lengthy and protracted legal battles only to obtain what was fair and reasonable in the first place many years earlier.