Rambus, N-Data, and the FTC: Creating Efficient Incentives in Patent Holders and Optimizing Consumer Welfare in Standards-Setting Organizations

Posted by D. Daniel Sokol

Theresa R. Stadheim (Minnesota Law) has a piece on Rambus, N-Data, and the FTC: Creating Efficient Incentives in Patent Holders and Optimizing Consumer Welfare in Standards-Setting Organizations.

ABSTRACT: This paper analyzes the Federal Trade Commission’s (“FTC”) actions in regards to standards-setting organizations (“SSOs”). After documenting the FTC’s actions in the cases of In re Dell Computer Corporation, In re Rambus, Inc., and In re Negotiated Data Solutions, LLC, I provide a law and economics analysis and present recommendations concerning two of the biggest issues in SSOs: RAND commitments and patent disclosure. The former can be dealt with using contract law, while the latter can be dealt with using contract law and patent pools overseen by the FTC. The FTC should choose enforcement mechanisms that will incentivize SSO members to act in a socially optimal manner. The FTC should generally limit itself to the use of antitrust powers, and make sure to give a meaningful limiting principle if unfair competition powers must be used.