Antitrust Rulemaking as a Solution to Abuse on the Standard-Setting Process

While many recognize the critical role that technology plays in modern life, few appreciate the role that standards play in contributing to its success. Devices as prevalent as the modern laptop computer for example, may be governed by over 500 interoperability standards, regulating everything from the USB drive to the memory chip. To facilitate adoption of such standards, firms are increasingly turning to standard-setting organizations. These organizations consist of members of an industry who agree to abide by the organization’s bylaws, which typically regard topics such as patent disclosure and reasonable licensing. Problems arise, however, when members violate these bylaws after a standard has been adopted. Where a member asserts its patents against other members in violation of the organization’s bylaws, that member engages in what is known as “patent holdup.” Both private and public litigation have focused on curbing this practice, but the current regime remains imperfect. This Note argues that the best approach to the current problem of patent holdup requires the Federal Trade Commission to promulgate an antitrust rule. This approach combines the advantages associated with traditional enforcement with the beneficial aspects of agency rulemaking.