Standard-essential patents and the distribution of gains from trade for innovation

An earlier study finds that standard-essential patents (SEPs) enhance trade and additionally lead to a phenomenon of global cross-licensing; that is, global value chains (GVCs) arise along those countries in which companies will act as both the licensor and licensee of SEPs. This, however, simultaneously leads to the situation that SEP-induced GVCs are a relatively closed-off club of companies that profit from the artificial temporary monopoly awarded by patents and their connection to standards. This chapter proposes several paths for future research with the goal to uncover the micro-mechanisms of these findings. The principal questions asked are: (1) How can intermediate producers (i.e., global network suppliers, for instance, in Korea and China) profit from GVCs in which many SEPs are used? (2) How is upgrading (i.e., moving up in the GVC toward performing more elaborated tasks) in an SEP-induced GVC possible? (3) How can a company reach a position that allows it to exert control over a GVC?.

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