Standard-Setting and the Incentives to Innovate: Evidence from the IEEE Patent Policy Update (New version!)

Abstract

This paper investigates the effects of enforcing licensing requirements on firms' standard-related innovation by empirically analyzing the Institute of Electrical and Electronics Engineers' 2015 patent policy revision. Using a continuous difference-in-differences approach, I find that firms technologically further from the standards increased their patenting activity by 33% after the policy change, compared to an 18% rise for firms closer to the standards. The results reveal distinct effects on standard-essential patent (SEP) holders and non-SEP holders, suggesting that stricter licensing policies can reshape the patenting landscape, offering opportunities for some firms while creating challenges for others.