Patent hold-up

Definition

Patent hold-up

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occurs when a patent holder make an intentionally false promise to license essential proprietary technology on FRAND terms, a standard setting organization relies on that promise in incorporating the patented technology into a standard, and the patent holder's subsequently breaches that promise and demands higher license fees than promised.

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[is] opportunistic conduct whereby a party of an agreement exploits vagueness in the agreement to expropriate another party's investment, which is specific to this agreement. In particular, patent hold-up designates an exorbitant royalty request made by a patent holder who led implementers to believe that they would be given more advantageous licensing conditions. The hold-up value is the additional value of the royalty that the patent holder is able to extract after the implementer has made irreversible investments to implement the patented technology.

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