Will New IEEE Standards Policy Devalue Standards Essential Patents?

On February 8, 2015, the Institute of Electrical and Electronics Engineers (IEEE) adopted a new patent policy for standards-essential patents (SEPs) in IEEE standards. This comes in the midst of rapid developments in the high tech industry, where courts and other authorities have been attempting to define the rights of owners of SEPs. The new IEEE policy may reduce the licensing value of patents that are essential to implement a product compliant with future IEEE standards. However, there is reason to believe that the net effect on SEP patent valuation may be small.

By way of background, a SEP is a patent that covers a technical standard set by a standards setting organization such as the IEEE. Such technical standards define specifications by which companies can comply to produce products, or employ processes, that allow for uniformity in the marketplace. Screw thread sizes and railroad track spacing are two examples of early standards. Today, standards are directed