University of Chicago economics professor talks patents, royalties and antitrust

Published: September 23rd, 2013

Category: News

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Dennis Carlton, economics professor at the University of Chicago, delivered the Heath Lecture Sept. 11 to more than 70 at UF Law. (Photo by Elise Giordano)

By Jenna Box (4JM)

More than 70 staff, faculty, students and visitors filed into the Martin H. Levin Advocacy Center to hear Dennis Carlton’s presentation, “How Should Royalties be Determined in Standard-Setting Organizations?”

“Today I’m going to talk about patents and in particular the relationship of patents to antitrusts, and in particular setting, a setting of standard-setting organizations,” said the University of Chicago economics professor during the Sept. 11 lecture. “Maybe you might say, ‘Ah boy, who wants to go to this lecture; this sounds kind of dull. And maybe you would have said that 10 or 15 years ago, but at least now anyone with a smartphone or an iPhone, you’re intimately affected by what I’m going to talk about today.”

Carlton proceeded to discuss the criticisms of the patent system and explained how a standard-setting organization, such as the International Telecommunications Union, sets rules about what patented technology a manufacturer needs to meet the standards of a certain product — for example, a smartphone. Because of this, competition among patent owners can become extremely limited, sometimes nonexistent.

The number of patent cases in the courts is steadily increasing, Carlton said, because people, or groups, who own the standard-essential patents are suing those who they believe have used their patent without paying a royalty. Oftentimes, these owners fall under the category of patent assertion entities — groups that buy patents and build portfolios, grants licenses, and sue for royalties — and they gain monopoly power.

“There’s no doubt in my mind we should reform the patent system,” Carlton said. “The question is, given how hard it is to reform the patent system, we’re stuck with a lot of terrible anti-trust issues.”

Bayer W. Heath, the namesake of the lectures, investigated analyzed and prosecuted anti-trust law violations and left a legacy of upholding anti-trust laws. “Wick,” as Dean Jerry referred to Heath, “would be delighted with the distinguished lecturer we have with us today,” Jerry said of Carlton.

Carlton is a professor of economics at the University of Chicago Booth School of Business and has published more than 100 articles and two books. His scholarship is in microeconomic, industrial organization and antitrust, and from 2006-08 Carlton was the Deputy Assistant Attorney General for Economic Analysis at the U.S. Department of Justice.

Carlton was the fifth annual guest to speak at the The Heath Memorial Lecture Series. The series is made possible by a gift from Inez Heath, Ph.D., widow of Bayard “Wick” Heath. This year’s lecture was co-sponsored by the Robert F. Lanzillotti Public Policy Research Center and the Robert F. and Patricia J. Lanzillotti Family Fund. Before his death in 2008, Heath was the senior competition consultant with Info Tech, a Gainesville firm specializing in statistical and econometric consulting, expert witness testimony and antitrust law. Previous lecturers include Herbert Hovenkamp, William Kovacic and Joseph Harrington.