IP creates competition instead of cooperation.

Tim Simcoe, “Chapter 8: Open Standards and Intellectual Property Rights,” Open Innovation: Researching a New Paradigm, 09-16-2005, https://people.bu.edu/tsimcoe/documents/published/OpenStandards_IPR.pdf

Compatibility standards are used to govern the interaction of products and components in a technological system. In other words, they are the shared language that technologies use to communicate with one another. Standards are particularly important in the information and communications technology industries, where there are large numbers of interdependent suppliers and a very rapid pace of technological change. This chapter explores the inherent tension between cooperation and competition in the standards creation process, with a special emphasis on the role of intellectual property rights. These issues are closely linked to several key themes of Open Innovation, including the growing significance of IP-based business models, and the trend towards vertical dis-integration between technology development and commercialization.

While new standards can emerge from a market-based technology adoption process, this chapter focuses on the role of voluntary Standard Setting Organizations (SSOs). These organizations provide a forum where firms can collaborate in the design and promotion of new compatibility standards. Most SSOs promote the adoption of open standards— where the term “open” implies that technical specifications are widely, perhaps even freely, available to potential implementers.i However, open-ness can pose a dilemma for individual firms hoping to benefit from SSO participation. While open-ness increases the probability of coordination on a particular standard (and hence its total expected value), it can also increase the intensity of competition, making it harder to capture that value once the new specification new standard is introduced. As a result, SSO participants are often tempted to take actions that “close off” a standard when those actions also give them a competitive edge in the standards-based product market. To put it crudely, SSO participants usually want all of the technology needed to implement a standard to be open—except for their own.