nology and a single manufacturer that could use the technology in a new product. The model has the following key features:
• Development of patented technology incorporated into the standard is
not contractible, so the innovator conducts R&D without knowing the payo↵. • An R&D project is undertaken only if the expected payo↵ is positive,
and that expectation is a↵ected by any legal rule influencing the terms of licensing.8 • The parties cannot write an enforceable contract conditioning on the
level of investment by the manufacturer in technology-specific product design. • The parties can write an enforceable option-to-license contract and can
employ an enforceable RAND commitment.
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