Patent Pools
7 important questions on Patent Pools
What are patent pools?
Why would antitrust authorities in the United States favour pools? (4)
- Integrating complementary technologies
- Reducing transaction costs
- Clearing blocking positions
- And avoiding costly infringement litigation
What do theoretical models of patent pools predict?
- Specifically, the prospect of a patent pool increases firm's incentives to invest in R&D because members can agree to sue infringers as a group and thereby lower their expected costs of litigation
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What is a key advantage of the historical setting of the sewing machine example?
Did the pool with the sewing machines discourage litigation? (3)
- Pool members faced little litigation
- Outside firms faced increased litigation risks
- Litigation data show that the pool as a whole engaged in 19 legal cases, and pool members acting independently engaged in another 23 disputes.
- There were 100 cases overall
Did the pool encourage outside firms to patent more? (4)
- In contrast to patents by members, patents by outside firms spiked just after the pool had been established
- The annual number of patents jumped from 25 in 1856 to almost 100 patents in 1858
- If outside firms failed to enter the pool because they were slower (rather than less productive), this increase is consistent with the idea of a patent race leading up to the pool
- Changes in sewing machine patents as a share of all U.S. patents also indicate that the pool discourages patenting
What are the conclusion of Lampe & Moser (2012): Patent Pools? (4)
- Pool members began to patent less as soon as the pool had been established
- producing an average of 3 patents per year from 1857 to 1861
- and only 2 patents per year from 1866 to 1870
- After the pool dissolved, the share of sewing machine patents recovered
- reaching nearly 1.5 percent of all U.S. patents in 1882
- The decline in innovation during the pool was limited to the United States
- British patents followed a more continuous growth path
- Evidence form the sewing machine industry challenges theoretical predictions and regulators' expectations that patent pools encourage innovation
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