Strategic Inputs into Patent Pools (original) (raw)

Effects Of Patent Pools On Innovation Investment Ex Ante Perspectives

Journal of Business & Economics Research (JBER), 2011

Recently Patent Pooling has a fast growing interest as a good alternative means to decrease transaction costs between IPRs owners and promote technology commercialization and diffusion. In this paper we attempt to shed light on the effects of patent pooling on the ex-ante innovation investment or incentive using the game theoretical economic model. We generalize the model by including many vertical integrated firms, research laboratories, and specialized manufacturing firms. Main results of this paper are: 1) Patent Pools can affect on the innovation incentives of vertically integrated firms(I-firms) and of research laboratories(R-firms) differently, and the effect depends on the number of I-firms owning essential patents and the number of specially manufacturing firms(M-firms). But in the presence of many I-firms owning essential patents, the instruction of patent pooling increases I-firms’ ex-ante innovation incentive or investments with independence of M-firms. 2) There is stra...

Early commitments help patent pool formation

2008

This paper explores in what circumstances patent owners can be expected to join unilaterally a patent pool. We develop a simple model in which owners of patents reading on a standard grant licences to competing manufacturers. Manufacturers must sink a …xed cost to enter the market for standard compliant products, and are thus exposed to a hold up when royalties are set after their entry. We show that the formation of non-cooperative patent pools nearly always fails if it takes place once manufacturers have incurred …xed costs -as is usually the case. By contrast, allowing the formation of patent pools ex ante facilitates the emergence of stable non-cooperative patent pools. Such ex ante pools yield lower prices and higher licensing pro…ts than ex post patent pools would. We discuss the policy implications of these results concerning the credibilty of licensing commitments required by standard setting bodies.

Patent pools, litigation, and innovation

The RAND Journal of Economics, 2015

This paper analyzes patent pools and their effects on innovation incentives. It is shown that the pro-competitive effects of patent pools for complementary patents naturally extend for dynamic innovation incentives. However, this simple conclusion may not hold if we entertain the possibility that patents are probabilistic and can be invalidated in court. In such a case, the licensing fees reflect the strength of patents. Patent pools of complementary patents can be used to discourage litigation by depriving potential licensees of the ability to selectively challenge patents and making them committed to a proposition of all-or-nothing in patent litigation. We show that if patents are sufficiently weak, patent pools with complementary patents reduce social welfare as they charge higher licensing fees and chill subsequent innovation incentives.

Quality versus quantity: Strategic interactions and the patent inflation

2009

This paper investigates the impact of companies" motivations to patent on the characteristics of their patent portfolio using international survey data. Three main findings emerge. First, companies mainly file for an exclusion motive and to protect their freedom to operate (FTO). Second, the exclusion motivation is driven by competitors" patenting behavior and pushes companies to apply for patents, suggesting a "patent arms race." Third, there is strong evidence that, in managing their patent portfolio, firms face a trade-off between quality and quantity, as measured with the average degree of internationalization of patents. This trade-off is exacerbated by the FTO motivation.

Formation of a Pool with Essential Patents

2007

We examine why cooperation among essential patent holders may not occur, despite significant gains for them and the users. We use the sequential coalition formation framework to show that no coalition may form when the number of patent holders is large, if a firm initiating the coalition can negotiate only sequentially and individually with the rest. Our results, complementing Ray and Vohra (1999) suggest that voluntary sequential negotiation cannot prevent the emergence of "tragedy of anticommons", even if side payments are allowed.

Patent Portfolio Races in Concentrated Markets for Technology

SSRN Electronic Journal, 2010

Patent application numbers grow exponentially in many industries, a phenomenon that has been linked to high fragmentation of patent ownership. Contradicting these findings and theoretical arguments, we show that such fragmentation is not a precondition for sudden and strong increases in patenting. We describe and analyze a patent portfolio race in an industry with highly concentrated patent ownership, namely the newspaper printing machines oligopoly. Triangulating data from patent analysis, interviews, and document research, we find that patent strategy change by one player triggered a patent portfolio race with its main competitor. Implications for managers are that increasing patent output may yield temporary advantages but, as in a price war, implies the risk of a prisoner's dilemma-type outcome with potentially severe implications for effectiveness and efficiency of the innovation process.

Do Patent Pools Encourage Innovation? Evidence from 20 U.S. Industries under the New Deal

2012

Patent pools, which allow competing firms to combine their patents, have emerged as a prominent mechanism to resolve litigation when multiple firms own patents for the same technology. This paper takes advantage of a window of regulatory tolerance under the New Deal to investigate the effects of pools on innovation within 20 industries. Difference-indifferences regressions imply a 16 percent decline in patenting in response to the creation of a pool. This decline is driven by technology fields in which a pool combined patents for substitute technologies by competing firms, suggesting that unregulated pools may discourage innovation by weakening competition to improve substitutes.

Disclosure and investment as strategies in the patent race

2001

Research firms disclose a surprisingly large amount of information to the patent office through "targeted" disclosures; that is, disclosures intended to make the patent office aware that potentially patentable information is already in the public domain. Conventional wisdom holds that these disclosures are made for defensive purposes; the disclosing firm does not itself plan to pursue patents related to the disclosed information, so the firm discloses as a way of creating prior art that might stop rivals from patenting. But firms have an incentive to disclose even if they themselves intend to pursue patent protection. The reason is that, by making it more difficult to patent, disclosure in essence extends the patent race. If an invention of a certain quality would have been sufficient to qualify for patent protection before the disclosure, after the disclosure any invention must be that much better before it will represent a sufficient advance over the now-expanded prior art. Extending the patent race can be an attractive strategy for a firm trailing in a given race since a longer race might offer that firm a better opportunity to catch up. Extending the race can similarly be attractive to a leading firm, since making the race longer raises the costs of racing, a strategy that will in certain instances discourage trailing firms from pursuing aggressively. This paper models disclosure strategies and explains how research firms use disclosure to gain a competitive edge. It also studies certain interactions between the decision to invest in accelerated research and the decision to disclose. Finally, it presents empirical evidence that IBM, at least, does engage in disclosures of the sort described here. * We thank two anonymous referees and the editor for their insightful comments. For helpful comments and conversations, we also thank Marty Adelman,

Patent Pools: Licensing Strategies in the Absence of Regulation

SSRN Electronic Journal, 2012

Patent pools allow competing firms to combine their patents and license them as a package to outside firms. Regulators today favor pools that license their patents freely to outside firms, making it difficult to observe the unconstrained licensing strategies of patent pools. This paper takes advantage of a unique period of regulatory tolerance during the New Deal to investigate the unconstrained licensing decisions of pools. Archival evidence suggests that-in the absence of regulation-pools may not choose to license their technologies. Eleven of 20 pools that formed between 1930 and 1938 did not issue any licenses to outside firms. Three pools granted one, two, and three licenses, respectively, to resolve litigation. Six pools issued between 9 and 185 licenses. Archival evidence suggests that these pools used licensing as a means to limit competition with substitute technologies.