Efficient Patent Pools
AbstractThe paper builds a tractable model of a patent pool, an agreement among patent owners to license a set of their patents to one another or to third parties. It first provides a necessary and suñcient condition for a patent pool to enhance welfare. It shows that requiring pool members to be able to independently license patents matters if and only if the pool is otherwise welfare reducing, a property that allows the antitrust authorities to use this requirement to screen out unattractive pools. The paper then undertakes a number of extensions. It evaluates the external test' according to which patents with substitutes should not be included in a pool; analyzes the welfare implications of the reduction in the members' incentives to invent around or challenge the validity of each other's patents; looks at the rationale for the (common) provision of automatic assignment of future related patents to the pool; and, last, studies the intellectual property owners' incentives to form a pool or to cross-license when they themselves are users of the patents in the pool.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9175.
Date of creation: Sep 2002
Date of revision:
Publication status: published as Lerner, Josh and Jean Tirole. "Efficient Patent Pools," American Economic Review, 2004, v94(3,Jun), 691-711.
Note: CF PR
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Other versions of this item:
- K11 - Law and Economics - - Basic Areas of Law - - - Property Law
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-09-21 (All new papers)
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- Hausman, Jerry A & Leonard, Gregory K & Tirole, Jean, 2003.
" On Nonexclusive Membership in Competing Joint Ventures,"
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- Carl Shapiro, 2003.
"Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting,"
Law and Economics
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- Shapiro, Carl, 2000. "Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting," Competition Policy Center, Working Paper Series qt4hs5s9wk, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
- Vincenzo Denicolo, 2002. "Sequential innovation and the patent-antitrust conflict," Oxford Economic Papers, Oxford University Press, vol. 54(4), pages 649-668, October.
- Josh Lerner & Marcin Strojwas & Jean Tirole, 2007.
"The design of patent pools: the determinants of licensing rules,"
RAND Journal of Economics,
RAND Corporation, vol. 38(3), pages 610-625, 09.
- Lerner, Josh & Strojwas, Marcin & Tirole, Jean, 2005. "The Design of Patent Pools: The Determinants of Licensing Rules," IDEI Working Papers 187, Institut d'Économie Industrielle (IDEI), Toulouse.
- Rasmusen, Eric, 1988. "Entry for Buyout," Journal of Industrial Economics, Wiley Blackwell, vol. 36(3), pages 281-99, March.
- Brueckner, Jan K & Whalen, W Tom, 2000. "The Price Effects of International Airline Alliances," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 503-45, October.
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