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Pools and Cross-Licensing in the Shadow of Patent Litigation

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  • Jay Pil Choi

Abstract

Most patent pools are formed in the shadow of patent litigation as an attempt to settle disputes in regard to conflicting infringement claims and the validity of patents. To reflect this reality, I develop a simple framework to analyze the incentives to form a patent pool or engage in cross-licensing arrangements in the presence of uncertainty as to the validity and coverage of patents that makes disputes inevitable. I analyze private incentives to litigate and compare them with the social incentives. Antitrust implications of patent pools are considered. The effects of patent pools on third party incentives to challenge the validity of patents and on development incentives are also investigated.

Suggested Citation

  • Jay Pil Choi, 2003. "Pools and Cross-Licensing in the Shadow of Patent Litigation," CESifo Working Paper Series 1070, CESifo.
    • Handle: RePEc:ces:ceswps:_1070
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    References listed on IDEAS

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    Cited by:

    1. Gilbert, Richard J. & Katz, Michael L., 2011. "Efficient division of profits from complementary innovations," International Journal of Industrial Organization, Elsevier, vol. 29(4), pages 443-454, July.
    2. Steffen Brenner, 2009. "Optimal formation rules for patent pools," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 40(3), pages 373-388, September.
    3. Ghafele, Roya & Gibert, Benjamin, 2011. "The Transaction Cost Benefits of Electronic Patent Licensing Platforms: A Discussion at the Example of the PatentBooks Model," MPRA Paper 36010, University Library of Munich, Germany, revised 10 Jan 2012.
    4. Alberto Galasso, 2007. "Broad Cross-License Agreements andPersuasive Patent Litigation: Theory andEvidence from the Semiconductor Industry," STICERD - Economics of Industry Papers 45, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    5. Robert M. Hunt, 2006. "When Do More Patents Reduce R&D?," American Economic Review, American Economic Association, vol. 96(2), pages 87-91, May.
    6. Rockett, Katharine, 2010. "Property Rights and Invention," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 315-380, Elsevier.
    7. Joachim Henkel & Stefanie Pangerl, 2008. "Defensive Publishing An Empirical Study," DRUID Working Papers 08-04, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    8. DUAN Yuzhen & SONG Wei & PENG Xiaobao & ZHOU Haibin & LEI lei, 2013. "Patent pool analysis based on technical standards: A case study of indigenous alliances in China," International Journal of Business and Social Research, LAR Center Press, vol. 3(2), pages 7-24, February.
    9. Layne-Farrar, Anne & Lerner, Josh, 2011. "To join or not to join: Examining patent pool participation and rent sharing rules," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 294-303, March.
    10. Philipp N. Baecker, 2007. "Real Options and Intellectual Property," Lecture Notes in Economics and Mathematical Systems, Springer, number 978-3-540-48264-2, December.
    11. Blandine Laperche, 2012. "How to Coordinate the Networked Enterprise in a Context of Open Innovation? A New Function for Intellectual Property Rights," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 3(4), pages 354-371, December.
    12. Robert M. Hunt, 2007. "Economics and the design of patent systems," Working Papers 07-6, Federal Reserve Bank of Philadelphia.
    13. Blandine Laperche, 2005. "How do firms protect their “knowledge capital”? socialization versus appropriation (Comment les firmes protègent-elles leur “capital savoir”? socialisation versus appropriation)," Working Papers 104, Laboratoire de Recherche sur l'Industrie et l'Innovation. ULCO / Research Unit on Industry and Innovation.

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    Keywords

    patent pools; cross-licensing; complements and substitutes; patent litigation;
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