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Dynamic Effects of Patent Pools: Evidence from inter-generational competition in optical disk industry

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  • SHIMBO Tomoyuki
  • NAGAOKA Sadao
  • TSUKADA Naotoshi

Abstract

This paper examines empirically how patent pools affect the research and development (R&D) for a next-generation standard and for improving and exploiting the current standard, based on panel data from the optical disk industry. Our analysis explicitly recognizes the inter-generational competition among standards and the timing difference between the standard agreement and the pool formation for the standard. The major findings are as follows. Both the agreement for the current standard (DVD) and the formation of the pools were followed by more R&D by the pool licensors for a next-generation standard (BD and HDDVD), relative to the nonparticipants of the pools. Furthermore, the formation of the pools was followed by intensified R&D efforts by the pool licensors for improving and exploiting the current standard. Thus, there is no evidence for negative effects of the pools on the innovations by the pool licensors. The R&D of the pool licensees for the next-generation standard also increased with some lag after the pool, suggesting the positive effect of open pool licensing for their learning and innovations toward the next-generation technology. Lower response of the 6C licensors, relative to that of the 3C licensors, may reflect the former's larger sunk cost in the DVD technology. After the formation of the pools, the patenting propensity by the licensors increased with deteriorating patent quality, and such tendency is larger for the 6C patent pool, presumably reflecting their royalty distribution policy based on simple patent counts.

Suggested Citation

  • SHIMBO Tomoyuki & NAGAOKA Sadao & TSUKADA Naotoshi, 2015. "Dynamic Effects of Patent Pools: Evidence from inter-generational competition in optical disk industry," Discussion papers 15132, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:15132
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    References listed on IDEAS

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    8. Josh Lerner & Jean Tirole, 2004. "Efficient Patent Pools," American Economic Review, American Economic Association, vol. 94(3), pages 691-711, June.
    9. Nagaoka, Sadao & Shimbo, Tomoyuki & Tsukada, Naotoshi, 2006. "The structure and the evolution of essential patents for standards: Lessons from three IT standards," IIR Working Paper 06-08, Institute of Innovation Research, Hitotsubashi University.
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