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Cooperative Marketing Agreements Between Competitors: Evidence from Patent Pools

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  • Josh Lerner
  • Jean Tirole
  • Marcin Strojwas

Abstract

On numerous occasions, rival firms seek to market goods together, particularly in high-technology industries. This paper empirically examines one such institution: the patent pool. The analysis highlights five findings consistent with the theoretical predictions: (a) pools involving substitute patents are unlikely to allow pool members to license patents independently, consistent with our earlier theoretical work; (b) independent licensing is more frequently allowed when the number of members in the pool grows, which may reflect the increasing challenges that reconciling users? differing technological agendas pose in large pools; (c) larger pools are more likely to have centralized control of litigation, which may reflect either the fact that the incentives for individual enforcement in large pools are smaller or that large pools are more likely to include small players with limited enforcement capabilities; (d) third party licensing is more common in larger pools, consistent with suggestions that such pools were established primarily to resolve the bargaining difficulties posed by overlapping patent holdings; and (e) during the most recent era, when an intense awareness of antitrust concerns precluded many competition-harming patent pools, more important patents were selected for pools and patents selected for pools were subsequently more intensively referenced by others.

Suggested Citation

  • Josh Lerner & Jean Tirole & Marcin Strojwas, 2003. "Cooperative Marketing Agreements Between Competitors: Evidence from Patent Pools," NBER Working Papers 9680, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:9680
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    References listed on IDEAS

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    1. Hall, B. & Jaffe, A. & Trajtenberg, M., 2001. "The NBER Patent Citations Data File: Lessons, Insights and Methodological Tools," Papers 2001-29, Tel Aviv.
    2. Josh Lerner & Jean Tirole, 2004. "Efficient Patent Pools," American Economic Review, American Economic Association, vol. 94(3), pages 691-711, June.
    3. Adam B. Jaffe & Manuel Trajtenberg, 2005. "Patents, Citations, and Innovations: A Window on the Knowledge Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 026260065x, January.
    4. Heckman, James J, 1978. "Dummy Endogenous Variables in a Simultaneous Equation System," Econometrica, Econometric Society, vol. 46(4), pages 931-959, July.
    5. Carl Shapiro, 2001. "Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting," NBER Chapters,in: Innovation Policy and the Economy, Volume 1, pages 119-150 National Bureau of Economic Research, Inc.
    6. Priest, George L, 1977. "Cartels and Patent License Arrangements," Journal of Law and Economics, University of Chicago Press, vol. 20(2), pages 309-377, October.
    7. Ghosal, Vivek & Gallo, Joseph, 2001. "The cyclical behavior of the Department of Justice's antitrust enforcement activity," International Journal of Industrial Organization, Elsevier, vol. 19(1-2), pages 27-54, January.
    8. Bittlingmayer, George, 1988. "Property Rights, Progress, and the Aircraft Patent Agreement," Journal of Law and Economics, University of Chicago Press, vol. 31(1), pages 227-248, April.
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    Citations

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    Cited by:

    1. Bessen James, 2009. "Evaluating the Economic Performance of Property Systems," Review of Law & Economics, De Gruyter, vol. 5(3), pages 1037-1061, December.
    2. Pierre Dehez & Sophie Poukens, 2013. "The Shapley value as a guide to FRAND licensing agreements," Working Papers of BETA 2013-03, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    3. Josh Lerner & Jean Tirole, 2005. "The Economics of Technology Sharing: Open Source and Beyond," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 99-120, Spring.
    4. Bertrand, Olivier & Zuniga, Pluvia, 2006. "R&D and M&A: Are cross-border M&A different? An investigation on OECD countries," International Journal of Industrial Organization, Elsevier, vol. 24(2), pages 401-423, March.
    5. Galasso, Alberto, 2007. "Broad cross-license agreements and persuasive patent litigation: theory and evidence from the semiconductor industry," LSE Research Online Documents on Economics 6718, London School of Economics and Political Science, LSE Library.
    6. Hussinger, Katrin & Grimpe, Christoph, 2007. "Firm Acquisitions and Technology Strategy: Corporate versus Private Equity Investors," ZEW Discussion Papers 07-066, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    7. 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.
    8. Dutz, Mark A. & Sharma, Siddharth, 2012. "Green growth, technology and innovation," Policy Research Working Paper Series 5932, The World Bank.
    9. TSUKADA Naotoshi & NAGAOKA Sadao, 2011. "Standards as a Knowledge Source for R&D: A first look at their incidence and impacts based on the inventor survey and patent bibliographic data," Discussion papers 11018, Research Institute of Economy, Trade and Industry (RIETI).
    10. Bertoni, Fabio & Tykvová, Tereza, 2015. "Does governmental venture capital spur invention and innovation? Evidence from young European biotech companies," Research Policy, Elsevier, vol. 44(4), pages 925-935.
    11. Langinier, Corinne, 2006. "Pool of Basic Patents and Follow-up Innovations," 2006 Annual meeting, July 23-26, Long Beach, CA 21127, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Jay Pil Choi, 2003. "Pools and Cross-Licensing in the Shadow of Patent Litigation," CESifo Working Paper Series 1070, CESifo Group Munich.
    13. Timothy S. Simcoe & Stuart J.H. Graham & Maryann Feldman, 2007. "Competing on Standards? Entrepreneurship, Intellectual Property and the Platform Paradox," NBER Working Papers 13632, National Bureau of Economic Research, Inc.
    14. Barbara Fidanza, 2017. "Quali driver nella selezione delle target in operazioni di M&A? Una verifica empirica nel mercato italiano," Working Papers 52-2017, Macerata University, Department of Studies on Economic Development (DiSSE), revised Jan 2018.
    15. Hussinger, Katrin & Grimpe, Christoph, 2008. "Market and Technology Access Through Firm Acquisitions: Beyond One Size Fits All," ZEW Discussion Papers 08-037, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    16. Grimpe, Christoph & Hussinger, Katrin, 2008. "Building and Blocking: The Two Faces of Technology Acquisition," ZEW Discussion Papers 08-042, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    17. Rainer Frey & Katrin Hussinger, 2011. "European market integration through technology-driven M&As," Applied Economics, Taylor & Francis Journals, vol. 43(17), pages 2143-2153.
    18. Sung-Hwan Kim, 2004. "Vertical Structure and Patent Pools," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 25(3), pages 231-250, July.

    More about this item

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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