Patent pools, litigation, and innovation

Abstract

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Patent pools, vertical integration, and downstream competition

“…A similar conclusion is reached in the literature, but with different mechanisms: inQuint (2014), a pool of nonessential patents raises the fees set by essential patents' holders outside the pool. InChoi and Gerlach (2015), by forcing licensees to challenge all patents, pools may discourage litigation and raise licensing fees.52 Gilbert (2004) gives a number of cases in which patent pools employ other forms of vertical restraints (like exclusive territories or resale price maintenance), the use of which is consistent with our theory. C The RAND Corporation 2019.…”

“…Thus, prices of complementary patents are optimally set by a patent pool (Shapiro, 2001). 2 The theoretical literature that followed has studied patent pools mainly in environments in which licensors and licensees are separated firms and licensees are active in independent markets (e.g., among others, Lerner and Tirole, 2004;Quint, 2014;Choi and Gerlach, 2015;Boutin, 2016;Rey and Tirole, forthcoming). The general message of these articles is that pools comprising complementary patents tend to be procompetitive.…”

“…This result builds on Cournot's (, 1897) insight that a monopoly raises welfare when products are perfect complements. Another thorny consequence of patent thickets is that a new product unintentionally infringes on existing patents (see Choi and Gerlach, ).…”

“…A similar conclusion is reached in the literature, but with different mechanisms: in Quint (), a pool of nonessential patents raises the fees set by essential patents' holders outside the pool. In Choi and Gerlach (), by forcing licensees to challenge all patents, pools may discourage litigation and raise licensing fees.…”

The strategies of patent introduction into patent pools

“…Delcamp (2015) shows that inclusion of a patent into a pool generally improves the patent holder's capacity to Downloaded by [New York University] at 18:31 22 July 2015 enforce his patent and to obtain a settlement with infringers. Choi (2010) and Choi and Gerlach (2013) demonstrate that inclusion of a patent into a pool reduces the incentives of potential licensees to challenge the validity of this patent.…”