A patent pool is a partnership between entities that agree to share patent rights for a particular technology, allowing for development without patent infringement. Benefits include saving time and money, setting industry standards, and increased competition and innovation. However, there is a risk of monopoly formation and violation of antitrust laws. Patent pools are still a debated topic, but are increasingly used in the medical field to provide access to innovation at lower costs.
A patent pool is a legal term referring to a partnership between two or more entities, usually called consortia, that agree to share patent rights for a particular form of intellectual property or technology. The parties are then free to market and develop their product without worrying about patent infringement. Patent pools are typically formed as a result of concurrent patents being developed at the same time or as a business strategy. Many companies have wasted time and money fighting patent lawsuits, and patent pools have somewhat alleviated this problem.
The use of patent pools can offer several benefits when done correctly. In addition to saving companies time and money in lawsuits, a patent pool can serve to set an industry standard. One example is the digital versatile disc (DVD) industry. In the late 1990s, several major DVD manufacturers built up a patent pool and were able to standardize the industry. This has allowed for a sharp reduction in production costs, which has led to lower prices for the consumer. Other benefits may include increased competition and innovation.
Many of the patent pools formed over the years were created out of necessity. In the run-up to World War I, two companies, the Curtiss Company and the Wright Company, were in the midst of an airplane patent war in the United States (USA). Their patent war, as it was believed, actually prevented the construction of airplanes at the time. The government stepped in and had the aircraft industry form a patent pool, in which all manufacturers had to join and pay a fee for using the patents. This pool of patents helped standardize the industry and led to the formation of several major commercial organizations in the aviation industry.
One problem that can arise from creating a patent pool is the possibility of a monopoly forming. Firms could seemingly stifle competition by creating a selective patent pool and marginalizing other firms. This could result in a violation of antitrust laws, and has been a problem over the years in determining what constitutes a valid patent pool, especially with regards to larger consortia.
Overall, patent pools are still a hotly debated topic. Its overall benefits have been proven, but there is a balancing act between the benefits and the possibility of abuse. Regardless, patent pools are still considered a very viable option and have increased in number since the early 2000s, especially in the medical field where many patents are pooled to provide access to more innovation and at lower cost of drugs.
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