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Patent Pool Licensing Project (view source)
Revision as of 17:50, 11 July 2012
, 17:50, 11 July 2012→Basic Economics
The choice to participate in a patent pool is clearly endogenous. An entity opts to include a patent in a pool (subject to the pool's approval) if and only if this leads to higher profits.
The marginal cost (to a patent holder) of issuing an additional license is effectively zero in a patent pool, as the cost is incurred by the pool administrator (Is there a pass-back of costs?). Note that this excludes 'strategic costs' in the form of lost future rents from the license. On the other hand the marginal cost of issuing a licence to a non-pool patent can be considerable (again ignoring strategic costs). Therefore, in equilibrium, firms will be will to gain less marginal benefit from a patent pool license than a non-patent-pool license, and patents with lower marginal benefits will select into the pool.
===Exogenously-given sharing rules===
===Substitution Protection===
Particularly when pools are linked to standards, there is the possibility of later substitution. Standards undergo revision, and substituted patents might not be removed from the pool (this is an empirical question). As such, a firm with a weak patent that will be suffer from substitution in the next generation of the technology may have a strong incentive to join the pool. The firm can choose between higher rents for a short duration, or lower rents for the duration of the patent term (or the pool).
=Empirics=
