Who's Jumping Into Patent Pools?
It was interesting to see this interview with Harvard Business School professor Josh Lerner on the subject of Monetizing IP. Particularly topical this week was Professor Lerner's answer to this question about patent pools, posed by Sean Silverthorne:
Q: What is happening in the area of patent pools? Are these becoming more popular and, if so, in which industries?A: In a patent pool, firms blend their patents with those of other firms. These pools allow users to access a number of firms' patents simultaneously, thereby avoiding the "patent thicket." In many cases, the pooling agreements also specify the pricing schedule in the agreement that establishes the pool, assuring that no party attempts to extract very high fees or to increase its fees after users are locked in.
Patent pools date back as far as the 1850s but have proliferated in recent years. Goods covered by patent pools totaled at least $100 billion in the United States in 2000, while multiple standard-setting bodies today cover virtually every high-technology product. Moreover, the scope of these activities is likely to grow in future years. In many industries, leaders have expressed frustration about the proliferation of patent thickets—the large number of overlapping awards—and the ensuing rise of costly and time-consuming litigation. In many cases, technology sharing has been proposed as a remedy.
And the scope of industries considering adopted patent pools has also grown. While the patent pools have been well established in basic manufacturing and electronic industries for decades, they have been seen as a potential solution for increasingly prevalent patent licensing issues elsewhere, such in new biotechnology-related fields. For instance, a great deal of interest has surrounded proposals to use patent pools to address the multiplicity of rights that are slowing research in critical diseases such as AIDS and breast cancer.
Patent pools are only one way in which firms share their technology with each other. The rapid growth of open source software over the course of this decade has been highlighted in numerous press accounts. The multibillion dollar initial public offerings of Red Hat and VA Linux, IBM's embrace of open source and its investment of billions of dollars into these projects, and the recent (though qualified) embrace of Linux by Microsoft, formerly a bitter opponent: all these events have been extensively documented. What is much less well appreciated, however, is that open source is only the tip of the iceberg of the technology sharing that is reshaping high-technology industries. Patent pools, standard-setting organizations, and technology licensing efforts are having a profound effect on how firms seek to exploit new discoveries.
This Q&A is especially topical this week when, that very same day the interview was published, it was announced that Alcatel-Lucent, Cisco, Clearwire, Intel Corporation, Samsung Electronics and Sprint have formed the Open Patent Alliance (OPA) to advance a competitive and open intellectual property rights model stimulating a larger WiMAX industry that supports innovation through broader choice and lower equipment and service costs for WiMAX technology, devices and applications globally.
