Patent pool
Encyclopedia
In patent law, a patent pool is a consortium
of at least two companies agreeing to cross-license
patents relating to a particular technology
. The creation of a patent pool can save patentees and licensees time and money, and, in case of blocking patents, it may also be the only reasonable method for making the invention available to the public. Competition law
issues are usually important when a large consortium is formed. Patent pooling has recently become a hotly debated field.
manufacturers Grover, Baker, Singer
, and Wheeler & Wilson, all accusing the others of patent infringement
. They met in Albany, New York
to pursue their suits. Orlando B. Potter, a lawyer and president of the Grover and Baker Company, proposed that, rather than sue their profits out of existence, they pool their patents (See also: Isaac Singer/I. M. Singer & Co).
In 1917, the two major patent holders for airplanes, the Wright
Company and the Curtiss
Company, had effectively blocked the building of new airplanes, which were desperately needed as the United States was entering World War I. The U.S. government, as a result of a recommendation of a committee formed by Franklin D. Roosevelt
, then Assistant Secretary of the Navy
, pressured the industry to form a patent pool, the Manufacturer's Aircraft Association.
In a more modern example in August 2005, a patent pool was formed by about 20 companies active in the Radio Frequency Identification (RFID) domain http://www.rfidjournal.com/article/articleview/1798/1/1/http://www.linuxdevices.com/news/NS8390642236.html. The RFID Consortium picked Via Licensing to administer its patent pool in September 2006 http://www.rfidjournal.com/article/articleview/2636/1/1/.
projects.
Patent pools do not eliminate risk, they only temper it. Patent holders (including other patent pools) outside the pool can still create cost and risk for the industry. While it is rare for a patent pool to indemnify licensees the pool does help to assure a common interest will emerge should one member be accused of infringement by a third party. Flaws in the design of the pool's governance can create the risk that one member can break the common cause of the group. Examples of well-known such cases include the MPEG-2
, MPEG-4 Part 2
and H.264
video coding standards, and the DVD6C
pool.
Consortium
A consortium is an association of two or more individuals, companies, organizations or governments with the objective of participating in a common activity or pooling their resources for achieving a common goal....
of at least two companies agreeing to cross-license
Cross-licensing
A cross-licensing agreement is a contract between two or more parties where each party grants rights to their intellectual property to the other parties.-Patent law:...
patents relating to a particular technology
Technology
Technology is the making, usage, and knowledge of tools, machines, techniques, crafts, systems or methods of organization in order to solve a problem or perform a specific function. It can also refer to the collection of such tools, machinery, and procedures. The word technology comes ;...
. The creation of a patent pool can save patentees and licensees time and money, and, in case of blocking patents, it may also be the only reasonable method for making the invention available to the public. Competition law
Competition law
Competition law, known in the United States as antitrust law, is law that promotes or maintains market competition by regulating anti-competitive conduct by companies....
issues are usually important when a large consortium is formed. Patent pooling has recently become a hotly debated field.
History
One of the first patent pools was formed in 1856, by sewing machineSewing machine
A sewing machine is a textile machine used to stitch fabric, cards and other material together with thread. Sewing machines were invented during the first Industrial Revolution to decrease the amount of manual sewing work performed in clothing companies...
manufacturers Grover, Baker, Singer
Isaac Singer
Isaac Merritt Singer was an inventor, actor, and entrepreneur. He made important improvements in the design of the sewing machine and was the founder of the Singer Sewing Machine Company...
, and Wheeler & Wilson, all accusing the others of patent infringement
Patent infringement
Patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a license. The definition of patent infringement may vary by jurisdiction, but it typically includes using or...
. They met in Albany, New York
Albany, New York
Albany is the capital city of the U.S. state of New York, the seat of Albany County, and the central city of New York's Capital District. Roughly north of New York City, Albany sits on the west bank of the Hudson River, about south of its confluence with the Mohawk River...
to pursue their suits. Orlando B. Potter, a lawyer and president of the Grover and Baker Company, proposed that, rather than sue their profits out of existence, they pool their patents (See also: Isaac Singer/I. M. Singer & Co).
In 1917, the two major patent holders for airplanes, the Wright
Wright Aeronautical
Wright Aeronautical was an aircraft and aircraft engine manufacturer located in New Jersey.-History:This American company evolved from the 1909-1916 Wright Company, which merged with the Glenn L. Martin Company in 1916 to form the Wright-Martin Aircraft Corporation. Glenn Martin resigned from...
Company and the Curtiss
Curtiss Aeroplane and Motor Company
Curtiss Aeroplane and Motor Company was an American aircraft manufacturer that went public in 1916 with Glenn Hammond Curtiss as president. Throughout the 1920s and 1930s, the company was the largest aircraft manufacturer in the United States...
Company, had effectively blocked the building of new airplanes, which were desperately needed as the United States was entering World War I. The U.S. government, as a result of a recommendation of a committee formed by Franklin D. Roosevelt
Franklin D. Roosevelt
Franklin Delano Roosevelt , also known by his initials, FDR, was the 32nd President of the United States and a central figure in world events during the mid-20th century, leading the United States during a time of worldwide economic crisis and world war...
, then Assistant Secretary of the Navy
Assistant Secretary of the Navy
Assistant Secretary of the Navy is the title given to certain civilian senior officials in the United States Department of the Navy....
, pressured the industry to form a patent pool, the Manufacturer's Aircraft Association.
In a more modern example in August 2005, a patent pool was formed by about 20 companies active in the Radio Frequency Identification (RFID) domain http://www.rfidjournal.com/article/articleview/1798/1/1/http://www.linuxdevices.com/news/NS8390642236.html. The RFID Consortium picked Via Licensing to administer its patent pool in September 2006 http://www.rfidjournal.com/article/articleview/2636/1/1/.
Risk mitigation
As in these examples many industries could not function without patent pools since the coordination costs (risk, negotiation, etc.) would otherwise be too high. Patent pools are only one example of cases where members of an otherwise competitive industry join in common cause to create some resource that is to their collective benefit. For example the insurance industry pools claims data to collectively reduce risk; the catalog sales industry pools sales data to better model their customers; the auto industry collaborates to standardize components; and in the software industry some companies actively contribute to open-sourceOpen-source software
Open-source software is computer software that is available in source code form: the source code and certain other rights normally reserved for copyright holders are provided under a software license that permits users to study, change, improve and at times also to distribute the software.Open...
projects.
Patent pools do not eliminate risk, they only temper it. Patent holders (including other patent pools) outside the pool can still create cost and risk for the industry. While it is rare for a patent pool to indemnify licensees the pool does help to assure a common interest will emerge should one member be accused of infringement by a third party. Flaws in the design of the pool's governance can create the risk that one member can break the common cause of the group. Examples of well-known such cases include the MPEG-2
MPEG-2
MPEG-2 is a standard for "the generic coding of moving pictures and associated audio information". It describes a combination of lossy video compression and lossy audio data compression methods which permit storage and transmission of movies using currently available storage media and transmission...
, MPEG-4 Part 2
MPEG-4 Part 2
MPEG-4 Part 2, MPEG-4 Visual is a video compression technology developed by MPEG. It belongs to the MPEG-4 ISO/IEC standards. It is a discrete cosine transform compression standard, similar to previous standards such as MPEG-1 and MPEG-2...
and H.264
H.264/MPEG-4 AVC
H.264/MPEG-4 Part 10 or AVC is a standard for video compression, and is currently one of the most commonly used formats for the recording, compression, and distribution of high definition video...
video coding standards, and the DVD6C
DVD6C
The DVD6C Licensing Agency or DVD6C Licensing Group is an industry consortium which licenses a portfolio of patents required to produce DVD discs, players, drives, recorders, decoders, and encoders....
pool.
Further reading
- United States Patent and Trademark Office, Patent Pools: A Solution to the Problem of Access in Biotechnology Patents?, December 5, 2000 (PDF file)
- Ed Levy, Emily Marden, Ben Warren, David Hartell & Isaac Filaté, Patent Pools and Genomics: Navigating a Course to Open Science?, 16 B.U. J. SCI. & TECH. L. 75, 78 (2010).