The Design of Patent Pools: The Determinants of Licensing Rules

Josh Lerner, Marcin Strojwas, and Jean Tirole

12/21/2005
(Original Publish Date: 11/4/2005)

Patent pools are an important but little-studied economic institution. In this paper, we first make a set of predictions about the licensing terms associated with patent pools. The theoretical framework predicts that (a) pools consisting of complementary patents are more likely to allow members to engage in independent licensing and (b) that the requirement that firms license patents to the pool (grantbacks) should be associated with pools that consist of complements and allow independent licensing. We then empirically examine the terms of 63 pools, and show that licensing rules are consistent with these hypotheses.