Patent Pools May Create Potential Antitrust Issues

Patent pools are on the rise. They are groups of two or more patent holders that publicly agree to share (or cross-license) patent rights. Patent pools are ideal for technology that contains a lot of overlap among various innovations in order to function properly. For instance, smartphones have a lot of overlap among innovations created by telecommunications technology giants. Companies such as Samsung, Microsoft, Apple, LG, and others sometimes form patent pools to share innovations and reduce the risk of lawsuits. This is fairly common in the telecommunications industry. In fact, a study conducted by Toulouse School of Economics indicates that cross-licensing accounts for half of all licensing agreements in the industry.

Sharing patents provides many benefits among companies within the same industry. Some of these benefits include reducing licensing fees, combining innovations to provide state-of-the-art products, providing faster development, and saving on costs, to name a few. However, while patent pools provide many benefits, they also create challenges. For instance, concern exists that patent pools may create collusive opportunities that hinder new companies from entering a particular market. These pools are also subject to regulatory scrutiny to ensure they do not create unfair competition or thwart innovation.

The challenges presented by patent pools can introduce complicated scenarios that may cause issues greater than what the pools were formed to avoid. Therefore, antitrust laws exist to promote honesty and fair circumstances for competition. However, every licensing agreement is different. Therefore, addressing specific provisions can make it difficult to provide antitrust rules that apply to all situations. Intellectual property by its very nature is unique, making it difficult to instill laws that are general and broad enough to encompass a tremendous amount of scenarios.

As the number of patent pools continues to rise, the need for antitrust laws promoting fair competition also rises. However, this area of law is not fully developed, enabling potential unfair situations presented by patent pools in the meantime. It will be interesting to see how patent pools can be regulated so that fair competition ensues. Unfortunately, given the complicated nature of intellectual property and individual licensing agreements, it may take some time to come up with solutions.