Patent pool is an association of two or more companies to cross license their patents in respect to a particular

technology. In other words this is an agreement between companies to license or permit one another or any third
party to use the patents owned by them.
The aggregation of intellectual property rights which are the subject of cross-licensing, whether they are transferred
directly by patentee to licensee or through some medium, such as a joint venture, set up specifically to administer
the patent pool1"

Patent pools are basically originated as most of the technologies involve various
patents and owners and it is impossible to adopt such technology without infringing
any ones technology or without an effective means to obtain necessary license to
use the various patents. Other reason for origination of patent pools was to avoid
the competitors suing each other in order to keep out each other from the
technology.
Patent pools are generally created to use the technology of others without incurring
any cost related to research and development. Patent pools also helps in reducing
the cost of licensing patents, risk of infringing patents and saves time in research.
The interest in the patent pool can be seen in the emerging industrial or electronic
technologies, examples including airplanes, radios, MPEG-2 audio and video, etc.
Patent pools recently have begun to be the subject of interest in the genomics or
biotechnology community also.

HISTORY
Patent pools are contributing an important role in shaping the face of the industry,
over the last hundred years. Looking back the first patent pool was formed by
Grover, Baker, Singer, and Wheeler & Wilson in 1856 for sewing machine. All of
them were fighting with each other in respect of patent infringement. In Albany,
during one of the Court proceeding, Orlando B. Potter, a lawyer and president of the
Grover and Baker Company, proposed all of them to settle the dispute by allowing
each other to use the technology by pooling rather than to run out of profits.

At the beginning of the twentieth century one of the patent pools was formed with
the intervention of the US Government. The two major airplane manufacturers at
that time the Wright Company and the Curtiss Company indulged in patent wars
with each other resulting in non production of airplanes. The US Govt. which was in
need of airplanes as the World War I is approaching pressurized both the companies
to form a Patent Pool in order to use technology of each other to manufacture
airplanes.
In 1924, an organization first-named the Associated Radio Manufacturers, and later
the Radio Corporation of America, merged the radio interests of American Marconi,
General Electric, American Telephone and Telegraph (AT&T) and Westinghouse,
leading to the establishment of standardization of radio parts, airway's frequency
locations and television transmission standards2.
Other examples of patent pools formed in the industry are as below. A more recent
patent pool was formed in 1997, by the Trustees of Columbia University, Fujitsu
Limited, General Instrument Corp., Lucent Technologies Inc., Matsushita Electric
Industrial Co., Ltd., Mitsubishi Electric Corp., Philips Electronics N.V. (Philips),
Scientific Atlanta, Inc., and Sony Corp. (Sony) to jointly share royalties from patents
that are essential to compliance with the MPEG-2 compression technology
standards3.
In 1998, Sony, Philips and Pioneer formed a patent pool for inventions that are
essential to comply with certain DVD-Video and DVD-ROM standard specifications
yet in another patent pool was formed in 1999, this time by Toshiba Corporation,
Hitachi Ltd., Matsushita Electric Industrial Co., Ltd., Mitsubishi Electric Corporation,
Time Warner Inc., and Victor Company of Japan, Ltd. For products manufactured in
compliance with the DVDROM and DVD-Video formats4.

TYPES OF PATENT POOL

Basically patent pool are classified on the fact that how the patents are exploited
and by whom. It can be done by cross-license agreement in which common

licensing is done by the two partners to third party or which can be done by
providing the separate legal entity which becomes the owner of the patents to be
licensed.

Moreover patent pool can be divided into two basic parts namely an open pool and
a closed pool. There are several patent owners in the closed pool, out of these
members one of the member is selected to license the pooled patents on behalf of
the all the members to the third party.
While in the open patent pools are usually outsourced to professional management
companies, such as a joint venture, set up particularly to manage the patent pool.
These management companies handle the upholding of the patent pool by adding
new patent owners who meet the criteria, coordinate among the patent owners, and
consult license fees with third-party licensees.

ADVANTAGE AND DISADVANTAGES OF PATENT POOL

As Patent pools impart several benefits to third parties which includes in
improvement and establishment of new technologies, reduction in the transaction
costs to prepare these new technologies, clearing blocking positions of the patents,
and escaping the costly infringement litigation. Particularly, patent pools allows
interested third parties "one-stop shopping," for patent licensees to assemble all the
necessary patents for using a certain technology from one place rather than
procuring licenses from all patent owners individually. On the other hand,
sometimes patent pools are considered as a barrier for third parties who are not
part of the pool, more particularly in the export manufacturing company, where a
domestic player who is not member of a patent pool and cannot enter foreign
market without paying royalties. Normally the patent pool controls all the patents at
an internationally adopted standard and always asks for huge royalty. As the patent
pool is the only source for the license rights, the manufacturing third parties are left
with no choice other than to negotiate for higher royalties. For example where the

licensee is lowest cost producer but has to pay the same royalties as a higher cost
companies in another countries.

Patent pool is indeed a double edged sword for third parties who acquire the
technology from the pool. On one side, it facilitates third parties to acquire and use
the technology without incurring any significant negotiation costs while dealing with
the individual patent owners. While on the other side, sometimes third parties are
left with no choice to implement the technology wherein he may have little or no
power to negotiate for the royalty due to lack of alternatives than to use that
technology.

GLOBAL SCENARIO RELATED TO PATENT POOL

Major corporations have announced their participation in patent pool. There is a
formation of new pools. Patent pools have gained attention recently because of their
prominent use in several industries, whether is it for the electronics, or wireless or
biotechnology.
In modern wireless systems, there are literally tens of thousands of patents involved
in what the consumer experiences as a 'communication system.' Many of these
patents make claims on very particular aspects of the overall communications
system that are useless without the technology claimed in other patents. As a
result, we see heavy use of patent pools in the wireless industry.5
They are, however, receiving greater attention from telecom and high tech industry
leaders. Moreover companies related to the biotechnology field are also forming the
patent pools which helps in eradicating the problem related to blocking of patents
or stacking of licenses.
PATENT POOL- INDIAN PERSPECTIVE
In India, the concept of patent pools is fairly new and has been always linked to the
proposed solution to the affordable health care. The patent pool is being viewed as
one of the ways to accumulate number of patents held by different companies, so

as to promote development and access to medicines affecting the poor people in

the developing countries.
According to the survey conducted by TERI, that after the amendment of Patents
Act, 1970, survival for most of the companies with only biogenerics will be difficult.
Moreover many are doubtful about good and useful new patents will be part of pool.
Indian Patent Act, 1970 does not provides for any provisions for formation or patent
pools or any guidelines for the same however the same neither restrain for creation
of the same. Many people are interpreting section 102 of the Patents Act as
facilitative provision for setting up patent pool which is administered and managed
by Government in public interest. One barrier could be anticipated in the way of
patent pools i.e. anti competitive policies governed by Competition Act, 2002. It
prohibits any kind of license or agreements which are anti-competitive. Patent pools
can be anti competitive when the members of the pool agrees for not to grant
license to third parties and the same time by fixing pricing and quota.

Recently one Indian generic drug manufacture Aurobindo Pharma Limited and
MedChem, joined the Medicines Patent Pool (MPP) for manufacturing of several antiretroviral medicines. This will facilitate Aurobindo Pharma to have access the
patented drugs of that Gilead recently introduced into the pool. Now Aurobindo can
manufacture and sell tenofovir in larger number of countries without paying any
royalty.
CONCLUSION
In view of the above, patent pool definitely helps in attaining the great advantages
in the development of the new technologies and new products. This in addition
helps in saving money and time and moreover helps in providing the greater access
to the information for its pool members. Patent pools will be going to help in
accessing life saving drugs to the poor people of developing and least developed
countries.
In India for the development of commerce industry access to the patented
knowledge have become most important. Henceforth the knowledge regarding the

concept of patent pooling should be known to every inventor so as to get good

progress in the field of technology or pharmaceuticals. Nonetheless it is to be seen
that how will these patent pools operate in the context of Indian patent regime or
any other legal barrier will come in their way.
Footnotes
1. JOEL I. KLEIN, "CROSS-LICENSING AND ANTITRUST LAW", American Intellectual
Property

Law

Association,

May

2,

1997,

http://www.justice.gov/atr/public/speeches/1118.htm , last accessed on 07/06/2014

2. Clark, Jeanne, PATENT POOLS: A SOLUTION TO THE PROBLEM OF ACCESS IN
BIOTECHNOLOGY

PATENTS?,

December

5,

2000

http://www.uspto.gov/web/offices/pac/dapp/opla/patentpool.pdf , last accessed on

07/06/2014
3. Ibid
4. Ibid
5. Closson Kevin, SPIE Professional October 2009 | Bonus, Webonly content, Patent
Pools: Are they right for your business? A Nerac analyst discusses the pros and
cons, http://spie.org/x37543.xmllast accessed on 10/06/2014