To Join or Not to Join: Examining Patent Pool Participation and Rent Sharing Rules

Josh   Lerner; Anne  Layne-Farrar

Article | International Journal of Industrial Organization | March 2011

To Join or Not to Join: Examining Patent Pool Participation and Rent Sharing Rules

by Josh Lerner and Anne Layne-Farrar

Abstract

In recognition that participation in modern patent pools is voluntary, we present empirical evidence on participation rates and the factors that drive the decision to join a pool, including the profit sharing rules adopted by the pool's founders. In most participation contexts, the at-risk group is extremely difficult, if not impossible, to identify. For pools centered on technologies that result from a standard-setting process, in contrast, we are able to identify a relatively unambiguous population of patents eligible for inclusion but that have not been included in the pool. We find that vertically integrated firms, with patents and downstream operations, are more likely to join a patent pool and among those firms that do join, those with relatively symmetric patent contributions (in terms of value) to a standard appear more likely to accept numeric patent share rules for dividing royalty earnings.

Keywords: Patents; Alliances; Vertical Integration; Standards;

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Citation:

Lerner, Josh, and Anne Layne-Farrar. "To Join or Not to Join: Examining Patent Pool Participation and Rent Sharing Rules." International Journal of Industrial Organization 29, no. 2 (March 2011): 294–303.

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To Join or Not to Join: Examining Patent Pool Participation and Rent Sharing Rules

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