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THE PHARMA REVIEW (JULY - AUGUST 2011)

Patent Pool and Life-Sciences

Manthan D Janodia, D.Sreedhar, Virendra S Ligade, Ajay Pise, N.Udupa

Prologue
Patent Pool is defined as agreement among patent owners to license a set of patents to one another or to third parties. Many experts believe that patent pools are important in a new economy. It is also agreed that patent pools may benefit both intellectual property owners and consumers which includes patents that are complementary or blocking.1 Patent pools have been existing since 1856, which included sewing machine patent pool and this phenomenon has been evolving at impressive speed after successful launch of MPEG2 and DVD patent pools in 1997 and 1999 respectively. The value of product produced under pool licenses and sold in the US market exceeds 100 bn USD per year.2 Economic literature suggest that patent pool creates incentive for strategic patent files and royalty distribution scheme can be thought of to encourage the multiplication of patents. However, not all patent pools collect royalty. For instance, Bluetooth pool has a royalty free licensing agreement.2
Patent Pools
Patent pools are structured and implemented in various forms and are used in a variety of industries ranging from sewing machines and aircraft to radio and software. In 1995 the Department of Justice (DOJ) and Federal Trade Commission (FTC) in the United States provided Antitrust Guidelines for the Licensing of Intellectual Property. The guidelines address patent pools and suggest criteria to be used to determine whether patent pool is pro-competitive and acceptable or anti-competitive and probably unacceptable. In order to understand structuring and implementing of patent pool it is important to understand definitions such as complementary, competing, blocking and essential patents. Complementary patents are for those technologies that may be used together and are not substitutes for each other. Competing patents cover technologies that are substitute to each other. A blocking patent is one which blocks another if it cannot be practiced without infringing on the basic patent. Essential patents have been defined as ones that have "no technical alternative" and useful only in "conjunction with other pooled patents.3 The Antitrust Guidelines for the Licensing of Intellectual Property (IP Guidelines) by FTC and DOJ specifically address pooling arrangements involving intellectual property owners and their rights.4 According to these guidelines, intellectual property pooling is procompetitive when it

 

 

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