Patent Pool advantages & risks

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A patent pool can be described as a grouping of two or more companies that have agreed to share patents by means of a process of cross licensing. The patent pool is normally created in terms of a particular type of invention or technology and within a specific industry such as IT, vehicles or insurance.

Why create a patent pool?

Companies create patent pools to reduce the cost of administrating patents, blocking patents, and commercially exploiting the inventions. As such several companies can exploit one or more patents in the patent pool. The companies can work together to make the patent available and exploit it commercially. It should be noted that in many countries specific competition laws are in place to prevent market domination and price fixing. As such patent pooling should be treated with caution to ensure that the companies stay on the right side of the law.

Cross licensing allows for collaboration

By cross licensing in the patent pool, rivals can work together rather than having to compete extensively. In many instances smaller companies can form a consortium to give them an equal footing with larger companies ensuring that they can also make their patents public and exploit them fully. Patent Pooling Is Not Risk Free. Patent pools do not eliminate the various risks, but limit them and ensure lower patent management costs. Patent pooling is frequently used in high risk industries such as insurance to help keep the industry strong. The possibility of one member of the patent pool going on their own and thus breaking up the unity of the consortium is always present and part of the risk that goes with patent pooling.