Patent Nonuse: Are Patent Pools a Possible Solution?

Abstract

Studies have depicted that the rate of unused patents comprises a high portion of patents in North America (35% Non-use on average), Europe (37% Non-use on average) and Japan (64% Non-use on average). The importance of the issue of patent non-use is also highlighted within the literature on strategic patenting, IPR policy and innovation economics and in this regards, the literature has paid particular attention to blocking patents. Moreover, the current literature has emphasized on the role of patent pools in dealing with potential issues such as excessive transaction cost caused by patent thickets and blocking patents (overlapping IPRs) that might hamper the use of patents in the market for technology. Accordingly, patent pools may favor the use of the pooled patents through decreasing licensing transaction cost and providing equal and non-discriminatory access of all the members and potential licensees to the pool’s technology. Hence, companies willing to license their patents through patent pools might consider taking advantage of faster, easier, broader and less costly access to the pool licensees. Nevertheless, in this study we argue that the willingness to commercialize patents through pool participation by a pool member is not limited to the commercialization of those patents that the company includes in the patent pool. Becoming a member of a patent pool may also favor the commercialization of blocking and non-blocking patents held by a pool member outside the pool (non-pooled patents) by providing the opportunity to commercialize the patent internally or externally in collaboration with other members. Using the data from a large scale survey on European inventors of 22,533 EPO patents resident in Europe, USA, Japan and Israel (PatVal II) as primary data and a considerably large database of patent pools in Consumer electronics, and Telecommunication technologies a secondary data (the largest constructed by 2014), in this study we show that pool members participating more intensively in patent pools are more likely to be willing to commercialize their non-pooled patents through pool participation. Furthermore, we show that pool licensors are more likely to be willing to commercialize their non-pooled patents by participating in patent pools with higher level of technological complementarity to their own technology. The robustness of our results is further checked using instrumental variable approach and linear probability model. This study contributes to the current discussion on social, economic and technological benefits of patent pools. The results of this study have practical implications for strategic decision-making and for policy makers dealing with the issue of patent non-use, overlapping IPRs, and technology commercialization.