Revisiting Patent Pool Strategies through the Lens of Platforms

This study explores whether a patent pool plays a positive role in reducing the activity of patent trolls—who sue firms of all sizes amid the threats of complex technology litigation—by using a game theory framework based on a vertical differentiation model. We find that when both firms develop core technologies of similar quality, price competition arises, leading to a decrease in product prices. However, if there is a significant gap in technology quality between the firms, pooling results in higher prices. Additionally, we examine how the difference in quality affects the profits of the two companies. As the quality gap widens, the combined profit of the two firms initially decreases until it reaches a certain cutoff point, beyond which their profits begin to increase. We then identify the region where the pooling strategy becomes a unique Subgame Perfect Nash Equilibrium (SPNE) when the technologies overlap to an appropriate degree. The incentive for pooling is greatest when the technology overlap is moderate, and it decreases as the level of technology overlap increases. Furthermore, we conduct a social welfare analysis and find that while the presence of patent trolls generally has a positive effect on social welfare, it negatively impacts welfare at higher levels of technology quality.

Patent pools for second and third-line Fixed Dose Combination (FDC) antiretroviral drugs (ARVs) should not be delayed as they are instrumental to urgent public health needs in the under-served markets.Nonetheless, multinational originator companies still seem to perceive patent pooling for ARVs as a minefield that would offer the generic competitors lots of deeply exploitable opportunities, to the detriment of patent owner’s rights.This paper analyses the brand industry concerns, while looking for a strategy up to a really equitable and free world market, without any discrimination between end-users in wealthy and resource-limited countries.This strategy would urge partnerships between originator companies first to make newer FDC ARVs quickly available and allow patent pool agreements with generic counterparts to be negotiated straight afterwards.The patent pool strategy highlighted in this paper would assert the primacy of health over for-profit policies, while aligning with the 61st WHO’s Assembly recommendations and G7, G8 and World Trade Organisation’s warnings and pledges against trade protectionism.

The current HIV/AIDS scenario in India is quite grim with an estimated 2.4 million people living with HIV/AIDS (PLHA) in 2008, just behind South Africa and Nigeria. The anti-retroviral drugs (ARVs) remain the main stay of global HIV/AIDS treatment. Over 30 ARVs (single and FDCs) available under six categories viz., NRTIs (nucleoside reverse transcriptase inhibitors), NNRTIs (non-nucleoside reverse transcriptase inhibitors), Protease inhibitors, the new Fusion inhibitors, Entry inhibitors-CCR5 co-receptor antagonists and HIV integrase strand transfer inhibitors. The major originator companies for these ARVs are: Abbott, Boehringer Ingelheim (BI), Bristol-Myers Squibb (BMS), Gilead, GlaxoSmithKline (GSK), Merck, Pfizer, Roche, and Tibotec. Beginning with zidovidine in 1987, all the drugs are available in the developed countries. In India, about 30 ARVs are available as generics manufactured by Aurobindo, Hyderabad, Andhra Pradesh; Cipla Limited, Goa; Emcure Pharmaceuticals, Pune, Maharashtra; Hetero Drugs, Hyderabad, Andhra Pradesh; Macleods Pharmaceuticals, Daman; Matrix Laboratories, Nashik, Maharashtra; Ranbaxy, Sirmour, Himachal Pradesh; and Strides Arcolab, Bangalore, Karnataka. The National AIDS Control Organization (NACO) set up in 1992 by the Govt. of India provides free ARVs to HIV positive patients in India since 2004. The drugs available in India include both single drugs and FDCs covering both first line and second line ARVs. Even while there are claims of stabilization of the disease load, there is still huge gap of those who require ARVs as only about 150,000 PLHA receive the ARVs from the Govt. and other sources. Access to ARVs therefore is still a cause of serious concern ever since India became fully Trade Related Aspects of Intellectual Property Rights (TRIPS)-complaint in 2005. Therefore, the Indian pharmaceutical companies cannot make generics for those for drugs introduced post-2005 due to product patent regime. Other concerns include heat stable, other better formulations and second line ARVs for adults and more drugs and formulations for paediatric groups, that are still to be widely available in India and other developing countries. To examine whether strong intellectual property (IP) protection systems are to be considered important barriers for the limited or lack of access to ARVs, we studied the patent profile of the ARVs of the originator companies within and outside India. We could record 93 patents in the United States Patent & Trademark Office (USPTO). The originator companies have been also aggressively filing and enforcing patents in India. There have been a few efforts by companies like Gilead and GSK to grant licenses to generic manufacturers in developing countries, ostensibly to promote access to ARVs through lower (two-tier) pricing. These steps are considered as too little and too late. There is an urgent need to look for alternative strategies to promote access to ARVs both linked to and independent of IPRs. Patent pooling as a viable strategy mooted by the UNITAID should be seriously explored to promote access to ARVs. India is ideally suited for trying out the patent pool strategy as most of the global requirement of affordable ARV drugs for HIV/AIDS treatment is sourced from Indian generic companies.

In the green energy sector, which includes the solar cell industry, effectively combining the patents of various manufacturers within the supply chain to collectively create sustainable patent market value is of paramount importance. This study aimed to establish a business strategy framework for project-based licensing through the analysis of solar cell patents and the integration of supply chain manufacturers’ patents, with the goal of collectively creating market value for patents in a sustainable manner. The research methodology included analysis of the literature and focus group discussions. The study began with an analysis of solar cell industry patents from the past decade using the WIPS Global Patent database to identify projects with the highest patent count. Subsequently, through the use of focus group discussions, the feasibility of a patent pool strategy within the supply chain was explored. Finally, a strategy framework was proposed for project-based patent pool licensing, focusing on the top 15 projects with the highest count of 5579 patents. The results indicate that adopting this strategy framework for supply chain manufacturer patents can result in higher commercial patent value.

A patent pool strategy was proposed for use in the electric vehicle cell industry to manage patent licensing disputes and litigation. How to promote EV cell innovation diffusion under a patent pool scenario is unclear. We introduced an innovation diffusion channel model comprising different players with patent licensing relationships and market competition relationships following evolutionary game analysis and simulation. We found the interlinked factors that influenced evolutionary stable strategies with a sensitivity test on all factors to identify the important and unimportant factors. To achieve the maximum return for the players, an optimization algorithm was introduced to find the maximum weighted object function. The decision and policy makers could focus on important factors such as improving the technology’s competitive advantages, delivering more profits to its licensees with reasonable licensing fees, and finding the best patent pool strategy with the support of the optimization algorithm to balance the competition relationships and patent licensing relationships between players.

Effect of an open patent pool strategy on technology innovation in terms of creating shared value

This paper discusses how the evolving nature of innovation has affected the way Intellectual Property Right (IPR) regime has affected economic growth in developing countries. Focusing more on utilization rather than protection of IPs for human society, it argues that the linkages from protection of knowledge to innovation incentives should be given more priority at the later stage of economic development when developing countries reach a certain level of technological capabilities. Despite the loose or open linkage between IP protection and economic growth, strong IP enforcement can still seriously decrease the catching-up probability of latecomer firms, especially small and medium-sized enterprises (SMEs). The lawsuits by patent trolls may be more damaging because cross-licensing or patent pooling strategy is not available at all as a settlement option. Thus, latecomer firms are facing heavier challenges than before, especially the SMEs with limited financial and human resources. In such circumstance, there can be a case for the active role of public policies and interventions.