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Technology Standard-Based Patent Pools and Their Procompeititve (Anticompetitive) Effects

Aleskute, Asta (2009)
Department of Law
Abstract
The legal environment in the area of patent pools in Europe and the US has experienced significant development over the past few decades. Today, the antitrust treatment of patent pools generally favors patent pools provided they meet a robust set of ex ante antitrust safeguards. Despite some inherent differences in antitrust laws, including rules on technology licensing, both sides of the Atlantic explicitly recognize the efficiencies that pools can produce. A more supportive antitrust policy has been fueled by several tendencies in technology markets. The increasing trend towards technology standardization and the proliferation of intellectual property held by numerous companies became a serious impediment to bringing new products to the... (More)
The legal environment in the area of patent pools in Europe and the US has experienced significant development over the past few decades. Today, the antitrust treatment of patent pools generally favors patent pools provided they meet a robust set of ex ante antitrust safeguards. Despite some inherent differences in antitrust laws, including rules on technology licensing, both sides of the Atlantic explicitly recognize the efficiencies that pools can produce. A more supportive antitrust policy has been fueled by several tendencies in technology markets. The increasing trend towards technology standardization and the proliferation of intellectual property held by numerous companies became a serious impediment to bringing new products to the markets at reasonable prices. Pools are therefore increasingly used as devices to facilitate implementation of technology standards. The ability to license a vast majority of essential patents in a single package assists hundreds, if not thousands of manufacturers to enter markets for products that are compliant with a technology standard. The owners of essential patents similarly generate higher licensing revenues and haste the dissemination and adoption of new technology standards. On the other hand, under certain circumstances patent pools may have potential to inflict anticompetitive harms. The anticompetitive effects of patent pools usually stem from pooling patents that are not related or are unnecessary for the implementation of a technology standard. When the competitive harm of a patent pooling arrangement is assessed, the economic relationship among the pooled patents is therefore on the ''thumb on the scale.'' This makes the antitrust analysis of patent pooling arrangements not only quite cumbersome and contentious but also highly dependent on the technology standard. Both EU and US authorities are concerned that pooling competing patents could serve as a price-fixing mechanism, ultimately raising the price of products utilizing standardized technology. In addition, the exchange of sensitive business information among vertically integrated members of the pool may facilitate collusion in downstream product markets. Nevertheless, enforcement actions against such anticompetitive practices are scarce, and if found, they are not related to the patent pools that emanate from standard setting efforts. Another concern commonly shared on both sides of the Atlantic is that patent pools might, in a tying manner, include non-essential patents and thereby foreclose alternative technologies from use by manufacturers. Similarly, a refusal to license essential patents on an individual basis is generally viewed as a threat to compel licensees to pay for the patents they do not need. While there are indeed sound reasons to recognize foreclosure of alternative technologies as a serious competitive concern, the recent Federal Circuit's case in Philips clearly indicates that adherence to the antitrust safeguards established by both EU and US authorities does not necessarily fit all patent pools. (Less)
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author
Aleskute, Asta
supervisor
organization
year
type
H2 - Master's Degree (Two Years)
subject
keywords
European Business Law
language
English
id
1555409
date added to LUP
2010-03-08 15:23:40
date last changed
2010-03-08 15:23:40
@misc{1555409,
  abstract     = {The legal environment in the area of patent pools in Europe and the US has experienced significant development over the past few decades. Today, the antitrust treatment of patent pools generally favors patent pools provided they meet a robust set of ex ante antitrust safeguards. Despite some inherent differences in antitrust laws, including rules on technology licensing, both sides of the Atlantic explicitly recognize the efficiencies that pools can produce. A more supportive antitrust policy has been fueled by several tendencies in technology markets. The increasing trend towards technology standardization and the proliferation of intellectual property held by numerous companies became a serious impediment to bringing new products to the markets at reasonable prices. Pools are therefore increasingly used as devices to facilitate implementation of technology standards. The ability to license a vast majority of essential patents in a single package assists hundreds, if not thousands of manufacturers to enter markets for products that are compliant with a technology standard. The owners of essential patents similarly generate higher licensing revenues and haste the dissemination and adoption of new technology standards. On the other hand, under certain circumstances patent pools may have potential to inflict anticompetitive harms. The anticompetitive effects of patent pools usually stem from pooling patents that are not related or are unnecessary for the implementation of a technology standard. When the competitive harm of a patent pooling arrangement is assessed, the economic relationship among the pooled patents is therefore on the ''thumb on the scale.'' This makes the antitrust analysis of patent pooling arrangements not only quite cumbersome and contentious but also highly dependent on the technology standard. Both EU and US authorities are concerned that pooling competing patents could serve as a price-fixing mechanism, ultimately raising the price of products utilizing standardized technology. In addition, the exchange of sensitive business information among vertically integrated members of the pool may facilitate collusion in downstream product markets. Nevertheless, enforcement actions against such anticompetitive practices are scarce, and if found, they are not related to the patent pools that emanate from standard setting efforts. Another concern commonly shared on both sides of the Atlantic is that patent pools might, in a tying manner, include non-essential patents and thereby foreclose alternative technologies from use by manufacturers. Similarly, a refusal to license essential patents on an individual basis is generally viewed as a threat to compel licensees to pay for the patents they do not need. While there are indeed sound reasons to recognize foreclosure of alternative technologies as a serious competitive concern, the recent Federal Circuit's case in Philips clearly indicates that adherence to the antitrust safeguards established by both EU and US authorities does not necessarily fit all patent pools.},
  author       = {Aleskute, Asta},
  keyword      = {European Business Law},
  language     = {eng},
  note         = {Student Paper},
  title        = {Technology Standard-Based Patent Pools and Their Procompeititve (Anticompetitive) Effects},
  year         = {2009},
}