A patent pool is a legal term that refers to a partnership between two or more entities, usually called a consortium, that agree to share the patent rights for a particular form of intellectual property or technology. The parties are then free to market and develop their own product without worrying about a patent infringement. Patent pools are typically formed either as the result of simultaneous patents developed at the same time or as a business strategy. Many companies have lost time and money fighting patent lawsuits, and patent pools have somewhat alleviated that problem.
The use of patent pools can offer several advantages if done correctly. In addition to saving companies time and money on lawsuits, a patent pool can serve the function of setting an industry standard. One such example is the Digital Versatile Disc (DVD) industry. In the late 1990s, many of the major manufacturers of DVDs created a patent pool and were able to standardize the industry. This allowed for a large reduction in production costs, which resulted in lower prices for the consumer. Other advantages can include increased competition and innovation.
Many of the patent pools formed over the years have been brought about out of necessity. In the period prior to World War I, two companies, the Curtiss Company and the Wright Company, were in the midst of a patent war over airplanes in the Unites States (US). Their patent war, as it was deemed, effectively stopped airplanes from being built at the time. The government stepped in and had the airplane industry form a patent pool, where all manufacturers had to join and pay a fee for the use of the patents. This patent pool helped to standardize the industry and led to the formation of several important trade organizations in the aviation industry.
One issue that can arise out of the creation of a patent pool is the possibility of a monopoly forming. Companies could ostensibly stifle competition by creating a selective patent pool and ostracizing other companies. This could bring about a violation of anti-trust laws, and has been an issue over the years in determining what constitutes a valid patent pool, especially with regards to larger consortiums.
Overall, patent pools are still a widely debated topic. Its overall benefits have been proven, but there is a balancing act between the benefits and the possibility for abuse. Regardless, patent pools are still considered a very viable option, and they have increased in number since the early 2000s, especially in regard to the medical field where many patents are pooled to provide access to more innovation and lower cost of medicines.