Innovation Asset Blog

Patent pools' commercial effects called into question

Patent pools have traditionally been promoted as a unique route for companies to gain affordable access to valuable intellectual assets by leveraging the current contents of their own portfolios. As this collaborative patent management strategy gains additional subscribers in increasingly complex industries, some are calling for a more thorough investigation of its impact on market innovation and consumer choice.

In a new study released by former Federal Trade Commission policy director David Balto, preliminary evidence suggests that a number of patent pools have begun to absorb large portfolios containing patented inventions that are not necessarily standards-essential to the consortium's given industry of operation. Additionally, more of these cooperative entities have established rules requiring participants to purchase licenses to patents they don't necessarily need in order to access the assets they want.

As a result, Balto urged both FTC and Department of Justice leaders to ramp up their enforcement efforts regulating potentially anticompetitive behaviors.

"Not surprisingly, with the lack of attention by antitrust enforcers, some pools have begun to be vehicles to exercise market power by deterring innovation, raising barriers to entry and dampening innovation," Balto wrote.

The antitrust expert was particularly concerned with recent developments in the mobile telecommunications space, as the scope and complexity of patent pools have expanded to such a point that independent verifications of asset quality and validity are exceedingly difficult. In the absence of such oversight, price fixing and untoward collusion could accelerate unabated.

Peter Ackerman

Peter Ackerman

Founder & CEO, Innovation Asset Group, Inc.