technology area, can provide for greater innovation, parallel research and development, removal of patent bottlenecks, and faster product development. (USPTO, 2000, p. 11)
Patent pools, like most licensing arrangements, usually are beneficial to competition. They may, however, occasionally reduce or eliminate it. Nevertheless, patent pools are uncommon in the biotechnology industry so far (OECD, 2005). Concerns exist about whether patent pools could solve problems in markets for genetic inventions. For example, a recent Organisation for Economic Co-operation and Development survey of biotechnology and pharmaceutical companies, genetic testing centers, and public research organizations found that respondents did not consider patent pools or cross-licensing agreements to be helpful in increasing access to genetic inventions (OECD, 2002). Respondents cited the difficulty of measuring the value of the contributions that each party would bring to the arrangement. Even though the utility of patent pools for the biotechnology industry is arguable, it generally is accepted that patent pools may benefit both patent owners and consumers, provided the pool is limited to complementary and/or blocking patents. Under these conditions, patent pools may facilitate the integration of complementary technologies, reduce transaction costs, facilitate the clearing of blocking patent positions, and avoid infringement litigation (Bratic et al., 2005; OECD, 2005).
Some features particular to the biopharmaceutical industry may create disincentives to patent pooling. Patent pools are more common in industries that use patents defensively, whereas in the biopharmaceutical industry patents tend to be used offensively. Patent holders who enter a pool risk losing the more significant revenue they might receive if they exclusively licensed their patents. Biotechnology companies generally prioritize the accumulation of patents, which makes them attractive for buy-out, while large pharmaceutical companies have tended to buy the intellectual property and/or small companies they need. However, large companies no longer have the capital to continue buying whatever intellectual property they need, which may create an incentive for more patent pooling. There also may be an incentive for pooling when the complexity of intellectual property requires a pool for research to progress; one example is the international patent pool for SARS. In order to avoid antitrust liability, all patents in the pool must be essential for the particular aim. A pool that is enabling is probably justified—the existence of multiple licenses to the pool creates a safe harbor—while a pool that restricts output or use is more problematic. There also is cause for concern if the pool revolves around price setting or standard setting, although this concern is often addressed by the federal antitrust agencies’ exercising oversight of a pool’s operation.