Measuring the costs and benefits of patent pools

Patent pools are widely considered an efficient mechanism to acquire rights to patented technologies, but few researchers have estimated the value of that efficiency. However, in a 2017 law journal article, two law professors did just that. After interviewing executives from Via Licensing and MPEG LA and performing detailed financial modeling, the authors concluded, [t]he “patent pools we studied saved, we estimate, $600 million and almost $400 million, respectively.”

The article is entitled Measuring the Costs and Benefits of Patent Pools and was published in the Law Journal of the Indiana University Maurer School of Law.  To reach these figures, the two patent-pooling organizations shared details about formation and operating costs for two pools, Via Licensing for MPEG Audio and MPEG LA for HEVC.

The authors compared these figures to the estimated costs of operating without a pool, where each licensee would have to search for all relevant patents and negotiate agreements with each licensor. They then factored in the number of licensors and licensees for the Via and MPEG LA pools to reach the numbers cited above. Elsewhere, the authors concluded, “Pools save enormous amounts of money. They are mind-blowingly efficient at conducting high volumes of patent licensing.”

In the article, the authors looked at theoretical public policy considerations that may eat into these savings, though these types of discussions are beyond the scope of this blog. What is relevant is that most companies that develop and sell technical products recognize the efficiencies that patent pools deliver, which the authors have very effectively quantified.

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