Dark Sides of Patent Pools with Compulsory Independent Licensing

Akifumi Ishihara and Noriyuki Yanagawa
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Akifumi Ishihara: Kyoto University
Noriyuki Yanagawa: The University of Tokyo

No CARF-F-318, CARF F-Series from Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo

Abstract: This paper examines roles of patent pools with compulsory independent licensing. A seminal work by Lerner and Tirole (2004) have shown that requiring independent licensing or compulsory independent licensing is a useful tool to select only desirable patent pools. In this paper, however, we are going to show that their argument is not always true, If there are users who demand only a part of the pooled technologies, the compulsory independent licensing gives a tool for price discrimination for the patent holders, and that is welfare decreasing under some conditions. Moreover, the compulsory independent licensing may promote entry deterrence when there are lower grade entrants. Even in this sense, compulsory independent licensing decreases social welfare. The welfare under the patent pool with independent licensing may become lower than that under the competitive licensing.

Pages: 42 pages
Date: 2013-05
New Economics Papers: this item is included in nep-com, nep-ind, nep-ino, nep-ipr and nep-pr~
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Persistent link: https://EconPapers.repec.org/RePEc:cfi:fseres:cf318

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