Do Patent Pools Encourage Innovation? Evidence from the 19th-Century Sewing Machine Industry

Ryan L. Lampe and Petra Moser

No 15061, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Members of a patent pool agree to use a set of patents as if they were jointly owned by all members and license them as a package to other firms. Regulators favor pools as a means to encourage innovation: Pools are expected to reduce litigation risks for their members and lower license fees and transactions costs for other firms. This paper uses the example of the first patent pool in U.S. history, the Sewing Machine Combination (1856-1877) to perform the first empirical test of the effects of a patent pool on innovation. Contrary to theoretical predictions, the sewing machine pool appears to have discouraged patenting and innovation, in particular for the members of the pool. Data on stitches per minute, as an objectively quantifiable measure of innovation, confirm these findings. Innovation for both members and outside firms slowed as soon as the pool had been established and resumed only after it had dissolved.

JEL-codes: D02 K0 K21 L2 L24 L4 N11 N4 N7 O3 O31 O32 O34 O38 (search for similar items in EconPapers)
Date: 2009-06
New Economics Papers: this item is included in nep-his, nep-ino, nep-ipr, nep-pr~ and nep-tid
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Citations: View citations in EconPapers (14)

Published as The Journal of Economic History, Volume 70, Issue 04, pp 898-920. December 2010

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