Patent Pools and Cross-Licensing in the Shadow of Patent Litigation

20 Pages Posted: 26 May 2010  

Jay Pil Choi

Michigan State University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

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Abstract

This article develops a framework to analyze the incentives to form a patent pool or engage in cross-licensing arrangements in the presence of uncertainty about the validity and coverage of patents that makes disputes inevitable. It analyzes the private incentives to litigate and compares them with the social incentives. It shows that pooling arrangements can have the effect of sheltering invalid patents from challenges. This result has an antitrust implication that patent pools should not be permitted until after patentees have challenged the validity of each other's patents if litigation costs are not too large.

Suggested Citation

Choi, Jay Pil, Patent Pools and Cross-Licensing in the Shadow of Patent Litigation. International Economic Review, Vol. 51, Issue 2, pp. 441-460, May 2010. Available at SSRN: https://ssrn.com/abstract=1611956 or http://dx.doi.org/10.1111/j.1468-2354.2010.00587.x

Jay Pil Choi (Contact Author)

Michigan State University - Department of Economics ( email )

101 Marshall Hall
East Lansing, MI 48824
United States
517-353-7281 (Phone)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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