Patent Pools to Facilitate Licensing of Standard-Essential Patents in the Internet of Things

Abstract

Patent pools aggregate patents from various patent owners to offer joint licenses and may solve the increasing licensing complexities in the Internet of Things (IoT). However, not all patent pools are successful. This study reveals factors and their interconnections contributing to successful patent pool formation and operation, using qualitative data from 24 interviews with SEP owners, implementers, pool administrators, and independent consultants. I develop a model for successful patent pool formation and operation, including the following four stages: (1) Goal-setting, (2) Understanding, (3) Assessing and Deciding, and (4) Reviewing. The first stage highlights goal-setting differences between pool administrators, SEP owners, and implementers. The second stage stresses the importance of understanding the diverse environments that may influence pool solutions. The third stage addresses the assessment and decision-making process of pool administrators, SEP owners, and implementers. SEP owners emphasize revenue-sharing mechanisms, pool composition, and pool behavior, while implementers focus on royalty rates, licensing levels, and legal risks. The final stage outlines the different stakeholder roles in reviewing pool solutions and emphasizes the potential future role of licensee aggregators in SEP licensing negotiations. The study reveals that policymakers should incentivize pool formation and participation to reduce licensing complexities and facilitate technological innovation in the IoT.

Keywords: Markets for technology, patent pools, licensing, standard-essential patents, Internet of Things

JEL Classification: L24, O32, O34