Patent pool

A patent pool is an agreement by which several patent holders put their titles in common in order to license them as a package, at a single rate, to the companies wishing to exploit them. The patent pool is frequent in standardised technologies, such as video compression, telecommunications or connected devices, where a product may implement hundreds of standard essential patents held by different owners.

How a patent pool works

First, the holders contribute their patents to the pool, generally after verification of their essential character by an independent expert. Second, an administering entity negotiates the licences with users, collects the royalties and distributes them among the contributors according to an agreed key. Third, each holder retains the ability to grant individual licences outside the pool. The pool reduces transaction costs, limits royalty stacking and offers users legal certainty over a coherent set of titles.

The patent pool and competition law

Pooling patents among competitors may restrict competition. The European Commission guidelines on technology transfer agreements specify the conditions under which a pool is regarded as lawful: participation open to all interested holders, inclusion limited to essential or complementary patents, licences granted to all applicants on fair, reasonable and non-discriminatory terms, freedom of the contributors to grant individual licences and absence of exchanges of sensitive information. These guidelines are available on the website of the European Commission. The inclusion of substitutable or non-essential patents exposes the pool to characterisation as a cartel.

Key points

In practice, joining a patent pool is a strategic decision for the holder, who weighs predictable royalties against the loss of individual bargaining power. For the user, the pool is an alternative to the bilateral negotiation of FRAND licences, without excluding litigation over the essential character or the validity of the titles. The firm advises and litigates on these questions, as presented on the page SEP and FRAND attorney.