This page details the Patent Pool Licensing Project's Literature Review. It is currently a series of BibTeX entries sorted by topic. The entries contain the abstracts of the papers. Ed Egan has local copies of the files and can post them as needed (there are too many to post right now).

Seminal or Major Papers

@inproceedings{lerner2003structure,
  title={The structure and performance of patent pools: empirical evidence},
  author={Lerner, J. and Strojwas, M. and Tirole, J.},
  booktitle={2010-01-03]. http://evan. lunarmania. com/idei002/doc/conf/sic/papers-2003/tirole2. pdf},
  year={2003},
  abstract={Firms share their intellectual property with rivals in many ways, including through cross-licensing, standard setting organizations, patent pools, technical publications, and open source projects. Despite the prevalence of such behavior, particularly in high-technology industries, such strategies have attracted little empirical or theoretical scrutiny from economists. This paper seeks to address this omission, empirically examining one knowledgesharing institution: the patent pool. Patent pools can be defined as formal or informal organizations where for-profit firms share patent rights with each other.1 A companion paper examines these institutions from a theoretical perspective.},
  filename={Lerner Strojwas Tirole (2003) - The Structure And Performance Of Patent Pools Empirical Evidence.pdf}
}

@article{lerner2007design,
  title={The design of patent pools: The determinants of licensing rules},
  author={Lerner, J. and Strojwas, M. and Tirole, J.},
  journal={The RAND Journal of Economics},
  volume={38},
  number={3},
  pages={610--625},
  year={2007},
  publisher={Wiley Online Library},
  abstract={Patent pools are an important but little-studied economic institution. In this article, we first make a set of predictions about the licensing terms associated with patent pools. The theoretical framework predicts that (i) pools consisting of complementary patents are more likely to allow members to engage in independent licensing and (ii) the requirement that firms license patents to the pool (grantbacks) should be associated with pools that consist of complements and allow independent licensing. We then examine the terms of 63 pools, and show that licensing rules are consistent with these hypotheses.},
  filename={Lerner Strojwas Tirole (2007) - The Design Of Patent Pools The Determinants Of Licensing Rules.pdf}
}

@techreport{lerner2003cooperative,
  title={Cooperative marketing agreements between competitors: evidence from patent pools},
  author={Lerner, J. and Tirole, J. and Strojwas, M.},
  year={2003},
  institution={National Bureau of Economic Research},
  abstract={On numerous occasions, rival firms seek to market goods together, particularly in high-technology industries. This paper empirically examines one such institution: the patent pool. The analysis highlights five findings consistent with the theoretical predictions: (a) pools involving substitute patents are unlikely to allow pool members to license patents independently, consistent with our earlier theoretical work; (b) independent licensing is more frequently allowed when the number of members in the pool grows, which may reflect the increasing challenges that reconciling users? differing technological agendas pose in large pools; (c) larger pools are more likely to have centralized control of litigation, which may reflect either the fact that the incentives for individual enforcement in large pools are smaller or that large pools are more likely to include small players with limited enforcement capabilities; (d) third party licensing is more common in larger pools, consistent with suggestions that such pools were established primarily to resolve the bargaining difficulties posed by overlapping patent holdings; and (e) during the most recent era, when an intense awareness of antitrust concerns precluded many competition-harming patent pools, more important patents were selected for pools and patents selected for pools were subsequently more intensively referenced by others.},
  filename={Lerner Tirole Strojwas (2003) - Cooperative Marketing Agreements Between Competitors.pdf}
}

@techreport{lerner2002efficient,
  title={Efficient patent pools},
  author={Lerner, J. and Tirole, J.},
  year={2002},
  institution={National Bureau of Economic Research},
  abstract={The paper builds a tractable model of a patent pool, an agreement among patent owners to license a set of their patents to one another or to third parties. It Þrst provides a necessary and sufficient condition for a patent pool to enhance welfare. It shows that requiring pool members to be able to independently license patents matters if and only if the pool is otherwise welfare reducing, a property that allows the antitrust authorities to use this requirement to screen out unattractive pools. The paper then undertakes a number of extensions: cases where patents differ in impor- tance, where asymmetric blocking patterns exist, and where licensors are also licencees. We also undertake some initial explorations of the impact of pools on innovation. We conclude by showing that the analysis has broader applicability than pools, as it is also relevant to a number of co-marketing arrangements.},
  filename={Lerner Tirole (2002) - Efficient Patent Pools.pdf}
}

@article{brenner2009optimal,
  title={Optimal formation rules for patent pools},
  author={Brenner, S.},
  journal={Economic Theory},
  volume={40},
  number={3},
  pages={373--388},
  year={2009},
  publisher={Springer},
  abstract={Patent pools in the framework of Lerner and Tirole (2004) may enhance or reduce social welfare. This paper presents a pool formation mechanism which prevents welfare decreasing pool equilibria to emerge, and which encourages welfare enhancing pools to form. In order to destabilize welfare decreasing pools, forcing coalitions members to offer individual licenses in parallel to the pool has been suggested. I show that in general, this mechanism is not an efficient antitrust tool. However, the mechanism combined with exclusive pool membership avoids stability problems of welfare enhancing pools, while it creates instability of welfare decreasing pools.},
  filename={Brenner (2009) - Optimal Formation Rules For Patent Pools.pdf}
}

Papers Making Our Arguments

Endogeneous Selection of Patents into Pools

Layne-Farrar and Lerner (2011) uses both pool and non-pool data

@article{layne2011join,
  title={To join or not to join: examining patent pool participation and rent sharing rules},
  author={Layne-Farrar, A. and Lerner, J.},
  journal={International Journal of Industrial Organization},
  volume={29},
  number={2},
  pages={294--303},
  year={2011},
  publisher={Elsevier},
  abstract={In recognition that participation in modern patentpools is voluntary, we present empirical evidence on participation rates and the factors that drive the decision to join a pool, including the profit sharing rules adopted by the pool's founders. In most participation contexts, the at-risk group is extremely difficult, if not impossible, to identify. For pools centered on technologies that result from a standard-setting process, in contrast, we are able to identify a relatively unambiguous population of patents eligible for inclusion but that have not been included in the pool. We find that vertically integrated firms, with patents and downstream operations, are more likely to join a patentpool and among those firms that do join, those with relatively symmetric patent contributions (in terms of value) to a standard appear more likely to accept numeric patent share rules for dividing royalty earnings.},
  filename={LayneFarrar Lerner (2011) - To Join Or Not To Join.pdf}
}

@article{aoki2005coalition,
  title={Coalition formation for a consortium standard through a standard body and a patent pool: Theory and evidence from MPEG2, DVD and 3G},
  author={Aoki, R. and Nagaoka, S.},
  journal={Institute of Innovation Research Working Paper, WP},
  pages={05--01},
  year={2005},
  abstract={We examine why cooperation among essential patent holders for a standard may not occur, despite significant gains for patent holders and users of the standard. Utilizing Maskin's (2003) framework, we show that a grand coalition... We also show that a firm specialized in research is more likely to become an outsider. We discuss the MPEG2, DVD and 3G patent pools in light of these results.},
  filename={Aoki Nagaoka (2005) - Coalition Formation For A Consortium Standard Through A Standard Body And A Patent Pool.pdf}
}

Vertical Integration

@article{kim2004vertical,
  title={Vertical structure and patent pools},
  author={Kim, S.H.},
  journal={Review of Industrial Organization},
  volume={25},
  number={3},
  pages={231--250},
  year={2004},
  publisher={Springer},
  abstract={It is well known that patent pools can enhance efficiency by eliminating the complements problem. This paper investigates how the presence of vertically integrated firms affects the economic impact of a patent pool. Without a patent pool, the presence of integrated firms may either increase or decrease the final product price as there are two countervailing effects: reduced double marginalization and raising rivals’ costs. However, when there is a patent pool, vertical integration always lowers the final product price. In conclusion, the economic efficiency arguments for patent pools are enhanced when some firms are vertically integrated.},
  filename={Kim (2004) - Vertical Structure And Patent Pools.pdf}
}

@misc{
  author={Schmidt,Klaus M.},
  year={2008},
  title={Complementary Patents and Market Structure},
  journal={CEPR Discussion Papers},
  note={TY: GEN; Copyright - Information provided in collaboration with the RePEc Project: RePEc; Date revised - 2009-05-01; Language of summary - English; ProQuest ID - 56898074; Corporate institution author - Schmidt, Klaus M; DOI - econlit-1031237; 1031237; 0265-8003},
  language={English},
  url={http://search.proquest.com/docview/56898074?accountid=14496},
  abstract={Many high technology goods are based on standards that require access to several patents that are owned by different IP holders. We investigate the royalties chosen by IP holders under different market structures. Vertical integration of an IP holder and a downstream producer solves the double mark-up problem between these firms. Nevertheless, it may raise royalty rates and reduce output as compared to non-integration. Horizontal integration of IP holders (or a patent pool) solves the complements problem but not the double mark-up problem. Vertical integration discourages entry and reduces innovation incentives, while horizontal integration always encourages entry and innovation.},
  filename={Schmidt (2008) - Complementary Patents And Market Structure.pdf}
}

Upstream/Downstream participants

@misc{
  author={Gallini,Nancy},
  year={2012},
  title={Promoting Competition by Coordinating Prices: When Rivals Share Intellectual Property},
  journal={UBC Department of Economics, UBC Departmental Archives, 2012, 56 pp.},
  pages={56-56},
  note={TY: GEN; Copyright - Information provided in collaboration with the RePEc Project: RePEc; Date revised - 2012-04-01; Language of summary - English; Pages - 56; ProQuest ID - 1009122607; Corporate institution author - Gallini, Nancy; DOI - econlit-1292194; 1292194},
  language={English},
  url={http://search.proquest.com/docview/1009122607?accountid=14496},
  abstract={The paper examines technology agreements and the standards process from which they emerge when members supply inputs to the alliance while simultaneously competing with it. Under this overlapping ownership structure, pool members are horizontally related. I show that strategic complementarity between the downstream products owned by a member and those arising from the collaboration is sufficient for a pool to be pro-competitive. Although patent pools are more efficient than uncoordinated pricing, consumers are better off if an outside firm rather than a pool member owns the non-pool competing product. Antitrust rules facilitating efficient IP agreements under overlapping ownership and their implications for the direction of technological change are derived.},
  filename={Gallini (2012) - Promoting Competition By Coordinating Prices.pdf}
}

Complements/Holdup/Royalty-Stacking in Pools

Santore et al. (2010) uses an experiment

@article{2010,
  jstor_articletype = {research-article},
  title = {Patent Pools as a Solution to Efficient Licensing of Complementary Patents? Some Experimental Evidence},
  author = {Santore, Rudy and McKee, Michael and Bjornstad, David},
  journal = {Journal of Law and Economics},
  jstor_issuetitle = {},
  volume = {53},
  number = {1},
  jstor_formatteddate = {February 2010},
  pages = {pp. 167-183},
  url = {http://www.jstor.org/stable/10.1086/600078},
  ISSN = {00222186},
  language = {English},
  year = {2010},
  publisher = {The University of Chicago Press for The Booth School of Business of the University of Chicago and The University of Chicago Law School},
  copyright = {Copyright © 2010 The University of Chicago},
  abstract={Production requiring licensing groups of complementary patents implements a coordination game among patent holders, who can price patents by choosing among combinations of fixed and royalty fees. Summed across patents, these fees become the total producer cost of the package of patents. Royalties, because they function as excise taxes, add to marginal costs, resulting in higher prices and reduced quantities of the downstream product and lower payoffs to the patent holders. Using fixed fees eliminates this inefficiency but yields a more complex coordination game in which there are multiple equilibria, which are very fragile in that small mistakes can lead the downstream firm to not license the technology, resulting in inefficient outcomes. We report on a laboratory market investigation of the efficiency effects of coordinated pricing of patents in a patent pool. We find that pool-like pricing agreements can yield fewer coordination failures in the pricing of complementary patents.},
  filename={Santore McKee Bjornstad (2010) - Patent Pools As A Solution To Efficient Licensing Of Complementary Patents Some Experimental Evidence.pdf}
}

Complements/Holdup/Royalty-Stacking (Patents, mentioning pools)

@article{lemley2006patent,
title={Patent holdup and royalty stacking},
author={Lemley, M.A. and Shapiro, C.},
journal={Tex. L. Rev.},
volume={85},
pages={1991},
year={2006},
publisher={HeinOnline},
abstract={We study several interconnected problems that arise under the current U.S. patent system when a patent covers one component or feature of a complex product. This situation is common in the information technology sector of the economy. Our analysis applies to cases involving reasonable royalties, but not lost profits. First, we show using bargaining theory that the threat to obtain a permanent injunction greatly enhances the patent holder’s negotiating power, leading to royalty rates that exceed a natural benchmark range based on the value of the patented technology and the strength of the patent. Such royalty overcharges are especially great for weak patents covering a minor feature of a product with a sizeable price/cost margin, including products sold by firms that themselves have made substantial R&D investments. These royalty overcharges do not disappear even if the allegedly infringing firm is fully aware of the patent when it initially designs its product. However, the hold-up problems caused by the threat of injunctions are reduced if courts regularly grant stays to permanent injunctions to give defendants time to redesign their products to avoid infringement when this is possible. Second, we show how hold-up problems are magnified in the presence of royalty stacking, i.e., when multiple patents read on a single product. Third, using third-generation cellular telephones and Wi-Fi as leading examples, we illustrate that royalty stacking can become a very serious problem, especially in the standard-setting context where hundreds or even thousands of patents can read on a single product standard. Fourth, we discuss the use of “reasonable royalties” to award damages in patent infringement cases. We report empirical results regarding the measurement of “reasonable royalties” by the courts and identify various practical problems that tend to lead courts to over-estimate “reasonable royalties” in the presence of royalty stacking. Finally, we make suggestions for patent reform based on our theoretical and empirical findings.},
filename={Lemley Shapiro (2006) - Patent Holdup And Royalty Stacking.pdf}
}

@article{lemley2007ten,
  title={Ten things to do about patent holdup of standards (and one not to)},
  author={Lemley, M.A.},
  journal={BCL Rev.},
  volume={48},
  pages={149},
  year={2007},
  publisher={HeinOnline},
  abstract={A central fact about the information technology sector is the multiplicity of patents that innovators must deal with. Indeed, hundreds of thousands of patents cover semiconductor, software, telecommunica- tions, and Internet inventions. Because of the nature of information technology, innovation often requires the combination of a number of different patents. Currently, various features of the patent system facili- tate holdup, particularly in the standard-setting context. These features include insufficient discounting in damages for patent infringement and the resultant inflated demands for royalties, the low standard of proof for willful infringement, which allows patentees to recover treble damages, and the threat of injunctive relief. Frequently, innovators make irreversible investments in their development of new technology, only to have those investments used against them as a bargaining chip by existing patent holders. This Article suggests five steps that standard- setting organizations may take to reduce the problem of patent holdup and five ways the law should change to deal with the problem.},
  filename={Lemley (2007) - Ten Things To Do About Patent Holdup Of Standards And One Not To.pdf}
}

@article{hall2007empirical,
  title={An empirical analysis of patent litigation in the semiconductor industry},
  author={Hall, B.H. and Ziedonis, R.},
  journal={University of California at Berkeley working paper},
  year={2007},
  publisher={Citeseer},
  abstract={Semiconductor firms sell products that embed hundreds if not thousands of patented inventions, elevating concerns about patent-related hold-up in this sector. This paper examines the incidence and nature of patent lawsuits involving 136 dedicated U.S. semiconductor firms between 1973 and 2001. By supplementing patent litigation data with information drawn from archival sources, we estimate the probability that firms will be involved in patent lawsuits, either as enforcers of exclusionary rights or as targets of litigation filed by other patent owners. We further distinguish between disputes that involve product-market rivals and those that do not. Overall, we find little evidence that semiconductor firms have adopted a more aggressive stance towards patent enforcement since the 1970s, despite the effective strengthening of U.S. patent rights in the 1980s and widespread entry by small firms. In fact, their litigation rate as enforcers of patents remains relatively stable over the past two decades once we control for factors such as the number of patents they own and changes in R&D spending. In striking contrast, we find an escalation in their baseline risk as targets of litigation brought by outside patent owners.},
  filename={Hall Ziedonis (2007) - An Empirical Analysis Of Patent Litigation In The Semiconductor Industry.pdf}
}

@article{shapiro2010injunctions,
  title={Injunctions, Hold-Up, and Patent Royalties},
  author={Shapiro, C.},
  journal={American Law and Economics Review},
  volume={12},
  number={2},
  pages={509--557},
  year={2010},
  publisher={Oxford University Press},
  abstract={A simple model is developed to study royalty negotiations between a patent holder and a downstream firm whose product is more valuable if it includes a feature covered by the patent. The downstream firm must make specific investments to develop, design, and sell its product before patent validity and infringement will be determined. The hold-up component of the negotiated royalties is greatest for weak patents covering a minor feature of a product with a high margin between price and marginal cost. For weak patents, the hold-up component of negotiated royalties remains unchanged even if negotiations take place before the downstream firm designs its product. The analysis has implications for the use of injunctions in patent infringement cases.},
  filename={Shapiro (2010) - Injunctions Hold Up And Patent Royalties.pdf}
}

@article{2007,
  jstor_articletype = {research-article},
  title = {Standard Setting, Patents, And Hold-Up},
  author = {Farrell, Joseph and Hayes, John and Shapiro, Carl and Sullivan, Theresa},
  journal = {Antitrust Law Journal},
  jstor_issuetitle = {},
  volume = {74},
  number = {3},
  jstor_formatteddate = {2007},
  pages = {pp. 603-670},
  url = {http://www.jstor.org/stable/27897562},
  ISSN = {00036056},
  language = {English},
  year = {2007},
  publisher = {American Bar Association},
  copyright = {Copyright © 2007 American Bar Association},
  abstract={Standard setting raises a variety of antitrust issues. Cooperative stan dard setting often involves horizontal competitors agreeing on certain specifications of the products they plan to market, implicating core anti trust issues regarding the boundary between cooperation and collusion. The American Bar Association's Handbook on the Antitrust Aspects of Stan dards Setting presents legal analysis of many such issues.1 Shapiro and Varian discuss business strategy in standard setting, and Shapiro ad dresses the boundary between cooperative standard setting and collu sion.2 This article focuses on a problem that the ABA Handbook labels "pat ent ambush"3 and that economists call "opportunism" or "hold-up." In very broad terms, opportunism or hold-up arises when a gap between economic commitments and subsequent commercial negotiations en ables one party to capture part of the fruits of another's investment...},
  filename={Farrell Hayes Shapiro Sullivan (2007) - Standard Setting Patents And Hold Up.pdf}
}

Network effects (Licensing and Adoption)

@article{fosfuri2004licensing,
  title={The Licensing Dilemma: understanding the determinants of the rate of licensing},
  author={Fosfuri, A.},
  journal={N{\textordmasculine}.: Workings Paper. Bussiness Economics 2004-07},
  year={2004},
  abstract={Licensing entails a tradeoff: licensing payments net of transaction costs (revenue effect) have to be balanced against the lower price-cost margin and/or reduced market share that the increased competition (profit dissipation effect) from the licensee implies. We argue that the presence of multiple technology holders, who compete in the market for technology, changes such tradeoff and triggers a more aggressive licensing behavior. To test our theory we analyze technology licensing by large chemical firms during the period 1986-96. We find that the rate of licensing is initially increasing and then decreasing in the number of potential technology suppliers, negatively related to the licensor’s market share and to the degree of product differentiation.},
  filename={Fosfuri (2004) - The Licensing Dilemma.pdf}
}

@article{shapiro1985patent,
  title={Patent licensing and R \& D rivalry},
  author={Shapiro, C.},
  journal={The American Economic Review},
  volume={75},
  number={2},
  pages={25--30},
  year={1985},
  publisher={JSTOR},
  abstract={It is widely recognized that long-run industrial performance is influenced not only by static efficiency, but also by the rate of technological progress. The single most important factor determining the rate of technological progress in a given industry is the level of industrywide expenditures on research and development (R&D) activities. Another critical factor in determining the rate of technological progress is the rate of diffusion of new technologies. The pattern of diffusion influences the pace of technological progress in two ways. First, it directly affects the costs of noninnovating firms and hence the speed with which technological advances are utilized throughout an industry. Second, it feeds back onto the incentives of firms to engage in R&D. It is useful to distinguish these two types of effects; I will call the first the ex post effect of diffusion and the second the ex ante effect. There are three basic channels through which dissemination takes place: patent licensing, research joint ventures, and imitation. Licensing is a voluntary form of dissemination whereby an inventor can enjoy at least some of the gains to trade from spreading the use of his superior technology. Research joint ventures (RJVs) are a way of agreeing to share research results before they are realized, a type of "ex ante licensing." Imitation is a form of diffusion over which the patentee has little control; noninnovating firms unilaterally appropriate some of the benefits of the discovery.},
  filename={Shapiro (1985) - Patent Licensing And R And D Rivalry.pdf}
}

Know-how/Show-how

@article{arora1996contracting,
  title={Contracting for tacit knowledge: the provision of technical services in technology licensing contracts},
  author={Arora, A.},
  journal={Journal of Development Economics},
  volume={50},
  number={2},
  pages={233--256},
  year={1996},
  publisher={Elsevier},
  abstract={Recent research on the economic payoff from new technology has emphasized the importance of tacit knowledge or know-how. This paper shows that arm's length contract can overcome the problems in contracting for know-how by bundling complementary inputs with know-how in a technology package, and leveraging the superior enforceability of contracts over the latter. In the empirical part of this paper, the relationship between bundling and transfer of know-how is analyzed, using Indian data. The results imply that tied sales of inputs may increase the efficiency of contracts involving the transfer of know-how. A striking result, in the context of the current North-South debates on intellectual property rights, is the packaging of patents with know-how.},
  filename={Arora (1996) - Contracting For Tacit Knowledge.pdf}
}

@article{trombinioptimal,
  title={Optimal pricing scheme in technology licensing: empirical evidence from the pharmaceutical industry},
  author={Trombini, G.},
  year={2011},
  abstract={abstract={Drawing on agency theory and theory of innovation, the study empirically examines determinants of optimal pricing scheme in technology licensing. We posit that firms’ choice between fixed versus variable payments is contigent on both licensed technology and partners’ features. The analysis relies on a dataset of 266 licensing contracts signed in the biopharmaceutical industry between 1985 and 2004. Key findings suggest that royalty payments are associated to ex-ante licensing and to situations in which the licensed innovation requires specific-capital commitments by the licensee. Further, output-based payments are preferred to lump sums when the parties to the transaction have different technological competences. On the contrary, fixed payments are preferred when know-how by the licensor is transferred or when the licensee has a large knowledge stock. Finally, past relations between the licensor and the licensee mitigate risks of opportunistic behavior, leading firms to choose as optimal payment scheme a fixed compensation.}},
  filename={Trombini (2011) - Optimal Pricing Scheme In Technology Licensing.pdf}
}

@article{hegde2009imperfect,
  title={Imperfect information and contracts in the market for ideas: evidence from the licensing of biomedical inventions},
  author={Hegde, D.},
  year={2009},
  abstract={This study evaluates the influence of imperfect information on the structure of arm’s-length contracts in the market for ideas. I employ a sample of 505 licensing contracts between inventors and developers of biomedical inventions to test the predictions of hidden quality and unobservable effort theories about contractual payment terms. My analysis reveals: (a) royalty rates provide incentives for the transfer of inventors’ “tacit knowledge” or unobservable inventor effort (b) fixed fees compensate the transfer of inventors’ “codified know-how” or observable inventor effort (c) minimum royalty payments are used by informed inventors to signal their inventions’ hidden quality, and (d) milestone payments address uncertainties in the development of valuable early-stage inventions. Firms use a variety of contractual incentives to cope with the information hazards inherent in transactions of new ideas.},
  filename={Hegde (2009) - Imperfect Information And Contracts In The Market For Ideas.pdf}
}

Other Reasons For Endogeneously Selecting

Choosing Competitors

@article{rockett1990choosing,
  title={Choosing the competition and patent licensing},
  author={Rockett, K.E.},
  journal={The RAND Journal of Economics},
  pages={161--171},
  year={1990},
  publisher={JSTOR},
  abstract={This article examines licensing as a means of choosing the competitors which a patenteemonopolist will face in the period after the patent expires. The queue of entrants consists of two firms which differ in their relative "strengths" as competitors (for example, by size or level of marginal cost). By structuring the industry to be composed of "weak" competitors, the incumbent is able to prolong its dominant position in the industry after the patent expires. Examples are presented in which the evidence suggests that "choosing the competition" was an important motivation of the licensor's behavior.},
  filename={Rockett (1990) - Choosing The Competition And Patent Licensing.pdf}
}

Pool Formation Papers

With Standards

@article{aoki2004consortium,
  title={The consortium standard and patent pools},
  author={Aoki, R. and Nagaoka, S.},
  journal={The Economic Review},
  volume={55},
  number={4},
  pages={345--356},
  year={2004},
  abstract={We examine patent pools in the context of a consortium standard. Although such pools of complementary technologies are approved by antitrust authorities, the actual implementation has proved to be problematic. We identify two possible obstacles: free riding and bargaining failure. We also examine the traditional RAND (reasonable and non-discriminatory) licensing condition. We suggest formation, licensing and rent distribution methods more conducive to a successful patent pool operation.},
  filename={Aoki Nagaoka (2004) - The Consortium Standard And Patent Pools.pdf}
}

@article{simcoe2009competing,
  title={Competing on standards? Entrepreneurship, intellectual property, and platform technologies},
  author={Simcoe, T.S. and Graham, S.J.H. and Feldman, M.P.},
  journal={Journal of Economics \& Management Strategy},
  volume={18},
  number={3},
  pages={775--816},
  year={2009},
  publisher={Wiley Online Library},
  abstract={This paper studies the intellectual property strategy of firms that participate in the formal standards process. Specifically, we examine litigation rates in a sample of patents disclosed to thirteen voluntary Standard Setting Organizations (SSOs). We find that SSO patents have a relatively high litigation rate, and that SSO patents assigned to small firms are litigated more often than those of large publicly-traded firms. We also estimate a series of difference-in-differences models and find that small-firm litigation rates increase following a patent’s disclosure to an SSO while those of large firms remain unchanged or decline. We interpret this result as evidence of a “platform paradox”— while small entrepreneurial firms rely on the openness in standards to lower the fixed cost of innovation and market entry, these firms are contrastively more likely to pursue an aggressive IP strategy that can undermine the openness of the standard.},
  filename={Simcoe Graham Feldman (2009) - Competing On Standards.pdf}
}

In Response to litigation

@article{choi2003patent,
  title={Patent pools and cross-licensing in the shadow of patent litigation},
  author={Choi, J.},
  year={2003},
  abstract={Most patent pools are formed in the shadow of patent litigation as an attempt to settle disputes in regard to conflicting infringement claims and the validity of patents. To reflect this reality, I develop a simple framework to analyze the incentives to form a patent pool or engage in cross-licensing arrangements in the presence of uncertainty as to the validity and coverage of patents that makes disputes inevitable. I analyze private incentives to litigate and compare them with the social incentives. Antitrust implications of patent pools are considered. The effects of patent pools on third party incentives to challenge the validity of patents and on development incentives are also investigated.},
  filename={Choi (2003) - Patent Pools And Cross Licensing In The Shadow Of Patent Litigation.pdf}
}

Models

@article{leveque2008early,
  title={Early commitments help patent pool formation},
  author={L{\'e}v{\^e}que, F. and M{\'e}ni{\`e}re, Y.},
  journal={Cerna working paper},
  year={2008},
  abstract={This paper explores in what circumstances patent owners can be expected to join unilaterally a patent pool. We develop a simple model in which owners of patents reading on a standard grant licences to competing manufacturers. Manufacturers must sink a fixed cost to enter the market for standard compliant products, and are thus exposed to hold up when royalties are set after their entry. We show that the formation of non-cooperative patent pools nearly always fails if it takes place once manufacturers have incurred fixed costs - as is usually the case. By contrast, allowing the formation of patent pools ex ante facilitates the emergence of stable non-cooperative patent pools. Such ex ante pools yield lower prices and higher licensing profits than ex post patent pools would. We discuss the policy implications of these results concerning the credibility of licensing commitments required by standard setting bodies.},
  filename={Leveque (2008) - Early Commitments Help Patent Pool Formation.pdf}
}

@article{leveque2011patent,
  title={Patent pool formation: Timing matters},
  author={L{\'e}v{\^e}que, F. and M{\'e}ni{\`e}re, Y.},
  journal={Information Economics and Policy},
  year={2011},
  publisher={Elsevier},
  abstract={This paper addresses the problem of non-cooperative patent pool formation by owners of patents related to a standard. We develop a model in which competing manufacturers must license several patents to produce standard-compliant goods. Separate licensing creates a double-marginalization problem. Moreover manufacturers must sink a fixed cost to enter the product market, and thus face a hold-up problem if licensing takes place after their entry. In this setting, the formation of a pool fails when it takes place after entry. Instead, we show that allowing patent owners to commit ex ante on joining a pool is an effective way to trigger the emergence of a stable pool solving both the double-marginalization and hold-up problems. Therefore, patent owners should be encouraged to coordinate their licensing policies on a voluntary basis at early stages in the standard-setting process.},
  filename={Leveque (2011) - Patent Pool Formation Timing Matters.pdf}
}

@book{aoki2007formation,
  title={Formation of a Pool with Essential Patents},
  author={Aoki, R. and Nagaoka, S. and University of Auckland. Dept. of Economics},
  year={2007},
  publisher={Department of Economics, University of Auckland},
  abstract={We examine why cooperation among essential patent holders may not occur, despite significant gains for them and the users. We use the sequential coalition formation framework to show that no coalition may form when the number of patent holders is large, if a firm initiating the coalition can negotiate only sequentially and individually with the rest. Our results, complementing Ray and Vohra (1999) suggest that voluntary sequential negotiation cannot prevent the emergence of “tragedy of anticommons”, even if side payments are allowed.},
  filename={Aoki Nagaoka (2007) - Formation Of A Pool With Essential Patents.pdf}
}

@article{dequiedt2007patent,
  title={Patent pools and the dynamic incentives to R\&D},
  author={Dequiedt, V. and Versaevel, B.},
  year={2007},
  abstract={Patent pools are cooperative agreements between two or more firms to license their related patents as a bundle. In a continuous-time model of multi-stage innovations we characterize firms' incentives to perform R\&D when they anticipate the possibility of starting a pool of complementary patents, which can be essential or nonessential. A coalition formation protocol leads the first innovators to start the pool immediately after they patent the essential technologies. The firms invest more than in the no-pool case and increase the\ speed of R\&D for essential technologies as the number of patents progresses to the anticipated endogenous pool size, to the benefit of consumers. There is overinvestment in R\&D compared to a joint profit-maximization benchmark. If firms anticipate the addition of nonessential patents to the pool they reduce their R\&D efforts for the essential patents at each point in time, resulting in a slower time to market for the pooled technologies.},
  filename={Dequiedt Versaevel (2007) - Patent Pools And The Dynamic Incentives To R And D.pdf}
}

As a Solution to Bargaining Problems

@article{2009,
  jstor_articletype = {research-article},
  title = {Intellectual Property as a Bargaining Environment},
  author = {Farrell, Joseph},
  journal = {Innovation Policy and the Economy},
  jstor_issuetitle = {},
  volume = {9},
  number = {1},
  jstor_formatteddate = {2009},
  pages = {pp. 39-53},
  url = {http://www.jstor.org/stable/10.1086/592420},
  ISSN = {15313468},
  abstract = {Intellectual property policy relies on bargaining in the shadow of exclusivity. But bargaining is generically less than fully efficient, and the bargaining that would be needed to reach efficient arrangements in the shadow of exclusivity may be especially difficult in certain ways. I explore these issues and illustrate with brief discussions of patent pools and standards organizations, among others.},
  language = {English},
  year = {2009},
  publisher = {The University of Chicago Press},
  copyright = {Copyright © 2009 The National Bureau of Economic Research},,
  filename={Farrell (2009) - Intellectual Property As A Bargaining Environment.pdf}
}

Pools and Welfare

General Patent Welfare (Relating to Pools)=

@article{shapiro2003antitrust,
  title={Antitrust limits to patent settlements},
  author={Shapiro, C.},
  journal={RAND Journal of Economics},
  pages={391--411},
  year={2003},
  publisher={JSTOR},
  abstract={Patents, patent litigation, and patent settlements increasingly influence competition. Settlements of patent disputes come in many forms, including licensing and cross-licensing agreements, patent pools, mergers, and joint ventures. While frequently procompetitive, such settlements can stifle competition and harm consumers. I propose a specific antitrust rule limiting such settlements: a settlement must leave consumers at least as well off as they would have been from ongoing patent litigation. After establishing that profitable settlements satisfying this constraint generally exist, I show how this antitrust rule can be used to evaluate three types of settlements: mergers, patent pools, and negotiated entry dates.},
  filename={Shapiro (2003) - Antitrust Limits To Patent Settlements.pdf}
}

@misc{shapiro2001navigating,
  title={Navigating the patent thicket: Cross licenses, patent pools, and standard setting},
  author={Shapiro, C.},
  year={2001},
  publisher={MIT Press},
  abstract={In several key industries, including semiconductors, biotechnology, computer software, and the Internet, our patent system is creating a patent thicket: an overlapping set of patent rights requiring that those seeking to commercialize new technology obtain licenses from multiple patentees. The patent thicket is especially thorny when combined with the risk of holdup, namely the danger that new products will inadvertently infringe on patents issued after these products were designed. The need to navigate the patent thicket and holdup is especially pronounced in industries such as telecommunications and computing in which formal standard setting is a core part of bringing new technologies to market. Cross licenses and patent pools are two natural and effective methods used by market participants to cut through the patent thicket, but each involves some transaction costs. Antitrust law and enforcement, with its historical hostility to cooperation among horizontal rivals, can easily add to these transaction costs. Yet a few relatively simple principles, such as the desirability package licensing for complementary patents but not for substitute patents, can go a long way toward insuring that antitrust will help solve the problems caused by the patent thicket and by holdup rather than exacerbating them.},
  filename={Shapiro (2001) - Navigating The Patent Thicket.pdf}
}

Pools Of Substitutes Can Increase Competition

@article{kato2004patent,
  title={Patent pool enhances market competition},
  author={Kato, A.},
  journal={International Review of Law and Economics},
  volume={24},
  number={2},
  pages={255--268},
  year={2004},
  publisher={Elsevier},
  abstract={This article investigates a pool of substitute patents that enable firms to reduce marginal costs of production. Contrary to the general belief, it is shown that a pool of substitute patents may promote competition under certain conditions, thereby enhancing social welfare in the product market. The intuition is that when firms compete in licensing fees, resultant low licensing fees discourage firms from licensing to outside firms. This leads to fewer licensees than when a patentpool is formed.},
  filename={Kato (2004) - Patent Pool Enhances Market Competition.pdf}
}

Solving Incentives To Innovate

@misc{
  author={Langinier,Corinne},
  year={2006},
  title={Pool of Basic Patents and Follow-up Innovations},
  journal={Iowa State University, Department of Economics, Staff General Research Papers, 2006},
  note={TY: GEN; Copyright - Information provided in collaboration with the RePEc Project: RePEc; Date revised - 2006-08-01; Language of summary - English; ProQuest ID - 56522844; Corporate institution author - Langinier, Corinne; DOI - econlit-0857549; 0857549},
  language={English},
  url={http://search.proquest.com/docview/56522844?accountid=14496},
  abstract={Basic innovations are often fundamental to the development of applications that may be developed by other innovators. In this setting, we investigate whether patent pools can rectify the lack of incentives for developers to invest in applications. Following Green and Scotchmer (1995), we also wonder whether broad basic patents are necessary to provide enough incentives for basic innovators. We show that patent pools are more likely to be formed with patents of very different breadth, or patents of similarly wide breadth. Further, even though patent pools rectify the problem of developers' incentives, they may reduce the incentive for doing basic research.},
  filename={Langinier (2006) - Pool Of Basic Patents And Follow Up Innovations.pdf}
}

@article{wen2012openpools,
  title={Patent Pools, Thickets, and the Open Source Software Entry by Start-up Firms},
  author={Ceccagnoli, Marco and Forman, Christopher and Wen Wen},
  year={2012},
  journal={Georgia Institute of Technology working paper, January}.
  abstract={We examine the relationship between the establishment of an open source patent pool and the open source commercialization strategies of start-up firms between 1999 and 2009. Employing one major open source patent pool—the Patent Commons—as our research setting, we find that changes in the pool’s patents related to a software segment are associated with increases in the number of new open source product introductions by start-up software firms to that segment. This impact is magnified when the cumulativeness of innovation is high and when the concentration of patent ownership in the software segment is high.},
  filename={Ceccagnoli Forman Wen (2012) - Patent Pools Thickets And The Open Source Software Entry By Start Up Firms.pdf}
}

Facilitating Sequential Innovation

@article{
  author={Denicolo,Vincenzo},
  year={2002},
  title={Sequential Innovation and the Patent-Antitrust Conflict},
  journal={Oxford Economic Papers},
  volume={54},
  number={4},
  pages={649-668},
  note={Date revised - 2003-01-01; Language of summary - English; Pages - 649-668; ProQuest ID - 56189397; Corporate institution author - Denicolo, Vincenzo; DOI - econlit-0631461; 0631461; 0030-7653},
  isbn={0030-7653, 0030-7653},
  language={English},
  url={http://search.proquest.com/docview/56189397?accountid=14496},
  abstract={I examine antitrust policy in a model of cumulative innovation, arguing that collusion between successive patentees (e.g. through patent pools or cross-licensing agreements) may be socially beneficial under certain circumstances, even if the patents involved are competing rather than complementary or blocking. Collusion stimulates investment in second-generation innovations, which is welfare-improving if their social returns exceed private returns. However, it discourages investment in first-generation innovations. Thus, for the pooling of subsequent patents to be beneficial, the non-appropriable returns from the second innovation must be large and it must be costly to achieve by comparison with the first.},
  filename={Denicolo (2002) - Sequential Innovation And The Patent Antitrust Conflict.pdf}
}

@misc{
  author={Llanes,Gaston and Trento,Stefano},
  year={2010},
  title={Patent Policy, Patent Pools, And The Accumulation Of Claims In Sequential Innovation},
  journal={Unitat de Fonaments de l'Analisi Economica (UAB) and Institut d'Analisi Economica (CSIC), UFAE and IAE Working Papers, 2010, 27 pp.},
  pages={27-27},
  note={TY: GEN; Copyright - Information provided in collaboration with the RePEc Project: RePEc; Date revised - 2010-12-01; Language of summary - English; Pages - 27; ProQuest ID - 821269549; Corporate institution author - Llanes, Gaston; Trento, Stefano; DOI - econlit-1138865; 1138865},
  language={English},
  url={http://search.proquest.com/docview/821269549?accountid=14496},
  abstract={We present a dynamic model where the accumulation of patents generates an increasing number of claims on sequential innovation. We compare innovation activity under three regimes -patents, no-patents, and patent pools--and find that none of them can reach the first best. We find that the first best can be reached through a decentralized tax-subsidy mechanism, by which innovators receive a subsidy when they innovate, and are taxed with subsequent innovations. This finding implies that optimal transfers work in the exact opposite way as traditional patents. Finally, we consider patents of finite duration and determine the optimal patent length.},
  filename={Llanes Trento (2010) - Patent Policy Patent Pools And The Accumulation Of Claims In Sequential Innovation.pdf}
}

Pools and Patent Scope

@article{langinier2011patent,
  title={Patent Pool Formation and Scope of Patents},
  author={Langinier, C.},
  journal={Economic Inquiry},
  volume={49},
  number={4},
  pages={1070--1082},
  year={2011},
  publisher={Wiley Online Library},
  abstract={Basic innovations are often fundamental to the development of applications that may be developed by other innovators. In this setting, we investigate whether patent pools can rectify the lack of incentives for a developer to invest in an application. Following Green and Scotchmer (1995), we also wonder whether broad basic patents are necessary in order to provide enough incentives for basic innovators. We show that patent pools are more likely to be formed with patents of very di¤erent breadths, or patents of similarly wide breadths. Further, although patent pools rectify the problem of developer incentives, they may reduce the incentive for doing basic research.},
  filename={Langinier (2011) - Patent Pool Formation And Scope Of Patents.pdf}
}

Empricial Evidence (Historic)

@article{
  author={Lampe,Ryan and Moser,Petra},
  year={2010},
  title={Do Patent Pools Encourage Innovation? Evidence from the Nineteenth-Century Sewing Machine Industry},
  journal={Journal of Economic History},
  volume={70},
  number={4},
  pages={898-920},
  note={Date revised - 2011-01-01; Language of summary - English; Pages - 898-920; ProQuest ID - 847276809; Corporate institution author - Lampe, Ryan; Moser, Petra; DOI - econlit-1148642; 1148642; 0022-0507},
  isbn={0022-0507, 0022-0507},
  language={English},
  url={http://search.proquest.com/docview/847276809?accountid=14496},
  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. This article 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, an objectively quantifiable measure of innovation, confirm these findings.},
  filename={Lampe Moser (2010) - Do Patent Pools Encourage Innovation Evidence From The Nineteenth Century Sewing Machine Industry.pdf}
}

Policy Towards Pools

@article{2007,
  jstor_articletype = {research-article},
  title = {Public Policy toward Patent Pools},
  author = {Lerner, Josh and Tirole, Jean},
  journal = {Innovation Policy and the Economy},
  jstor_issuetitle = {},
  volume = {8},
  number = {},
  jstor_formatteddate = {2007},
  pages = {pp. 157-186},
  url = {http://www.jstor.org/stable/25056201},
  ISSN = {15313468},
  abstract = {The past two decades have seen an explosion of patent awards and litigation across a wide variety of technologies, which numerous commentators have suggested has socially detrimental consequences. Patent pools, in which owners of intellectual property share patent rights with each other and third parties, have been proposed as a way in which firms can address this patent-thicket problem. The paper discusses the current regulatory treatment of patent pools and highlights why a more nuanced view than focusing on the extreme cases of perfect complements and perfect substitutes is needed. It also highlights the importance of regulators' stance toward independent licensing, grantback policies, and royalty control. We also present case-study and large-sample empirical evidence.},
  language = {English},
  year = {2007},
  publisher = {The University of Chicago Press},
  copyright = {Copyright © 2007 The National Bureau of Economic Research},,
  filename={Lerner Tirole (2007) - Public Policy Toward Patent Pools.pdf}
}

@article{gilbert2004antitrust,
  title={Antitrust for patent pools: A century of policy evolution},
  author={Gilbert, R.J.},
  journal={Stanford Technology Law Review},
  volume={2004},
  year={2004},
  abstract={On June 26, 1997, the Department of Justice ("DOJ") issued the first in a series of business review letters dealing with antitrust risks posed by patent pooling arrangements. The first letter responded to a request by the MPEG LA group1 in connection with the group’s intention to pool and jointly license patents necessary to comply with the MPEG-2 standard.2 MPEG-2 is a digital technology for video and audio compression. Nine different entities owned patents that were essential to use the MPEG technology. The MPEG group proposed a jointly owned agent ("MPEG LA") that would license the essential patents as a single package. On December 16, 1998 and June 10, 1999, the Antitrust Division issued similar business review letters in connection with the Digital Versatile Disc ("DVD") technology.3 The letters responded to proposals to offer package licenses for patents necessary to manufacture DVDs and players in compliance with the DVD-ROM and DVDvideo formats.},
  filename={Gilbert (2004) - Antitrust For Patent Pools A Century Of Policy Evolution.pdf}
}

@article{1937,
  jstor_articletype = {research-article},
  title = {Compulsory Licensing and the Patent Pool Problem},
  author = {},
  journal = {The Yale Law Journal},
  jstor_issuetitle = {},
  volume = {46},
  number = {8},
  jstor_formatteddate = {Jun., 1937},
  pages = {pp. 1402-1406},
  url = {http://www.jstor.org/stable/792163},
  ISSN = {00440094},
  language = {English},
  year = {1937},
  publisher = {The Yale Law Journal Company, Inc.},
  copyright = {Copyright © 1937 The Yale Law Journal Company, Inc.},
  abstract={THE PATENT pool, affording reciprocal patent privileges to its members, is a common feature of industries dependent upon patents.' Whenever basic patents are controlled by interests hostile to owners of improvement patents, or numerous letters patent have been issued which mutually overlap, manufacture of the patented articles is impossible and cooperative action to break the deadlock becomes imperative.2 This cooperative action may take the form of either a pooling of patent rights by a series of cross-licensing agreements or an assignment of patents to a central unit which issues comprehensive licenses to subscribers.3 By exploitation of patents in combination the pool achieves a dominating position in the industry which may develop into a monopoly far more extensive than could be attained by independent exercise of the individual privileges4 and which may extend even beyond the ambit of protection intended by the patent laws-thereby exposing the licensing practices of the pool to attacks under the anti-trust legislation.5 The sanctions prescribed for the enforcement of the anti-trust laws appear ill adapted to resolve the problems presented by the patent pool. Injunctions by the government compelling dissolution of the pools may prove more harmful to the public than the practices sought to be condemned.6 The provision for private triple damage actions has appeared equally impotent, since strict requirements of proof make recovery difficult.7 A possible solution of the problem is suggested, however, by a recent suit for injunctive relief arising under Section 16 of the Clayton Act.8},
  filename={xxx (1937) - Compulsory Licensing And The Patent Pool Problem.pdf}
}

@article{2005,
  jstor_articletype = {research-article},
  title = {The USPTO's Proposal of a Biological Research Tool Patent Pool Doesn't Hold Water},
  author = {Iyama, Scott},
  journal = {Stanford Law Review},
  jstor_issuetitle = {},
  volume = {57},
  number = {4},
  jstor_formatteddate = {Mar., 2005},
  pages = {pp. 1223-1241},
  url = {http://www.jstor.org/stable/40040247},
  ISSN = {00389765},
  language = {English},
  year = {2005},
  publisher = {Stanford Law Review},
  copyright = {Copyright © 2005 Stanford Law Review},
  abstract={A recent report by the National Institutes of Health (NIH) announced that the granting of intellectual property (IP) rights to research tools1 "can stifle the broad dissemination of new discoveries and limit future avenues of research and product development."2 Specifically, IP rights to research tools can limit the viability of particular research scenarios because of the phenomenon known as patent thicketing.3 Patent thickets arise because of well-distributed and overlapping patent rights. Thus, a given research process will be adversely affected where a would-be investigator encounters difficulty in the assembly of utilization rights for each research tool required for the particular research scheme.4 To mitigate this problem of patent thicketing, the U.S. Patent and Trademark Office (USPTO) issued a white paper arguing for the creation of a patent pool, composed of biological research tools, to mechanically facilitate a broad licensing scheme of the necessary use rights.5 In this Comment, I argue that a patent pool is an inadequate solution to the problem of patent thicketing in the field of biological research tools. Following a background discussion in Part I on the formation of research tool patent thickets and the USPTO white paper, I will attempt in Parts II and III to elucidate the distinct characteristics of biological research in order to demonstrate that the pool's goal of "one stop patent license shopping" is simply not feasible. Specifically, in Part IV, I will show that the uncertain nature of experimental investigation creates fatal impracticalities when one is trying to identify a particular collection of patents to be included in the pool. Then, in Part V, I will argue that, even if a set of patents can be identified for inclusion in a research-tool-based patent pool, the doctrines of antitrust will render its usage impermissible. Thus, this Comment concludes that legislators and agency policymakers should not adhere to the recommendation of the USPTO white paper.},
  filename={Iyama (2005) - The Usptos Proposal Of A Biological Research Tool Patent Pool Doesnt Hold Water.pdf}
}

@article{
  author={Gallini,Nancy},
  year={2011},
  title={Private Agreements for Coordinating Patent Rights: The Case of Patent Pools},
  journal={Economia e Politica Industriale},
  volume={38},
  number={3},
  pages={5-29},
  note={Date revised - 2011-12-01; Language of summary - English; Pages - 5-29; ProQuest ID - 913437623; Corporate institution author - Gallini, Nancy; DOI - econlit-1271802; 1271802; 0391-2078},
  isbn={0391-2078, 0391-2078},
  language={English},
  url={http://search.proquest.com/docview/913437623?accountid=14496},
  abstract={Inventors and users of technology often enter into cooperative agreements for sharing their intellectual property in order to implement a standard or to avoid costly litigation. Over the past two decades, U.S. antitrust authorities have viewed pooling arrangements that integrate complementary, valid, and essential patents as having pro-competitive benefits in reducing prices, transactions costs, and the incidence of legal suits. Since patent pools are cooperative agreements, they also have the potential of suppressing competition if, for example, they harbor weak or invalid patents, dampen incentives to conduct research on innovations that compete with the pooled patents, foreclose competition from downstream product or upstream input markets, or soften competition with outside substitutes that do not rely on the pooled patents. In synthesizing the ideas advanced in the economic literature, this paper explores whether these antitrust concerns apply to pools with complementary patents and, if they do, the implications for competition policy to constrain them.},
  filename={Gallini (2011) - Private Agreements For Coordinating Patent Rights.pdf}
}

@misc{
  author={Gilbert,Richard},
  year={2009},
  title={The Essentiality Test for Patent Pools},
  journal={Competition Policy Center, Institute for Business and Economic Research, UC Berkeley, Competition Policy Center, Working Paper Series, 2009},
  note={TY: GEN; Copyright - Information provided in collaboration with the RePEc Project: RePEc; Date revised - 2011-12-01; Language of summary - English; ProQuest ID - 913430897; Corporate institution author - Gilbert, Richard; DOI - econlit-1268674; 1268674},
  language={English},
  url={http://search.proquest.com/docview/913430897?accountid=14496},
  abstract={Antitrust policy for the pooling of patents and other intellectual property rights has undergone a dramatic transformation since the first cases were decided at the beginning of the twentieth century. This transformation generally reflects developments in economics that provide a better understanding of the characteristics of patent pools that warrant antitrust scrutiny. The change, however, was slow, and the U.S. antitrust agencies did not clarify their enforcement principles with respect to patent pools until the publication by the Department of Justice and the Federal Trade Commission of Antitrust Enforcement and Intellectual Property Rights: Promoting Innovation and Competition, released in April 2007 ("IP Report").},
  filename={Gilbert (2009) - The Essentiality Test For Patent Pools.pdf}
}

@misc{
  author={Gilbert,Richard J.},
  year={2009},
  title={Ties that Bind: Policies to Promote (Good) Patent Pools},
  journal={Competition Policy Center, Institute for Business and Economic Research, UC Berkeley, Competition Policy Center, Working Paper Series, 2009},
  note={TY: GEN; Copyright - Information provided in collaboration with the RePEc Project: RePEc; Date revised - 2011-12-01; Language of summary - English; ProQuest ID - 913430925; Corporate institution author - Gilbert, Richard J; DOI - econlit-1268676; 1268676},
  language={English},
  url={http://search.proquest.com/docview/913430925?accountid=14496},
  abstract={Hundreds of patents cover products in many high technology fields such as semiconductors, information technology, and biotechnology. Firms that make, sell, or use products in these fields often have to negotiate patent rights with many intellectual property owners. The time and effort required to assemble these rights can interfere with the adoption and diffusion of new technologies and the cumulative payments to rights holders for use of their intellectual property can weigh heavily on technology costs.},
  filename={Gilbert (2009) - Ties That Bind Policies To Promote Good Patent Pools.pdf}
}

@article{flamm2012ataleoftwo,
  title={A Tale of Two Standards: Patent Pools and Innovation in the Optical Disk Drive Industry},
  author={Flamm, Kenneth},
  year={2012},
  journal={University of Texas at Austin working paper, January},
  abstract={Patent pools—arrangements to issue single common licenses to a portfolio of patents owned by multiple distinct owners—became increasingly common in high tech industry in the final decade of the last century.1 The patent system enabling these pools sits at the intersection of two sometimes conflicting objectives of economic policy. On the one hand, societies typically encourage innovation by granting temporary monopolies (i.e., patents) on new technologies, as a dynamic incentive to induce investment in R&D, the outcome of which would otherwise be difficult to appropriate by an inventor. On the other hand, once technology has been created, it is statically optimal to make it available as widely as possible at its marginal cost of transfer, which is often close to zero, a price that would offer no return to an inventor and discourage new investment in innovation. There is a fundamental tension between these two divergent goals. Patent pools further complicate this tradeoff: while antitrust policy is generally focused on discouraging coordination among producers intended to improve the exercise of their collective monopoly power, patent pools explicitly encourage such coordinated action.},
  filename={Flamm (2012) - A Tale Of Two Standards.pdf}
}

History of Pools

@article{1945,
  jstor_articletype = {research-article},
  title = {Patent Pools},
  author = {Morrow, Alexander},
  journal = {The Antioch Review},
  jstor_issuetitle = {},
  volume = {5},
  number = {3},
  jstor_formatteddate = {Autumn, 1945},
  pages = {pp. 429-439},
  url = {http://www.jstor.org/stable/4609098},
  ISSN = {00035769},
  language = {English},
  year = {1945},
  publisher = {Antioch Review, Inc.},
  copyright = {Copyright © 1945 Antioch Review, Inc.},
  abstract={AMID THE FURORE excited in recent years by the international cartel, that prevalent form of American cartel-the patent pool-has been comparatively overlooked. The domestic patent pool has exerted greater influence upon our economy. But it is not in the limelight, perhaps because its dealings have usually lacked the melodrama of secret agreements with sinister I. G. Farben. Yet an international cartel could not be establisshed if various national cartels did not exist. While, relatively, a handful of the largest corporations have participated in international cartels, many companies of varying size in nearly every American industry have set up patent pools. Indeed, most patents of value are held and administered by these pools.},
  filename={Morrow (1945) - Patent Pools.pdf}
}

@article{lampe2012patent,
  title={Patent Pools: Licensing Strategies in the Absence of Regulation},
  author={Lampe, R. and Moser, P.},
  year={2012},
  abstract={Patent pools allow competing firms to combine their patents and license them as a package to outside firms. Regulators today favor pools that license their patents freely to outside firms, making it difficult to observe the unconstrained licensing strategies of patent pools. This paper takes advantage of a unique period of regulatory tolerance during the New Deal to investigate the unconstrained licensing decisions of pools. Archival evidence suggests that - in the absence of regulation - pools may not choose to license their technologies. Eleven of 20 pools that formed between 1930 and 1938 did not issue any licenses to outside firms. Three pools granted one, two, and three licenses, respectively, to resolve litigation. Six pools issued between 9 and 185 licenses. Archival evidence suggests that these pools used licensing as a means to limit competition with substitute technologies.},
  filename={Lampe Moser (2012) - Patent Pools Licensing Strategies In The Absence Of Regulation.pdf}
}

@article{lampe2012newdeal,
  title={Patent Pools, Competition, And Innovation: Evidence From 20 U.S. Industries Under The New Deal},
  author={Lampe, R. and Moser, P.},
  year={2012},
  abstract={Patent pools have emerged as a prominent policy tool to address problems with the patent system, but their unconstrained effects on innovation are unclear. This paper examines the effects of pools that would form in the absence of effective antitrust. Difference-in-differences comparisons for pools in 20 industries indicate that industry patenting declined by 16 percent for pool technologies after a pool had formed compared with related technologies in the same industry. This decline in patenting was driven by technologies for which the pool combined patents by competing firms for substitute technologies.},
  filename={Lampe Moser (2012) - Patent Pools Competition And Innovation.pdf}
}

@techreport{moser2009compulsory,
  title={Compulsory Licensing-Evidence from the Trading with the Enemy Act},
  author={Moser, P. and Voena, A.},
  year={2009},
  institution={National Bureau of Economic Research},
  abstract={Compulsory licensing allows firms in developing countries to produce foreign-owned inventions without the consent of foreign patent owners. This paper uses an exogenous event of compulsory licensing after World War I under the Trading with the Enemy Act to examine the long run effects of compulsory licensing on domestic invention. Difference-in-differences analyses of nearly 200,000 chemical inventions suggest that compulsory licensing increased domestic invention by at least 20 percent.},
  filename={Moser Voena (2009) - Compulsory Licensing Evidence From The Trading With The Enemy Act.pdf}
}

Background on pools

@book{clark2000patent,
  title={Patent pools: a solution to the problem of access in biotechnology patents?},
  author={Clark, J. and Critharis, M. and Kunin, S.},
  year={2000},
  publisher={US Patent and Trademark Office},
  abstract={One of the biggest public concerns voiced against the granting of patents by the United States Patent Office (USPTO) to inventions in biotechnology, specifically inventions based on genetic information, is the potential lack of reasonable access to that technology for the research and development of commercial products and for further basic biological research. One possible solution lies in the formation of patent pools. Part II of this document briefly discusses public concerns about the granting of intellectual property rights to genomic inventions. Part III defines a patent pool and summarizes their history in the United States. Part IV sets forth the legal guidelines issued by the Department of Justice and the Federal Trade Commission concerning intellectual property licensing arrangements. Finally, Part V analyzes the potential benefits of forming patent pools in the biotechnology industry to both commercial entities and the public at large.},
  filename={Clark Critharis Kunin (2000) - Patent Pools.pdf}
}

@article{merges1999institutions,
  title={Institutions for intellectual property transactions: the case of patent pools},
  author={Merges, R.P.},
  journal={University of California at Berkeley Working Paper},
  year={1999},
  abstract={In this Chapter I hope to accomplish three things: briefly summarize trends in the economic theory of intellectual property rights (IPRs); describe some ideas of my own on the emergence of IPR exchange institutions, and describe how an emphasis on institutions fits into existing theory; and ground these issues in a discussion of collective IPR licensing, in particular, patent pools. I begin with a discussion of how transactions have crept into IP theory, and then turn to an examination of actual institutions that have evolved out of the need for various industries to conduct a large volume of IPR transactions.},
  filename={Merges (1999) - Institutions For Intellectual Property Transactions.pdf}
}

@book{us2010antitrust,
  title={Antitrust guidelines for the licensing of intellectual property},
  author={US Department Of Justice},
  year={2010},
  publisher={General Books},
  abstract={These Guidelines state the antitrust enforcement policy of the U.S. Department of Justice and the Federal Trade Commission (individually, "the Agency," and collectively, "the Agencies") with respect to the licensing of intellectual property protected by patent, copyright, and trade secret law, and of know-how.(2) By stating their general policy, the Agencies hope to assist those who need to predict whether the Agencies will challenge a practice as anticompetitive. However, these Guidelines cannot remove judgment and discretion in antitrust law enforcement. Moreover, the standards set forth in these Guidelines must be applied in unforeseeable circumstances. Each case will be evaluated in light of its own facts, and these Guidelines will be applied reasonably and flexibly.},
  filename={DOJ (2010) - Antitrust Guidelines For The Licensing Of Intellectual Property.pdf}
}

@book{dept2007antitrust,
  title={Antitrust enforcement and intellectual property rights: promoting innovation and competition},
  author={Dept. of Justice and Federal Trade Commission},
  year={2007},
  publisher={DIANE Publishing},
  abstract={Over the past several decades, antitrust enforcers and the courts have come to recognize that intellectual property laws and antitrust laws share the same fundamental goals of enhancing consumer welfare and promoting innovation. This recognition signaled a significant shift from the view that prevailed earlier in the twentieth century, when the goals of antitrust and intellectual property law were viewed as incompatible: intellectual property law’s grant of exclusivity was seen as creating monopolies that were in tension with antitrust law’s attack on monopoly power. Such generalizations are relegated to the past. Modern understanding of these two disciplines is that intellectual property and antitrust laws work in tandem to bring new and better technologies, products, and services to consumers at lower prices. Intellectual property laws create exclusive rights that provide incentives for innovation by “establishing enforceable property rights for the creators of new and useful products, more efficient processes, and original works of expression.”1 These property rights promote innovation by allowing intellectual property owners to prevent others from appropriating much of the value derived from their inventions or original expressions. These rights also can facilitate the commercialization of these inventions or expressions and encourage public disclosure, thereby enabling others to learn from the protected property.},
  filename={DOJ (2007) - Antitrust Enforcement And Intellectual Property Rights.pdf}
}

@article{serafino2007survey,
  title={Survey of patent pools demonstrates variety of purposes and management structures},
  author={Serafino, D.},
  journal={Knowledge Ecology International. http://keionline. org/content/view/69/1},
  year={2007},
  abstract={The collective management of intellectual property rights is a term used to describe methods of managing large portfolios of intellectual property assets, including patents, copyrights, trademarks, know-how and data. Patent pools are one such mechanism. A “patent pool” is an agreement between two or more patent owners to license one or more of their patents to one another or to third parties.2 In its 2001 White Paper on Patent Pools, the USPTO said, “A patent pool allows interested parties to gather all the necessary tools to practice a certain technology in one place, e.g, ‘one-stop shopping,’ rather than obtaining licenses from each patent owner individually.”3 The following paper provides a summary of features of 35 patent pools organized or proposed from 1856 to the present.},
  filename={Serafino (2007) - Survey Of Patent Pools Demonstrates Variety Of Purposes And Management Structures.pdf}
}

Royalty Rates

Non-pool Royalties

@article{sakakibara2010empirical,
  title={An empirical analysis of pricing in patent licensing contracts},
  author={Sakakibara, M.},
  journal={Industrial and Corporate Change},
  volume={19},
  number={3},
  pages={927--945},
  year={2010},
  publisher={Oxford Univ Press},
  abstract={We empirically examine the determinants of the price of patent licensing. We find factors affecting the profitability of patents and bargaining power of licensors and licensees are good predictors of the royalty rate of patent licensing, while proxies for the reservation price of licensors are less informative. Our findings suggest large licensors’ adverse selection to license only small and unprofitable inventions. Large, technology-intensive licensees appear to have greater bargaining power, whereas research organizations exercise weak bargaining power. More appropriable patents command higher prices.},
  filename={Sakakibara (2010) - An Empirical Analysis Of Pricing In Patent Licensing Contracts.pdf}
}

@article{contractor2011profitability,
  title={The “profitability” of technology licensing by US multinationals: A framework for analysis and an empirical study},
  author={Contractor, F.J.},
  year={2011},
  abstract={The fees or compensation charged by technology licensing companies to recipient firms overseas have long been subject to debate. Opinion has ranged from a cost-related pricing to a monopolistic pricing model where the price or compensation is considerably higher than the variable costs of effecting a transfer. The empirical study covering 102 technology licenses shows that whereas compensation levels greatly exceed transfer costs, statistically they are strongly related. Compensation levels are influenced by the extent of services rendered to the licensee and by his scale of production. Important differences were manifest between industrialized nations and LDCs, between product types, and between patented and unpatented technologies. },
  filename={Contractor (2011) - The Profitability Of Technology Licensing By Us Multinationals.pdf}
}

@article{kemmerer2008profitability,
  title={Profitability and Royalty Rates Across Industries: Some Preliminary Evidence},
  author={Kemmerer, J. and Lu, J.},
  year={2008},
  abstract={Is the licensing market efficient such that royalty rates reflect the costs and profitability across industries‘ This paper tries to answer the question through exploring the relationship between royalty rates and profitability. Our analysis shows that the reported royalty rates across industries do not converge with the rates generated by the 25% rule, although they tend to fall between 25% of gross margins and 25% of operating margins. Regression analyses indicate that there is a linear relationship between the reported royalty rates and various profitability measures, which suggests that the licensing market is efficient and that cost structure and profitability across industries have been factored into royalty rate negotiation. Therefore, the 25% rule is simply a special case of such a general linear relationship. A revisit to the data in Goldscheider et al (2002) further demonstrates that a “forced” linear fitting seems to make the average royalty rate equal to 23% of the average operating profit margin, rendering indirect support to the 25% rule. However, such a conclusion should be taken as for the purpose of illustration and contrast only, because no general linear relationship was found between the reported royalty rates and operating margins as defined by Goldscheider et al (2002).},
  filename={Kemmerer Lu (2008) - Profitability And Royalty Rates Across Industries.pdf}
}

@misc{branstetter2005stronger,
  title={Do stronger intellectual property rights increase international technology transfer? Empirical evidence from US firm-level data},
  author={Branstetter, L.G. and Fisman, R. and Foley, C.F.},
  year={2005},
  publisher={National Bureau of Economic Research Cambridge, Mass., USA},
  abstract={This paper examines how technology transfer within U. S. multinational firms changes in response to a series of IPR reforms undertaken by sixteen countries over the 1982–1999 period. Analysis of detailed firm-level data reveals that royalty payments for technology transferred to affiliates increase at the time of reforms, as do affiliate R&D expenditures and total levels of foreign patent applications. Increases in royalty payments and R&D expenditures are concentrated among affiliates of parent companies that use U. S. patents extensively prior to reform and are therefore expected to value IPR reform most. For this set of affiliates, increases in royalty payments exceed 30 percent.},
  filename={Branstetter Fisman Foley (2005) - Do Stronger Intellectual Property Rights Increase International Technology Transfer.pdf}
}

@article{becker2009royalty,
title={Royalty Rate and Industry Structure: Some Cross-Industry Evidence},
author={Becker, S. and Lu, J.},
year={2009},
abstract={This paper continues where Kemmerer and Lu (2008) left off, and explores the relationship between royalty rates and market structure among industries. Economists have studied innovation, R&D, and market structure for decades, and also have investigated patent licensing methods across industries. However, there is very little research on the relationships between market structure and royalty rates. In this paper, we first show that royalty rates are positively associated with price markup, a market power and market performance measure, and then move to explore the relationship between royalty rates and market structure. Two complementary sets of market structure factors are discussed. The first one is technology intensiveness or technology opportunity, on which we demonstrate that technology intensive sectors tend to have higher royalty rates than other sectors. The second set covers the traditional measures of barriers of entry. Regression analysis reveal that royalty rates exhibit a negative linear relationship with two measures of barriers to entry, the ratio of sales to capital invested and the ratio of sales to operating costs. Finally, cluster analysis is conducted to reveal group pattern among the industries studied, using royalty rate, markup, and the ratio of sales to capital invested as variables. The analysis yields four distinguishable groups of industries, and the characteristics of each group are discussed. Cluster analysis also corroborates our conclusion that while both traditional barriers of entry and technology intensiveness contribute to determining market power, one set of factors can exert more dominant and pronounced impact than the other one in a specific industry, as evidenced by media and internet/software sectors, in which market power is mainly created by their technology and know-how embedded in legally-protected IP.},
filename={Becker Lu (2009) - Royalty Rate And Industry Structure Some Cross Industry Evidence.pdf}
}

@inproceedings{leone2008explaining,
  title={Explaining the Remuneration Structure of Patent Licenses},
  author={Leone, M.I. and Oriani, R.},
  booktitle={Proceeding of the 2008 Annual Meeting of the Academy of Management},
  year={2008},
  abstract={The design of an appropriate remuneration structure is one of the crucial aspects of patent license negotiation. However, with few exceptions, literature about licensing has paid scarce attention to the determinants of the contractual remuneration structure. Moreover, the licensee’s perspective has been often neglected. The aim of this paper is to shed new light on the variables affecting the upfront fee that the licensee is willing to pay to enter the license. Consistently with real options theory, we consider the initial fee paid by the licensee analogous to the premium of an option to commercialize the patented technology in the future. As such, the upfront fee should be positively affected by market uncertainty and technological potential. We empirically test our hypotheses on an original sample of 124 patent licenses, finding support to our hypotheses.},
  filename={Leone Oriani (2008) - Explaining The Remuneration Structure Of Patent Licenses.pdf}
}

@article{leone2007option,
title={The option value of patent licenses},
author={Leone, M.I. and Oriani, R.},
journal={Second EPIP},
year={2007},
abstract={Patent valuation is one of the most relevant issues within the studies on the management of intellectual property rights. As firms rely more and more on external sources of innovation, the need for reliable measurements of what is traded becomes essential. Patent valuation is especially challenging primary because of the great uncertainty affecting their returns and for the lack of market-based data. The most recent and promising attempts in this research field have been developed within the real option theory (ROT), which recognizes the effect of uncertainty on patent value, and they have taken advantage of the increasing amount of information available about licenses. The aim of this paper is to propose and empirically test a valuation model of licensed patents based on ROT. According to our model, the initial fee paid by the licensee is considered analogous to the premium she is willing to pay to buy an option to commercialize the licensed patents in the future. A fundamental prediction of ROT is that this option value increases with volatility. In order analyze the relationship between volatility and the initial fee of the license, we assume that volatility is primarily determined by market and technological uncertainty. We analyse 105 patent licenses. The results of our regression model show that both market and technological uncertainty positively affect the initial fee paid for a patent license.},
filename={Leone Oriani (2007) - The Option Value Of Patent Licenses.pdf}
}

@article{sherry2004royalties,
  title={Royalties, evolving patent rights, and the value of innovation},
  author={Sherry, E.F. and Teece, D.J.},
  journal={Research Policy},
  volume={33},
  number={2},
  pages={179--191},
  year={2004},
  publisher={Elsevier},
  abstract={The value of an innovation to the innovator can change over time, especially in response to changes in the legal protection (such as patent rights) afforded the innovator. A proven-valid-and-infringed patent is a more valuable economic commodity than is an untested patent. The increase in value can be estimated using the success rate of patent lawsuits. Using a database of the outcomes of U.S. patent litigation, we find that plaintiffs win patent litigation some 45% of the time at the trial court level. This has implications both for patent damages awards and for the incentives to innovate.},
  filename={Sherry Teece (2004) - Royalties Evolving Patent Rights And The Value Of Innovation.pdf}
}

@article{leonelicensing,
  title={LICENSING AS A SOURCE OF FINANCING},
  author={Leone, M.I. and Oriani, R.},
  year={2009},
  abstract={Although the licensing phenomenon has gained attention over the last decades, the role of licensing contracts as a source of external finance for innovation has been underinvestigated by scholars so far. Empirical evidence, instead, suggests that accessing capital is among the most common reasons to out-license. In some circumstances licensors is required to further develop the licensed technology which the licensee may finance by paying an upfront fee. Thus, the need for extra finances may affect the decision of the licensor to negotiate and thus actually agree on a specific form of payment. The aim of our paper is to investigate whether financial constrained licensors are more likely to choose an upfront license and more incline to credit a portion of the initial fee against future royalties to meet their short-term financing needs. We investigate this issue by relying on a original dataset of patent licenses.}
  filename={Leone Oriani (2009) - Licensing As A Source Of Financing.pdf}
}

@article{gu2004information,
  title={The information content of royalty income},
  author={Gu, F. and Lev, B.},
  journal={Accounting Horizons},
  volume={18},
  number={1},
  pages={1--12},
  year={2004},
  publisher={AMERICAN ACCOUNTING ASSOCIATION},
  abstract={The rise of intangible assets in size and contribution to corporate growth over the past quarter century was accompanied by a steep increase in the rate and scope of patenting. Consequently, many patent-rich companies, particularly in the science- based and high-tech industries, are extensively engaged in the licensing and sale of patents. We examine various valuation and disclosure aspects of the outcome of patent licensing?royalty income. Our findings indicate the following: (1) royalty income is highly relevant to securities valuation, (2) the intensity of royalty income provides investors with an important signal about the quality and prospects of firms? R&D expenditures, and (3) a substantial number of companies engaged in patent licensing do not disclose royalty income in financial reports.},
  filename={Gu Lev (2004) - The Information Content Of Royalty Income.pdf}
}

@article{nagaoka2005determinants,
  title={Determinants of high-royalty contracts and the impact of stronger protection of intellectual property rights in Japan},
  author={Nagaoka, S.},
  journal={Journal of the Japanese and international economies},
  volume={19},
  number={2},
  pages={233--254},
  year={2005},
  publisher={Elsevier},
  abstract={This paper first reviews how Japan has strengthened the protection of intellectual property rights (IPRs), focusing on the expansion of the patentable subject matter, the restriction of the possibility of compulsory licensing, stronger deterrence against infringement and the introduction of the doctrine of equivalents. Second, based on the statistical analysis of sector-level panel data, it shows that (1) R&D intensity of domestic industry, trademark licensing, cross-licensing and, to a smaller degree, monopoly provisions are the significant determinants of the incidence of high-royalty contracts, and (2) Stronger protection of intellectual property rights looks to have increased the incidence of high-royalty contracts in the latter part of 1990s in the Japanese industries for which patent is important for appropriability.},
  filename={Nagaoka (2005) - Determinants Of High Royalty Contracts And The Impact Of Stronger Protection Of Intellectual Property Rights In Japan.pdf}
}

@article{bessy2008payment,
  title={Payment schemes in technology licensing agreements: A transaction cost approach},
  author={Bessy, C. and Brousseau, E. and Saussier, S.},
  year={2008},
  abstract={This article provides an empirical assessment of payment schemes implemented in technology licensing agreements. Using a new source of data (a French governmental database designed to observe international technology transfers) we analyze the choice of royalties vs. lump sum payments as reflecting the ex post contractual hazards that may impede the use of royalties in such agreements. Such costs evolve with the quality of the protection provided to the licensor by the institutional environment and with the nature of what is exchanged. Our empirical investigations highlight the key role played by the tastiness of the licensed knowledge and support transaction cost propositions.},
  filename={Bessy Brousseau Saussier (2008) - Payment Schemes In Technology Licensing Agreements.pdf}
}

@article{lu2012high,
  title={High Technology Royalty Survey Financial Terms: Descriptive Statistics and Analysis},
  author={Lu, J.},
  year={2012},
  abstract={The High Technology Sector of the Licensing Executives Society (U.S.A. and Canada) conducted the first deal term and royalty survey in 2011. A total of 228 licensing transactions were reported, and 220 of them included various forms of royalty payments. This article analyzes the descriptive statistics of the lump sum payments and the flat running royalty rates expressed as percentages of sales. The average of 119 transactions with sales-based percentage rates is about 6%, and the median is 5%. Lump sum payments vary drastically across transactions, and the median is about half million. The analysis further tabulates descriptive statistics by characteristics of licensor/licensee, performance of licensed products, number and type of IP licensed, field of use, technology type and development stage, and certain licensing terms such as exclusivity, co-marketing, and auxiliary payments.},
  filename={Lu (2012) - High Technology Royalty Survey Financial Terms (Slides).pdf}
}

@article{adamspatent,
  title={Patent Royalty Rates: A Look at Recent Court Decisions},
  author={Adams, III, A.F. and Center, C.F.E. and Calcagno, P.T. and Naydenova, B.},
  year={2009},
  abstract={Patent infringement cases require that a damages expert put forth a reasonable royalty calculation to assist the trier of fact in determining damages absent the ability of the patent holder to make the sales that the infringer made. Numerous factors affect the calculation of a reasonable royalty including the industry in which the patent holder operates, the market size for the product, the growth potential of the product, etc. Industry-wide averages can be a useful starting point in calculating a reasonable royalty as royalty rates in various industries exhibit distinctly different central tendencies. In this paper, we compare the results of recent Federal Appeals Court decisions involving royalty rate awards with royalty rate data from arm’s-length non-litigation sources to see if litigation results in higher royalty rates.},
  filename={Adams Center Calcagno Naydenova (2009) - Patent Royalty Rates A Look At Recent Court Decisions.pdf}
}

@article{gu2001markets,
  title={Markets in intangibles: Patent licensing},
  author={Gu, F. and Lev, B.},
  year={2001},
  abstract={The absence of organized markets in intangibles has been a major hindrance to their recognition as assets in financial reports. Economic conditions, however, change fast and markets in intangibles, particularly in patents and know-how, are operating both off and on-line (Internet). We examine various valuation and disclosure aspects of the most active of these markets - the licensing of patents and know-how - which has grown substantially in recent years. Our findings indicate that: (a) a significant nonuniformity exists in the financial reporting of royalty (licensing) income across firms, (b) royalty income is a highly relevant variable to investors, (c) in addition to being an important source of income, the intensity of patent royalties provides investors with a strong signal concerning the value and potential of R&D expenditures, and (d) given both the direct and indirect (signaling) valuation implications of royalty income, and the heightened public concern about the adequacy of information concerning intangibles, accounting standard-setters should reevaluate firms' disclosure of various aspects of patents, technology, and know-how. },
  filename={Gu Lev (2001) - Markets In Intangibles Patent Licensing.pdf}
}

University (non-pool) Royalties

@article{lach2004royalty,
  title={Royalty sharing and technology licensing in universities},
  author={Lach, S. and Schankerman, M.},
  journal={Journal of the European Economic Association},
  volume={2},
  number={2-3},
  pages={252--264},
  year={2004},
  publisher={Wiley Online Library},
  abstract={Using data for 102 U.S. universities, we show that royalty-s haringa rrangements( cash flow rights) vary substantially across universities and that they are largely unrelated to most observed universityc haracteristicsi ncluding faculty size, quality, researchf unding, technology mix of the faculty, and size of the technology licensing office. However, higher inventors' royalty shares are associated with higher licensing income at the university, controlling for other factors. The results suggest that monetary incentives from inventions have real effects in the university sector.},
  filename={Lach Schankerman (2004) - Royalty Sharing And Technology Licensing In Universities.pdf}
}

@article{scherer1998size,
  title={The size distribution of profits from innovation},
  author={Scherer, F.M.},
  journal={Annales d'Economie et de Statistique},
  pages={495--516},
  year={1998},
  publisher={JSTOR},
  abstract={This paper reports on research seeking to determine how skew the distribution of profits from technological innovation is - i.e., whether it conforms most closely to the Paretian, log normal, or some other distribution. The question is important, because high skewness makes it difficult to pursue risk-hedging portfolio strategies, and it may have real business cycle consequences. Data from several sources are examined: the royalties from U.S. university patent portfolios, the quasi rents from marketed pharmaceutical entities, the stock market returns from three large samples of high-technology venture startups, and preliminary results from a survey of German patents on which renewal fees were paid until full-term expiration in 1995. The evidence reveals a mixture of distributions, some close to log normality and some Paretian. Preliminary hypotheses about the underlying behavioral processes are advanced.},
  filename={Scherer (1998) - The Size Distribution Of Profits From Innovation.pdf}
}

@article{bulut2009us,
  title={US universities’ net returns from patenting and licensing: A quantile regression analysis},
  author={Bulut, H. and Moschini, G.C.},
  journal={Economics of Innovation and New Technology},
  volume={18},
  number={2},
  pages={123--137},
  year={2009},
  publisher={Taylor \& Francis},
  abstract={Consistent with the rights and incentives provided by the Bayh–Dole Act of 1980, US universities have increased their involvement in patenting and licensing activities through their own technology transfer offices. Only a few US universities are obtaining large returns, however, whereas others are continuing with these activities despite negligible or negative returns. We assess the US universities’ potential to generate returns from licensing activities by modeling and estimating quantiles of the distribution of net licensing returns conditional on some of their structural characteristics. We find limited prospects for public universities without a medical school everywhere in their distribution. Other groups of universities (private, and public with a medical school) can expect better but still fairly modest returns. These findings call into question the appropriateness of the revenue-generating motive for the aggressive rate of patenting and licensing by US universities.},
  filename={Bulut Moschini (2009) - Us Universities Net Returns From Patenting And Licensing.pdf}
}

@article{thursby2001objectives,
  title={Objectives, characteristics and outcomes of university licensing: A survey of major US universities},
  author={Thursby, J.G. and Jensen, R. and Thursby, M.C.},
  journal={The Journal of Technology Transfer},
  volume={26},
  number={1},
  pages={59--72},
  year={2001},
  publisher={Springer},
  abstract={This paper describes results of our survey of licensing at 62 research universities. We consider ownership, income splits, stage of development, marketing, license policies and characteristics, goals of licensing and the role of the inventor in licensing. Based on these results we analyze the relationship between licensing outcomes and both the objectives of the TTO and the characteristics of the technologies. Patent applications grow one-to-one with disclosures, while sponsored research grows similarly with licenses executed. Royalties are typically larger the higher the quality of the faculty and the higher the fraction of licenses that are executed at latter stages of development. Sponsored research is more likely to be included in a license if the new technology is at an early stage of development or if the TTO evaluates it as important. We find that additional disclosures generate smaller percentage increases in licenses, and those increases in licenses generate smaller percentage increases in royalties.},
  filename={Thursby Jensen Thursby (2001) - Objectives Characteristics And Outcomes Of University Licensing.pdf}
}

Royalty Stacking

@misc{
  author={Geradin,Damien and Layne-Farrar,Anna and Padilla,Atilano J.},
  year={2007},
  title={Royalty Stacking in High Tech Industries: Separating Myth from Reality},
  journal={CEPR Discussion Papers},
  note={TY: GEN; Copyright - Information provided in collaboration with the RePEc Project: RePEc; Date revised - 2007-03-01; Language of summary - English; ProQuest ID - 56717549; Corporate institution author - Geradin, Damien; Layne-Farrar, Anna; Padilla, Atilano Jorge; DOI - econlit-0890484; 0890484; 0265-8003},
  language={English},
  url={http://search.proquest.com/docview/56717549?accountid=14496},
  abstract={A few recent contributions have claimed that in high-tech industries--where innovation is often cumulative and products include many components which are protected by patents in the hands of many different patent holders--the cost of obtaining all necessary licenses is too high. Some have even requested sweeping policy reforms to deal with the so-called royalty stacking problem. In this Essay we find that the empirical evidence--including new evidence for the 3G telecom industry--does not corroborate the gloomy predictions of the proponents of the royalty stacking hypothesis. A careful look at the theoretical underpinnings of this hypothesis explains the lack of empirical support. First, three necessary conditions must be satisfied for a royalty stacking problem to exist: (a) innovation must be cumulative, so that the patents are complementary; (b) there must be many patents for a given product; and (c) the many patents must be held by numerous, distinct rights holders. Second, royalty stacking may not be a problem even if the three necessary conditions are met; i.e., the three necessary conditions are not sufficient. And, third, several market mechanisms, such as cross licensing or voluntary patent pools, can be used to mitigate the costs of multiple concurrent patent negotiations. We conclude that the so-called royalty stacking problem is more myth than reality and that there is no reason to adopt the dramatic reforms in antitrust and patent law that have been recently proposed by, inter alia, Lemley and Shapiro (2006).},
  filename={Geradin LayneFarrar Padilla (2007) - Royalty Stacking In High Tech Industries Separating Myth From Reality.pdf}
}

@article{geradin2008complements,
title={The complements problem within standard setting: assessing the evidence on royalty stacking},
author={Geradin, D. and Layne-Farrar, A. and Padilla Blanco, A.},
journal={Boston University Journal of Science and Technology Law, Vol. 14, No. 2, 2008},
year={2008},
abstract={Royalty stacking, the most recent incarnation of the complements problem identified in the early 1800s by French engineer Augustine Cournot, has received considerable attention. The potential for royalty stacking within standard setting efforts arises from the fact that downstream manufacturing companies can face multiple upstream gatekeepers, each of whom must grant a license to their “essential” patents before the downstream firms can legally commercialize the standard. Some authors have claimed that in high-tech industries—which are frequently characterized by cumulative innovation, dispersed ownership of patents, and cooperative standard setting efforts—the cost of obtaining all necessary licenses is too high, such that innovation has been thwarted and consumers have been harmed. In this paper, we assess the case for royalty stacking within standards and find the evidentiary support weak at best. We note that the relevant question is not whether royalty stacking is possible, as the theoretical arguments behind it have withstood the test of time, but whether it is common enough and costly enough in actuality to warrant policy changes. The available evidence suggests not, implying that any policy changes aimed at solving royalty stacking are likely to cause more (unintended) harm than they cure.},
filename={Geradin LayneFarrar PadillaBlanco (2008) - The Complements Problem Within Standard Setting.pdf}
}

FRAND in SSOs

@misc{
  author={Layne-Farrar,Anna and Padilla,Atilano J. and Schmalensee,Richard},
  year={2007},
  title={Pricing Patents for Licensing in Standard Setting Organisations: Making Sense of FRAND Commitments},
  journal={CEPR Discussion Papers},
  note={TY: GEN; Copyright - Information provided in collaboration with the RePEc Project: RePEc; Date revised - 2007-02-01; Language of summary - English; ProQuest ID - 56749553; Corporate institution author - Layne-Farrar, Anna; Padilla, Atilano Jorge; Schmalensee, Richard; DOI - econlit-0888020; 0888020; 0265-8003},
  language={English},
  url={http://search.proquest.com/docview/56749553?accountid=14496},
  abstract={We explore potential methods for assessing whether licensing terms for intellectual property declared essential within a standard setting organization can be considered fair, reasonable, and non-discriminatory (FRAND). We first consider extending Georgia-Pacific to a standard setting context. We then evaluate numeric proportionality, which is modelled after certain patent pool arrangements and which has been proposed in a pending FRAND antitrust suit. We then turn to two economic models with potential. The first--the efficient component-pricing rule (ECPR)--is based on the economic concept of market competition. The second--the Shapley value method--is based on cooperative game theory models and social concepts for a fair division of rents. Interestingly, these two distinct methods suggest a similar benchmark for evaluating FRAND licenses, but ones which might appeal differently to the courts and competition authorities in the US as compared to Europe. We find that under any approach, patents covering "essential" technologies with a greater contribution to the value of the standard and without close substitutes before the standard gets adopted should receive higher royalty payments after the adoption of the standard.},
  filename={LayneFarrar Padilla Schmalensee (2007) - Pricing Patents For Licensing In Standard Setting Organisations.pdf}
}

Useful Licensing Models

@article{kamien2002patent,
  title={Patent licensing: the inside story},
  author={Kamien, M.I. and Tauman, Y.},
  journal={The Manchester School},
  volume={70},
  number={1},
  pages={7--15},
  year={2002},
  publisher={Wiley Online Library},
  abstract={In this paper we compare and contrast the most profitable modes of licensing a cost-reducing invention by an inventor who is an industry incumbent with one who is not. We find that an industry incumbent favors licensing by means of a royalty per unit of output to which the new technology is applied while an outsider prefers to auction off a fixed number of licences outright. Our analysis also suggests that an outside inventor finds it most profitable to target greater cost-reducing inventions to monopolistic industries while an incumbent inventor favors competitive industries.},
  filename={Kamien Tauman (2002) - Patent Licensing The Inside Story.pdf}
}

@article{poddar2004patent,
  title={On patent licensing in spatial competition},
  author={Poddar, S. and Sinha, U.B.},
  journal={Economic Record},
  volume={80},
  number={249},
  pages={208--218},
  year={2004},
  publisher={Wiley Online Library},
  abstract={We consider the optimal licensing strategy of an outsider patentee as well as an insider patentee in a linear city framework where firms compete in price. We show that offering royalty is best for an outsider patentee for both drastic and non-drastic innovations. For an insider patentee, offering no license is the best when the innovation is drastic, while royalty is optimal when the innovation is non-drastic. The incentive for innovation is higher for an outsider patentee compared to an insider patentee. The overall increase in welfare due to an innovation is the same for both outsider and insider patentees.},
  filename={Poddar Sinha (2004) - On Patent Licensing In Spatial Competition.pdf}
}

@article{fauli2002welfare,
  title={Welfare reducing licensing},
  author={Fauli-Oller, R. and Sandonis, J.},
  journal={Games and Economic Behavior},
  volume={41},
  number={2},
  pages={192--205},
  year={2002},
  publisher={Elsevier},
  abstract={In this paper, we characterize situations where licensing a cost reducing innovation to a rival firm using two-part tariff contracts (a fixed fee plus a linear per unit of output royalty) reduces social welfare. We show that it occurs if (i) the firms compete in prices, (ii) the innovation is large enough but not drastic, and (iii) the goods are close enough substitutes. Moreover, we show that, regardless of the type of competition, first, the optimal contract always includes a positive royalty and, second, even drastic innovations are licensed whenever the goods are not homogeneous.},
  filename={FauliOller Sandonis (2002) - Welfare Reducing Licensing.pdf}
}

@article{aoki2001patent,
  title={Patent licensing with spillovers},
  author={Aoki, R. and Tauman, Y.},
  journal={Economics Letters},
  volume={73},
  number={1},
  pages={125--130},
  year={2001},
  publisher={Elsevier},
  abstract={We study the effect of spillover on extent of licensing of a process innovation. With spillover, increasing the number of licenses makes non-licensees more efficient in addition to increasing competition among licensees. Despite these effects, a patentee of a significant innovation will sell more licenses when there is spillover.},
  filename={Aoki Tauman (2001) - Patent Licensing With Spillovers.pdf}
}

@article{hernandez2006patent,
  title={Patent licensing revisited: Heterogeneous firms and product differentiation},
  author={Hern{\'a}ndez-Murillo, R. and Llobet, G.},
  journal={International Journal of Industrial Organization},
  volume={24},
  number={1},
  pages={149--175},
  year={2006},
  publisher={Elsevier},
  abstract={In this paper we study the optimal licensing agreement between a patentholder of a cost-reducing innovation and firms that have heterogeneous uses for the new technology. We consider the case in which these firms are competitors in a downstream market. We extend the competition environment among the licensees beyond the Cournot/Bertrand models considered by the previous literature to a framework with differentiated products. We also assume that potential licensees have private information about the usefulness of the new technology. We characterize two purposes the optimal licensing contract serves to the patentholder: separation of the licensees and competition softening in the downstream market. We also describe how the optimal contract changes with the degree of product differentiation.},
  filename={HernandezMurillo Llobet (2006) - Patent Licensing Revisited.pdf}
}

@article{toikka2000patent,
  title={Patent Licensing Under Competitive and Non-Competitive Conditions},
  author={Toikka, R.S.},
  journal={J. Pat. \& Trademark Off. Soc'y},
  volume={82},
  pages={279},
  year={2000},
  publisher={HeinOnline},
  abstract={This article considers how licensing royalties for patented inventions are determined in competitive and noncompetitive markets. The framework set out here is useful for examining both the determinants of actual royalties and of a "reasonable royalty" for damages in patent litigation 2. Beginning with Schaafsma's framework as expounded in two articles in this journal3, licensing is analyzed under the assumption that a perfectly competitive market for the patented product would exist but for the exclusionary effect of the patent. From this starting point, the analysis of special patent profit follows directly from the economics of monopoly pricing in which the patent holder can achieve a special profit, attributable to the exclusionary power of the patent, by maintaining price above cost to earn in excess of a normal profit. Licensing royalties are a vehicle by which the patent monopolist both realizes and possibly shares its special patent profit with its licensees who produce part or all of the market output of the patented product. This article examines the manner in which licensing royalties are set in both competitive and noncompetitive licensing markets.},
  filename={Toikka (2000) - Patent Licensing Under Competitive And Non Competitive Conditions.pdf}
}

Patent Pool Literature Review

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