Inefficiencies in Essential Patent Pool Formation; Are Pool Administrators Also Involved?

Abstract

Technology standards are becoming increasingly important in economic extent. Facilitating and building patent pools for technology standards is crucial for their success, which is done by pool adminstrators. Practitioners believe that many factors have lead to inefficiencies such as delays, failures and the inlcusion of non-essential patents in new patent pools formations. However, the potential role of expert pool administering party on these inefficiencies has not been studied yet. This paper develops a simple model of pool formation which determines the optimal strategies of a rent seeking pool administrator. The results show that pool forming strategies by the pool administrator may contribute to delays and failures in pool formation process. Also, in the environments where the essentiality claims are difficult to assess or the industries with higher pace of technology, the pool administrator may find it optimal to include the patents in the pool regardless of the essentially evaluation and launch the...