IP leaders weigh in on what makes or breaks a patent pool

Last month IAM published its annual Global Leaders, in which many of the world’s foremost private practice patent experts reflect on their professional journeys and offer insights and guidance into career development, practice management and patent industry trends.

We grilled the IP elite on how useful they find the existing patent-pool system and what could be done to improve it. Their thoughtful responses provide fascinating insight in to where patent pools are needed, where they fall down and how they might evolve in the future.
 

There is room for further change and nuance

Patent pools of various types have evolved substantially over my career, and trends involving the creation of pools with non-profit and freedom-to-operate goals alongside for-profit pools has created a diverse range of approaches and options for both patent holders and licensees. I think there is still room for more creativity in the ecosystem for pooled or structured patent licensing that will create even more nuanced options in the future.

Edward Black, co-head of Ropes & Gray's technology, media and telecommunications practice group
 

A one-stop shop for FRAND royalties?

They are extremely useful. What would be necessary, or at least advisable, would be if such pools were construed as a one-stop-shop for a FRAND royalty, overseen by a central patent administrator. That administrator would then be responsible for regulating the mutual monetary obligations of the members of the pool as well as the licensing conditions, in a top-down-way, towards newcomers. Pools could be improved further if there were an internal mechanism for determining whether self-declared SEPs were actually essential to the standard, as well as mechanisms to determine FRAND rates by mediation/arbitration. 

Heinz Goddar, partner at BOEHMERT & BOEHMERT 
 

Further clarity is needed

Existing patent pools have proven to be effective in the past, generally for the benefit of patent contributors, licensees and, ultimately, consumers. However, there are cases where excessively high royalties are enforced through agreements between patent holders or where several different patent pools cover the same technology – both these scenarios lead to inadequate royalties and the risk that corresponding technologies might not be implemented. To better assess a patentee’s contribution to a patent pool and determine an adequate licence fee, the creation of a classification that clearly identifies the relevant portions in the standard and shows them in relation to individual patents would be useful. 

 Joel Naegerl, patent attorney at Zimmermann & Partner (Patentanwälte)
 

Self-certification can weaken a pool

Patent pools are extremely useful, as long as they are managed well, the licence fees are reasonable and the patents in the pool have been evaluated independently. We have been involved in patent pool evaluations for more than 20 years now and we see that the pools where patents are evaluated prior to entering the pool are most successful.  

Given the constant desire to reduce costs, there are, however, pools that require only self-certification by the patent owners. One can imagine that the patent owners themselves are not independent and will probably not make the best judgement call as to whether a claim is essential. This will not result in a solid pool, since it is highly likely that at least some, probably many, patents in it are not as essential as they pretend to be. 

For users of technology, the possibility of a one-stop licence is very attractive. However, this requires the pool to be as complete as possible, which appears to me a possible point of improvement for the future.

Philipe Walter, patent attorney at COHAUSZ & FLORACK
 

A solution to SEP licensing issues

Even though I am not at all an expert on patent pools, they have played a role in my litigation experience from time to time, for example, as an alternative FRAND offer of a litigating pool member compared to a bilateral licence. I think that patent pools are a great idea and are a great help in solving SEP licensing issues. Generally, pools are particularly favourable to implementers for obvious reasons, for example, Avanci licenses an enormous share of all telecommunications patents worldwide to automotive manufacturers for the price of a car wash per car. However, in my experience, I find implementers frequently prefer a bilateral licence over a pool licence, simply to get rid of litigation and pay less (until the next SEP owner knocks on the door).  

Peter-Michael Weisse, partner at Wildanger 
 

Royalty rates need to be reasonable

Patent pools can be helpful, particularly in the high-tech communication industries, to overcome barriers to entering markets and adjusting to certain standards to reduce the risk of future patent infringement. Royalty rates need to be reasonable and to allow a party to enter the market with minimal risk from those that are members of the patent pool. These could be improved by allowing independent boards to evaluate reasonable royalties and to ensure that these are an appropriate apportionment based on the patents in the pool. Using industry experts on such panels to help develop the reasonableness of rates could also be beneficial.  

Jeffrey Whittle, partner at Womble Bond Dickinson 
 

Strong assets and management create success

Patent pools are one of very many tools available to help monetise the value of patent rights. Combining resources and finding economies of scale are basic principles of business, and fundamentally, patent pools can help achieve those goals. Like any enterprise, the strength of the underlying assets and their management are the crucial determinants of success.

Chris Bakewell, managing director and global head of intellectual property advisory services at Duff and Phelps
 

Barriers to entry for smaller manufacturers must be addressed

Patent pools are useful for simplification of the standards for the process of obtaining licences to practice. Current concerns about barriers to entry for smaller manufacturers could be addressed by more inclusive provisions for patent pool participants.

Timothy Bianchi, principal at Schwegman Lundberg & Woessner