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Do Patent Pools Encourage Innovation? Evidence from 20 U.S. Industries under the New Deal

By  |  September 29, 2012

Ryan L. Lampe (DePaul) Petra Moser (Stanford) ask Do Patent Pools Encourage Innovation? Evidence from 20 U.S. Industries under the New Deal.

ABSTRACT: Patent pools, which allow competing firms to combine their patents, have emerged as a prominent mechanism to resolve litigation when multiple firms own patents for the same technology. This paper takes advantage of a window of regulatory tolerance under the New Deal to investigate the effects of pools on innovation within 20 industries. Difference-in-differences regressions imply a 16 percent decline in patenting in response to the creation of a pool. This decline is driven by technology fields in which a pool combined patents for substitute technologies by competing firms, suggesting that unregulated pools may discourage innovation by weakening competition to improve substitutes.