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Patent Pools May Stymie Competition, Study Concludes
The National Law Journal
Patent pools bundles of patents intended to facilitate cross-licensing and steer technology into the marketplace have been touted as a way to cut litigation and transaction costs for businesses. A study released by a former Federal Trade Commission official challenges that assumption.
"While patent pools may generate some efficiencies and benefits, they may also cause anticompetitive effects like price fixing, collusion, and thwarting innovation," the official, David Balto, said in releasing his findings on Thursday.
Balto, policy director for the Bureau of Competition from 1998 to 2001, now operates from the Washington-based Law Offices of David A. Balto. He released "Barriers to Competition on the Innovation Superhighway: How the Lack of Antitrust Scrutiny of Patent Pools Deters Competition."
The document was based on his examination of FTC and the Justice Department's antitrust division's enforcement actions and guidelines, plus a 2011 DOJ investigation into the Moving Pictures Experts Group pool involving web video encoding technology.
He concluded that consortia of competitors increasingly are banding together to acquire large portfolios containing standard essential patents for their field of technology. In an interview, Balto said that some of the pools have expanded to include non-essential patents and have established rules requiring businesses to buy licenses they don't want to gain access to licenses they need.
"Some of these pools have gotten way out of hand. We really need the government to ramp up enforcement," he said.
The study noted that neither the FTC nor the Justice Department "has challenged a patent pool in over 15 years." In fact, the FTC brought the last cases against patent pools during his tenure as a competition official, Balto said.
"Hopefully this paper will be sort of a wakeup call to the antitrust division and the FTC to ramp up investigations in this area," he said.