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

Posted by D. Daniel Sokol

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.