Two critical industry sectors are pooling their patent resources to achieve divergent objectives but one common goal – to prevent disputes and costly litigation. Here’s why patent pools are becoming more popular in the hi-tech sector, and potentially life-saving in pharmaceuticals.

In a patent pool, two companies or more agree to cross-license patents relating to a specific technology. Patent pools – an example of otherwise competitive parties joining in a common cause to benefit collectively – enable patentees and licensees to share their technology with each other, as well as save time and money by lowering risks of litigation and the costs of coordination. It can also be an effective way to make the invention accessible to the public.

In an interview with Harvard Business School professor, Josh Lerner, on the subject of Monetizing IP, quoted in securinginnovation.com, Lerner defined patent pools as “firms blending their patents with those of other firms,” allowing users to access other firms’ patents simultaneously and avoiding the patent thicket. By setting a pricing schedule in the pooling agreement, patent pools also ensure that pool members won’t extract high fees or increase its fees after users are locked in.

Patent pools seem to be the way to go in two industry sectors.

Equal access to medicine.

In a recent press release, the Executive Board of UNITAID announced its support of the establishment of a patent pool for medicines. The international drug purchase facility – which helps increase access to, and reduce the prices of, quality drugs in developing countries – approved the initiative to provide patients in low- and middle-income countries with increased access to more appropriate and affordable medicines.

According to representatives of MSF (Médecins Sans Frontières), a patent pool, with its portfolio of patents and other intellectual assets made available to others for production or further development, can foster competition and bring new drug prices down. It can also develop more fixed-dose combinations that combine several drugs in one pill, help speed up the availability of generic versions of new medicines since development can start well before the 20 year patent term runs out, and increase the size of the potential market because companies that produce drugs under license from the patent pool can export them to any of the countries designated by the pool’s licenses.

In such a patent pool, the patent holders receive royalties that are paid by those who use the patents. The pool manages the licenses, the negotiations with patent holders and the receipt and payment of royalties.

Accelerated adoption and deployment of technology.

In this case, this would mean the WiMAX technology. Recently, six high-tech companies – Alcatel-Lucent, Cisco, Clearwire, Intel, Samsung Electronics and Sprint – formed the Open Patent Alliance (OPA) to help their firms access WiMAX patent licenses from patent owners at a predictable cost. According to an article by W. David Gardner in informationweek.com, this is part of an effort to “smooth the development of WiMAX and avoid squabbling over intellectual property issues.”

With more consumer devices becoming based on international technology standards, OPA is poised to aggregate all the essential patents required to implement the WiMAX standard as defined by the WiMAX Forum and the IEEE 802.16e standard. It will use a third-party independent “patent referee” in selecting the patents for inclusion in its patent pool.

According to Gardner, the OPA emerged in the midst of the bitter intellectual property disputes, such as that between Qualcomm and Nokia, and is hoping to reverse this trend with a system of royalty payments to encourage companies to enter the market unrestrained by threats of litigation.

Representatives from various OPA members like Intel Capital and Sprint Nextel emphasized the importance of predictable costs for IPR for the WiMAX industry to flourish. They also made it clear that companies that join the group don’t relinquish their patents, but retain and freely use their IP rights. On the other hand, OPA will make it easier for others to license those patents.

Patent pools are not without their downside – there are anti-trust risks, for example, to such arrangements. But patent pooling may be the answer for companies trying to navigate an IP landscape that now includes public health issues, new technology standards, rising patent litigation costs and other critical issues.