DO PATENT POOLS ENCOURAGE INNOVATION? EVIDENCE ...

Of the 20 pools that formed between 1930 and 1938, only 9 licensed their
technologies to outside firms. Among the 9 pools that licensed, the average pool
issued licenses to 31 firms. The pool with the smallest number (lecithin) had one
licensee, the median (stamped metal wheels) had 11 licensees, and the pool with
the largest number (wrinkle finishes) had 200 licensees (Table 1). Six pools
(railroad springs, Phillips screws, stamped metal wheels, wrinkle finishes, fuse
cutouts, and ophthalmic frames) licensed voluntarily to between 10 and 200 firms.
The large majority of pools (14 out of 20) included implicit grant back
rules, implying comparable shares to 73 percent of 63 pools between 1895 and
2001 in Lerner, Strojwas, and Tirole (2007). Three other pools – textile
machinery, stamped metal wheels, and wrinkle finishes - added large number of
patents (179, 57, and 99, respectively), suggesting that they may have included
implicit grant-back rules.
Eighteen pools in our sample added patents after they had formed; the
average pool added 78 patents while it was active, the median pool added 49
patents, and the high-tension cables pool added 221 patents (growing from 73
patents in 1934 to 294 in 1948). The average pool grew by 386 percent, the
median by 50 and high tensions cables grew by 570 percent.
All pools involved at least one domestic firm; seven pools also included
foreign firms from Germany, the United Kingdom, France, Italy, Denmark, and
Switzerland.
interaction between pool*pool patents and pool members yields a coefficient of -0.014 and a
standard error of 0.027. The estimated coefficient on pool*pool patents remains negative and
significant (-0.375, significant at 1 percent level).
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