Interesting article discussing patent pools and 4G wireless

It can be difficult for companies to design products according to a given technical standard, when that standard is protected by key patents held by different companies. The traditional approach requires the prospective licensee to negotiate individual license agreements with each patent owner, and that can be time consuming and prohibitively expensive. Patent pools provide an alternative approach, wherein the patents essential to practicing a technical standard are pooled together and managed by a licensing administrator. The licensing administrator is empowered to grant a standardized license on all patents in the pool, providing prospective licensees with a one-stop shop for licensing. In this way, patent pools provide licensing cost transparency, and greatly simplify the process of acquiring the patent licenses necessary to practice the technical standard.

Of course, a given patent pool is meaningful only to the extent that it contains all or most of the patents that are critical for a given technology. In other words, a patent pool for a given technology is not very valuable if there is a significant number of “essential” patents outside of the pool. Nonetheless, patent pools have been used successfully, such as for CD standards in the 1990s, and more recently for the MPEG2 digital video compression standards.

For an interesting perspective on how patent pools may facilitate the adoption of so called “4G” wireless technology, and the effect of such pools on patent trolls, see the article by Ned Smith in Digital Media Buzz, at: