Intellectual Property Pools and the Disappearing Essentiality Requirement.

Within the United States, the Intellectual Property (IP) rights necessary to develop and commercialize a product, especially in the technology sectors, often are held by multiple, individual holders. While the statutory grant of exclusivity, created through the Patent Act and the Copyright Act, that these IP holders possess entitle them to exercise their legal monopoly against the world, often, in order for an IP holder to effectively develop, produce, and market a technology, that holder will need to either cross-license their rights with another IP holder or enter into an IP “pool” due to fact that they do not possess all of the “essential” IP rights necessary to commercialize that technology. Also, given the uncertainty of an IP right’s scope or whether that right can weather a third party challenge, the IP holder may want to cross-license or pool their rights as a means of removing “blocking” rights and minimizing costly challenges to be defended against. Over-all, IP pools are regarded as an “efficiency-enhancing” integration between not only the individual holders of the IP rights attempting to commercialize their IP but also between those entities, outside of the pool, seeking to license a larger number of IP rights in a given area of technology and those holding the IP rights.

Given the efficiency-enhancing nature of IP pools, why has the Department of Justice Antitrust Division and the Federal Trade Commission taken such an active role in overseeing the formation, through the issuance of business review letters and guidelines, of IP pools?

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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