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2. What is a standardization process, an essential patent and an infringement?

2.1. Stylized facts on essential patents and the standardization process

The market benefits of pools are not fully realized and, in some cases, entirely destroyed when the burdens are not shared equally. Expecting one party to shoulder all of the costs, such as requiring litigation-grade validity and essentiality checks, leads to an abusive market position, such as, e.g., hold-out. Such tactics frustrate the market benefits that pools are intended to foster, and drive parties into the very thing patent pools were designed to prevent: litigation.

In our next article, we examine some unfounded critiques of the patent pool system, and how these misunderstandings of patent pools lead to market inequities when parties refuse to entertain licensing discussions with a pool administrator.

It has been observed that the pharmaceutical patents under the TRIPS Agreement have increased the drug prices exorbitantly, especially in developing countries. This made the patent regime itself most unpopular especially in developing countries. Right to health is the heart of the idea of CL provisions. Voluntary licenses and patent pools are promising and a new approach to delivering affordable medicines to developing and least developed countries under the TRIPS regimes of intellectual property protection. These concepts may be converted into practical realities in treating poor patients throughout the world rather than only protecting the intellectual property rights and the interest of multinational pharmaceutical companies. There must be a balancing act between the social welfare and the protection of innovation and intellectual property rights. The system of voluntary license in any form will make the medicines more affordable and faster delivery in developing country markets. The WTO members should promote voluntary agreement system at international level like MPP and through their domestic legal system with more incentives for VL. It is not an easy task for the developing countries on the background that CL is always issued when VL is denied.

Certain of the reforms noted here are worthy of consideration in particular circumstances no matter what, if anything, were to occur with global IPR reform.  

Patent Pools.  One can imagine the utility of patent pools in at least two circumstances.  First, when the existence of multiple IP owners requires coordination, particularly when the IP in question is under dispute, patent pools represent a possible solution. This has been discussed in relation to genomic and biotechnology patenting, for example, to reduce transaction costs and facilitate the bringing together of multiple gene sequence owners for DNA microarrays and diagnostic tests (Clark, et al., 2000). The worry in this context is that the high transaction costs associated with negotiating between multiple IP owners could prevent inclusion of all the necessary gene sequences for a clinically effective diagnostic test.  In global health, patent pools have most recently been discussed in relation to the production of a SARS vaccine (Simon, et al., 2005).15   

Patent Pools (Merges, 1999).  A final reform that has begun circulating in the past several years is the idea of a patent pool geared toward essential medicines.  A patent pool is an arrangement among multiple patent holders to aggregate their patents. A typical pool makes all pooled patents available to each member of the pool. Pools also usually offer standard licensing terms to licensees who are not members of the pool. In addition, the typical patent pool allocates a portion of the licensing fees to each member according to a pre‐set formula or procedure. (Merges, 1999 10‐11)

Historically, one of the more well‐known examples of a patent pool is the Manufacturer’s Aircraft Association of 1917, formed at the behest of Franklin D. Roosevelt (Dykman, 1964).  The two major patent holders at the time, the Wright‐Martin Aircraft Corporation and the Curtiss‐Burgess Airplane & Motor Corporation, Inc., could not agree upon reasonable royalties and licensing terms.  This nearly blocked the manufacture of aircraft at a time when the U.S. government was quite interested in their production (for World War I).  To this end, the federal government essentially stepped in and insisted upon the formation of a patent pool with fixed royalty rates to both corporations under threat of simply taking the patents. (Of course, patent pools can also be voluntary, not just imposed by the federal government.9)  How might a patent pool apply to essential medicines?  Consider Essential Inventions, Inc., and its recent proposal for an Essential Patent Pool for AIDS.  Under this proposal, a non‐profit entity, the EPPA, would identify patent relevant to HIV/AIDS treatment and request voluntary licensing to the pool for use in low‐income countries.  If a voluntary license is not obtained, a compulsory license would be sought.  Licensees also agree to “grantback” any rights obtained through use of EPPA patents.  Although the EPPA, were it formed, would seek to pool all patents necessary for HIV/AIDS treatment and prevention, of particular interest might be the use of multiple patents to create fixed dose combinations (FDCs) and products that for one reason or another are currently unsuitable for low income settings (e.g., the HIV drug Fuzeon, which requires sterile water for mixing, refrigeration once mixed, and then subcutaneous injection).10

In a few weeks’ time world leaders will have the opportunity to usher in a new era of multilateral cooperation on climate change. This starts with the UN climate change conference in Paris, but it does not end there. Building momentum to tackle climate change is a common challenge for us all – individually and institutionally. The broader international community, including the WTO, has to play its part. Like most economic activity, trade is often linked to carbon emissions, but the world cannot stop trading – not least as trade is essential in achieving many other shared goals. Trade can help to improve the efficiency of production, it can improve food security and, above all, it has proven to be one of the best anti-poverty tools in history. Trade played a key role in helping us reach the millennium development goal to cut extreme poverty by half – and it is a cross-cutting element in many of the new sustainable development goals agreed at the UN in September, so this work will continue. The challenge is not to stop trading but to ensure that trade is an ally in the fight against climate change. We need to create a virtuous circle of trade and environmental policies which promote sustainable production and consumption while being pro-growth and development. It is just over 20 years since the signing of the United Nations Framework Convention on Climate Change in 1992 – and it is exactly 20 years since the WTO was created. The world has witnessed a profound transformation in the debate on trade and the environment since then – and a degree of convergence between the two. While international trade flows have increased dramatically over this period, the green economy has been built into business models and investment in renewable energy has been mainstreamed. Standards and technical regulations, which are so vital for the functioning of markets and trade, have followed suit with strengthened environmental requirements. So how can we ensure that trade policy plays its full part in future? First, we must improve the dissemination of and access to climate-friendly technologies, goods and services which support the transition towards a low carbon economy. In some countries, import tariffs on products such as solar water heaters are over 20%, and wind turbines over 15% – much higher than the average tariff of 9%. Making environmental goods and services cheaper and more accessible would help countries to leapfrog outmoded technologies and move quickly to apply climate-friendly alternatives. A group of WTO members, who account for the majority of global trade in environmental goods, are negotiating an environmental goods agreement to lower their trade barriers on a number of important environmental products. Success here would help to disseminate cutting-edge technologies, such as those identified by the Intergovernmental Panel on Climate Change (IPCC), at much lower costs while also stimulating innovation and strengthening the green economy around the world. Although these tariff reductions are being taken forward by a group of WTO members, the benefits would apply to the whole WTO membership. Second, we can make trade more efficient overall. Trade is often linked to carbon emissions – particularly through international transportation. Although 80% of trade volume utilises sea transport which has the lowest level of emissions of any form of transport, there is scope to do more. The International Maritime Organisation and the International Civil Aviation Organisation are working to find a global solution to emissions in the maritime and aviation sectors – and we should support these efforts. By streamlining customs processes, we also can reduce some transport emissions and cut the energy required to keep perishable goods fresh while they wait to cross the border. The WTO’s trade facilitation agreement will deliver this while also helping businesses to grow – green businesses included – and reducing trading costs by over 14% on average, and more for the poorest countries. Associated with every environmental good is a dense value chain of other goods and services suppliers. A wind turbine, for instance, consists of more than 8,000 component parts. Cutting the time that it takes to move these parts across borders would lower costs and help make climate friendly technologies more available. I hope that green businesses will use this opportunity. The international community is facing a historic test. We must ensure that the trade, development and environmental agendas complement each other. I am optimistic that we will rise to the challenge.

Without reforms, one or more major economies could leave the WTO, as President Trump has threatened. This would cripple the other two pillars of the WTO—its negotiating and monitoring arms—which are already atrophying. The absence of the WTO could potentially lead to a proliferation of bilateral and regional trade agreements that may better address member states’ complaints on a case-by-case basis. However, a bitter disintegration of the WTO could come with a Hobbesian erosion of trust between states. Governments may opt for self-sufficiency and isolation, rather than engagement and integration. An erosion of the WTO could lead to the return of more trade barriers, loss of predictability and certainty for multinational companies and governments alike, and the absence of a credible venue to mediate trade disputes and serve binding decisions. Those developments could extract a high cost on the global economy and severely diminish global growth and economic stability for years, if not decades.

In the strategic relationship between Japan and China, however, there are problems at both the political and military–technical levels. Firstly, there seems to be minimal political understanding of, or commitment to, avoiding escalation. It is hard to tell whether Japan and China will see it as in their political interests to constrain what begins as a minor conflict. These political obstacles increase the pressure created by military considerations that encourage swift escalation, to the point at which even nuclear options seem attractive. The close military links between Japan and the US would not necessarily encourage restraint. It may be militarily logical for the US to place China in a position in which further escalation seemed tempting, while it could be politically logical for Japan to create conditions in which American action became more likely. An initial outbreak of hostilities between Japan and China over the East China Sea could remain just that: a short, contained exchange of fire and a sobering lesson that encouraged much-needed efforts to improve communication and recognise their common interest in avoiding conflict. But it might also veer out of control before they had a chance to take preventative measures. The subsequent involvement of the United States could lead to Asia’s first serious war involving nuclear-armed states. And we have no precedent to suggest how dangerous that would become.

The confidence effect of joining the WTO, which signaled China's commitment to the same global rules and principles that other countries were bound by, was the reason why trade between Japan and China, as well as Japanese investment into China, grew at a record pace throughout the 2000s even while political relations waxed and waned, deteriorating seriously at times over this period (Armstrong 2012). Bilateral state visits were suspended over the 2001–2006 period between Japan and China. During that time, political relations deteriorated significantly with episodes such as large-scale protests in China against Japan in 2005, including an attempted public boycott of Japanese goods. Yet trade both ways between Japan and China, and investment from Japan into China, grew at a record pace. The growth in interdependence, and the constraints it put on the politics, was no more evident than in 2006 when Prime Minister Abe—long known as hawkish towards China—made China his first state visit to ‘break the ice’ in bilateral relations. It also resulted in the six prime ministers who followed Abe, avoiding visits to the Yasukuni Shrine, the main factor in the poor relations during the prime ministership of Koizumi from 2001 to 2006. The recent visit by Abe to Yasukuni in 2013 in his second time as prime minister, when he appeared to have much more political capital, has reversed that course politically, but the China–Japan economic relations have not been derailed. The Sino–Japan relationship is the most striking example of economics dominating politics because of the scale and depth of economic relations and the unresolved history and political mistrust between the two countries. And it importantly explains why thus far the territorial dispute over the Senkaku/Diaoyu Islands has not derailed the economic relationship. History is littered with examples of how bad politics have dominated economic relations. One such contemporary example is the India–Pakistan relationship. Despite having a single market—with the free flow of goods, capital and people, and having the many similar institutions—prior to partition, the political divide between the two countries since has meant that Pakistan accounts for less than 1 per cent of India's trade, and India accounts for less than 5 per cent of Pakistan's trade, with estimates suggesting that trade could be as much as 10 times higher (Khan 2009). Unlike Japan and China, India and Pakistan do not have normalised economic relations. Pakistan has not granted India most favoured nation (MFN) status despite both countries being members of the WTO. This is the result of the primacy of politics between South Asia's two largest economies. And neither India nor Pakistan has committed to openness to the global economy to the extent that their East Asian neighbours have. 3. Strengths of the Global Trading System Many countries, such as Russia recently, remain keen to join the WTO. This is despite some literature that suggests that WTO membership is largely insignificant because members do not trade more or have more liberal trade policies than non-members (Rose 2004). This literature misses the fact that there is a difference between old members, especially the original signatories of the GATT, and members who joined the GATT after the conclusion of the Uruguay Round. The gains from joining the GATT/WTO largely depend on what liberalisation a country agrees to undertake during the process of its accession to the organisation (Subramanian & Wei 2007). The strict accession requirements that the United States and the European Union (EU) imposed on China in the bilateral negotiations leading up to entry in 2001 were unprecedented. They were largely because of the impact that China was already having, and was predicted to have, on the international trading system. China's rapid rise and the adjustments that had to be made were causing friction for China, its trading partners and the international economic community. More stringent rules had to be put in place in order for other WTO members to be confident that China's accession would not impact the global trading system adversely (Garnaut & Huang 2000). It is precisely because of such unprecedented concessions that the signaling effect of membership to investors and trading partners was so strong. The accession commitments were a blueprint for China's institutional change and reforms for at least a decade from 2001 (Chow 2003). Japanese investors and traders, for example, could be confident of constraints on China retreating from the global market. 3.1 Dispute Settlement A major role of the GATT/WTO is in dispute resolution and the confidence that members, including developing countries, have in fair and equal treatment. That trade disputes can be settled in a universally (among members) accepted legal setting means that retaliation and escalation do not occur outside of the WTO rules, nor do these spill over into sensitive political problems. The dispute settlement function of the WTO is active and robust. While the number of WTO panels established to resolve disputes seems to have decreased in the wake of the global financial crisis (GFC), it has rebounded strongly since 2010 (see Figure 2). The number of disputes brought against trading partners by developing countries has grown, and the number of disputes that have been resolved or upheld demonstrates the relevance and importance of the mechanism. The relative number of disputes initiated by developing nations has increased (see Figure 3) as has their relative importance in the disputes resolution space. The establishment of the Advisory Centre on WTO Law in 2001 further demonstrates the ability of the WTO to adapt in order to remain relevant to developing countries (Bown & McCulloch 2010). The WTO's legitimacy depends on its relevance to developing as well as developed country members. The recent ruling against China on its restrictions on rare earth metals exports, 2 and China's acceptance of that ruling, 3 provide considerable confidence in the disputes settlement process under the WTO. Whether China's purpose in restraining exports was for consolidation of the domestic industry and environmental reasons, the manner in which that policy was executed and the anxiety it caused the international community—especially Japan, which relied heavily on Chinese rare earth supplies—meant that the way in which the ruling was handled is an important sign of faith in the WTO. The United States, Japan, EU and China resolved the dispute peacefully in the appropriate forum without resorting to embargos, a trade war or any form of conflict. This is but one example of confidence in the WTO and its dispute settlement mechanism preventing a trade dispute from escalating into more serious conflict.

Patent pools have many benefits that can be translated into the public health and pharmaceutical sphere. Stated benefits of pools include their procompetitive nature through integration of complementary technologies, the reductions of transaction costs, clearing innovative roadblocks, and increasing the widespread sharing of technologies.115 Patent pools show their efficiency and effectiveness when “multiple patented technologies are needed to produce a standardized product . . . . [These pools] are generally recognized as mitigating the ‘holdup’ and ‘holdout’ problems that can sometimes stymie industry efforts to make a product that conforms to an industry standard.”116

Critics of patent pools note different concerns, mostly related to competition and antitrust laws. Such concerns include “distortion of competition caused by pooling competing patents.”117 While there is an inextricable tie to antitrust law and the possibility of antitrust violations with patent pools, there is unlikely to be an “anticompetitive effect[] unless (1) excluded firms cannot effectively compete in the relevant market for the good incorporating the licensed technologies and (2) the pool participants collectively possess market power.”118

Patent pools, which allow competing firms to combine their patents as if they are a single firm, have emerged as a prominent policy tool to address a key problem with the current patent system: Imperfect boundaries of intellectual property rights allow multiple firms to own mutually infringing patents for the same technology, which they use to threaten litigation and prevent each other from producing the technologies. Patent pools can mitigate this problem by allowing firms to combine their patents in a “pool” which all firms can access to produce the technology and license it to outside firms. For example, pools have been proposed to cover improvements in smart phones, tablet computers, video compression technologies, malaria and HIV drugs, and diagnostic test kits for breast cancer.

What are the mechanisms by which the creation of a patent pool may discourage innovation? Intuitively, complementarities across pool patents should encourage innovation, as the creation of a pool resolves blocking patents, mitigates litigation risks for members, and reduces license fees and transaction costs for outside firms (e.g., Shapiro 2001; Lerner and Tirole 2004). The creation of a pool may, however, also discourage innovation as it reduces competition among members to improve substitute technologies. 15 Regulators are particularly concerned that pools, which combine patents for substitute technologies “are more likely to harm social welfare and than are pools of complementary patents” (Department of Justice and Federal Trade Commission 2007). In practice, however, it is extremely difficult to identify pools of substitute patents. 16

Many patent pools offer important cost savings to their members. These savings include access to shared patent rights, immunity from challenges to patent validity, and joint funds to offset litigation and patent prosecution costs. The desire to lower costs may explain why patent holders voluntarily join licensing collectives that offer limited control over royalties, and in some cases, no royalties at all.

Nine institutions examined in this study were not structured to collect or to distribute royalties to patent holders. Instead, these groups were formed purely to reduce the risk of patent infringement litigation by requiring each member to provide every other member a royalty-free license to its covered patent rights. As one would expect, these agreements were formed by companies that were both licensors and prospective licensees — that is, they manufactured potentially infringing products but also held patents of their own.

Some standards-based patent pools have adopted more complex formulas to discourage such behavior. For instance, the RFID patent pool alters the pro rata formula such that “half of the royalties are allocated to participants based on the number of patents contributed by each participant, and the other half are allocated substantially equally among participants.” By hinging fifty percent of all royalties on the pure number of members within the group rather than the number of patents within the group, this hybrid approach could limit strategic patenting behavior. However, this formula arguably results in an even cruder division of royalties than a purely pro rata formula.

A second type of formula adopted by some groups gradually apportions fewer royalties to patents over time. The DVD patent pool, for instance, allocates royalties to patent holders on the basis of how old their patents are. According to the group’s organizers, this formula was selected to encourage contributors to license new and valuable patent rights to the collective. This approach seems to assume that older patents are always less valuable than newer ones. As such, graded royalty sharing, like pro rata distributions, appears as a rough-and-ready approximation of patent value.

Corporate issuance of dividends is a second mechanism that has been adopted to apportion royalties within patent pools. Fifteen patent pools identified in this study were corporations that acquired full ownership of patents held by their members in exchange for stock that periodically yielded dividends. Unlike the ex ante bargains described in the foregoing Part, these share-based groups were capable of directing a portion of their profits to the contributors of after acquired patent rights. However, the decisions that governed the royalties that such patents earned — e.g., the amount of stock to be offered to an inventor in exchange for a patent, the amount of a given dividend distribution, the timing of dividend distributions — were made by officers of these organizations, and not by shareholders. As a result, these share-based groups were not truly platforms or forums for collective patent valuation.

The Pneumatic Steel Corporation, a steel patent licensing group formed in the late-nineteenth century, illustrates the share-based design. The group was born from a dispute: In the late 1850s, two American investor groups acquired patent rights to the “Bessemer process” — a breakthrough in steelmaking technology. One group of investors held patents developed by Sir Henry Bessemer, the original inventor of the process. A second group held a blocking patent derived from experiments with related processes.

B. A Proposal for the Recording of Patent Pooling Agreements This Article’s findings show that private institutions have long had a significant and largely unappreciated impact on innovation incentives and returns. However, as explained in Part II, policy efforts to reform the patent system have generally focused on the institutions that define it — namely, the PTO and the Federal Circuit. In order to better encourage innovation, future patent reform efforts should be informed by the role of private institutions. To that end, I propose that Congress enact legislation that would mandate (or alternatively, encourage) the recording of patent pooling agreements with a federal agency. Patent pools are changing the rules of innovation. Our patent system is premised on the theory that innovation is encouraged by offering inventors limited monopoly pricing power. However, this study has shown that patent holders are increasingly ceding this power — sometimes in whole and sometimes just in part — to gain membership to private licensing communities. In some industries, joining such groups may be a necessary prerequisite to providing certain services or products. Consequently, the incentive to innovate is increasingly defined by private rules. Because collective patent agreements are usually private, the impact of collective action on innovation has been poorly understood. As this study has shown, the realities of collective governance are far more varied and complex than theorists have appreciated. Some patent pools are focused on lowering the cost of producing existing products. Others hold no promise of royalties but deliver important cost savings. Some patent pools may be capable of encouraging innovation, but through rough-and-ready rules rather than carefully tuned voting regimes. These insights come only from records that could be located; the true number of patent licensing collectives that have existed in the past is unknown, as are the full number and nature of any such groups that operate in secrecy today. It is striking how much will remain unknown about the internal governance of these organizations in the future if the historical lack of public reporting continues. A new law designed to encourage the recording of collective patent licenses would be an important first step in redirecting policy efforts; such a law would inform policymakers of the total number of patent licensing groups that operate in various industries, and the institutional forms such groups have adopted. With the benefit of this information, policymakers would be better able to understand how collective action influences the incentive to innovate. This knowledge will be essential to crafting new policies that maximize innovation, economic prosperity, and social welfare. What would a patent agreement recording law look like? A congressional bill proposed nearly eighty years ago provides a good model. In January of 1935, H.R. 4523 was introduced in the House of Representatives with the title “A Bill Providing for the Recording of Patent Pooling Agreements and Contracts with the Commissioner of Patents.” The core of the bill required the following: That every agreement by which rights in a plurality of patented inventions are rendered subject to common ownership, control, or enjoyment, whether by assignment, license, or otherwise . . . shall be recorded in the Patent Office within six months from the date thereof. . . . That any change or addition in the parties or patents involved in the agreements recorded as hereinbefore provided and any changes in the provisions of such agreements shall be fully set forth and duly recorded in the Patent Office within three months of the date thereof. Had this law been enacted, it would have imposed civil penalties on any person or organization that failed to comply with its provisions. However, the bill did not provide details on how compliance would be monitored. During the winter and spring of 1935, a special Committee on Patents investigated the possible usefulness of H.R. 4523 by interviewing a wide spectrum of patent holders — from some of the largest corporations in the country down to individual inventors. The Committee observed that some patent pooling arrangements are “beneficial . . . to the general public welfare,” while others are used to carry out “secret and sinister [goals] . . . prejudicial to public interest.” In its final report, the Committee concluded that “the recordation of such agreements in the United States Patent Office, and in the Federal Trade Commission would seem to be the best method of preventing such secret and sinister operations.” However, for reasons that are unclear from the legislative history the bill never advanced beyond the committee stage. If introduced today, a bill modeled on H.R. 4523 would solve several problems. First, and most importantly, such a law would provide much-needed information to policymakers. As mentioned earlier, patent reform legislation efforts have largely focused on the institutions that apportion patent rights. Patent pools, the internal structure of which is often unknown, redefine these rights in several respects. If policymakers are to make intelligent decisions, it seems they must have a clearer understanding of the impact of these private regimes. A second positive outcome of this proposal relates to its impact on contracting behavior. If such a law made patent pooling contracts available to the general public, it could indirectly place public pressure on patent holders to form pools that are forward-looking by design. By the same token, the new law would also discourage restrictive pooling agreements that slow the pace of innovation (to the extent such pools are not already prohibited by applicable antitrust law). While the foregoing reasons show why a bill like H.R. 4523 could very well gain the necessary political goodwill to be enacted into law, large patent holders might oppose a law that mandates the recording of private agreements. Thus, a gentler approach may be needed. The National Cooperative Research and Production Act (“NCRPA”) — a federal law passed in 1984 — provides a model for a more moderate approach. The law offers reduced antitrust penalties to research consortia that inform the DOJ and the Federal Trade Commission of their operations. An attorney with the DOJ who commented for this Article explained that “although the law does not require consortia to file their membership agreements under the Act, many do so in hopes of receiving favorable business reviews from the Department of Justice.” Thus, the NCRPA encourages the recording of research agreements with a carrot rather than a stick. A patent agreement recording law would do well to adopt a similar design. Drafters of a patent agreement recording law would have several important factors to consider. First, they would need to decide whether to mandate or merely encourage the recording of collective patent agreements. While a mandatory recording law could yield the most information, it might also face the greatest opposition from certain constituencies. Moreover, a mandatory recording law could spur collaborators to search for paths to cooperation that do not involve formal contracts (e.g., non-assertion pledges). This wasted activity would represent efficiency losses. For this reason, lawmakers might prefer a gentler approach that mirrors the NCRPA’s reductions in antitrust penalties in return for compliance. Compliance could also be encouraged through novel incentives such as an expedited review of patent applications submitted by members of participating organizations.

Second, lawmakers would need to decide where recorded agreements should be submitted and who would have access to them. Two prime choices are the DOJ and the PTO. The DOJ already reviews similar agreements in connection with requests for antitrust business review letters and agreements submitted in connection with the NCRPA. Moreover, if the bill proposed here were to offer a reduction in antitrust penalties, it would fall squarely within the DOJ’s purview. Thus, the DOJ appears to have a strong existing framework for receiving and analyzing patent pooling agreements. By contrast, the PTO could be a good custodian for different reasons. Unlike the DOJ, the PTO has a long history of receiving, reviewing, and storing vast collections of patent-related information. From this perspective, it could make sense for the PTO to collect related patent pooling agreements. The PTO has also long published periodic reports on patent application filings and grants. A new avenue of business for the office could be the publishing of reports on the number and nature of patent pooling agreements in operation across the country. The PTO’s institutional competency and internal resources could thus make it a strong choice for overseeing the collection of patent pooling agreements. The very existence of the NCRPA and H.R. 4523 indicates that this proposal could be both useful and achievable. To be sure, like any legislative proposal, such a bill would probably face some opposition. The most vocal opponents would likely be those with the most to lose: companies that perceive strategic advantages in keeping their patent pooling operations secret. Moreover, policing and enforcing compliance with such a law could create new administrative costs. However, as explained above, a moderate approach that solicits rather than mandates the recording of collective patent licenses should quell such criticism. At the same time, lawmakers, experts, and many industry stakeholders might rally in support of a law that would shed light on the transformative but often hidden practice of collective patent licensing.

This paper explores empirically the interplay between patent pooling and litigations using data on 1564 United States patents belonging to eight modern I.C.T. pools and to a control database with patents having the same characteristics. First, our analysis makes it possible to highlight that pool patents are more litigated than non-pool patents presenting the same characteristics. Second, we underline that the difference in the likelihood to be involved in an infringement case, with the patent holder as plaintiff, is due to a pool effect per se, on top of the impact of the pool on the market size of the patent. Third, we explore several tracks that could explain this positive pool effect on litigations. We underscore that the patent inclusion in a pool, by reducing the uncertainty on the patent essentiality, facilitates dispute resolution by settlement. We also show that the pools’ size, as measured by the number of members, has a positive effect on the number of cases which could be due to a transmission of information between members. We emphasize and discuss such other factors that affect the incentives to litigate as the size of the firm and whether the patent holder is vertically integrated. From a public policy standpoint, our results underscore the need for a higher scrutiny of the real functioning of modern I.C.T. pools by the antitrust authorities.

Implementers of standard essential technology such as Long-Term Evolution (LTE) are constantly attempting to reduce costs for implementation. This behavior has led to certain inefficiencies in the marketplace, such as innovators not being compensated for their contributions to technological standards. The symbiotic relationship between innovators and implementers cannot continue where one side takes all the risk and the other side reaps all the reward. One construct put in place by innovators to extract compensation from the marketplace are patent pools that license patents that are declared essential for technology standards.

A Brief History of Pools

It is for this reason, and the fact that damages are paid by economic and monetary means, that a solution might be to invoke the enforcement power of the WTO as a last resort forum if valid adjudicated claims go unpaid and diplomatic avenues fail. As all space-capable countries are reliant on world trade to support their economies, and as much of the space arena is morphing into commercial and commercial-like transactions, the WTO would be a familiar forum for imposing measurable economic trade sanctions to punish the liable state, and in part would compensate the damaged state.21 Enforcement under these conditions is not reliant on voluntary payment, but the sum can be extracted by the international community. As in all standing tribunals, precedent would provide clarity of what is considered a violation and what the likely consequences would be for offending actions. Intentional offenses can have a “punitive damages” approach to increase the economic impact to the offending states. Additionally, as expertise and experience grow, the costs for even large egregious actions such as the 2007 China antisatellite missile test debris field might be calculated and placed as an economic threat to any nation contemplating such action. Conclusion Nations have gone a long way to identify and deter the weaponization of space. In short, the concerns over weaponization involve the potentially destructive nature of space weapons. It is impossible to define what constitutes a space weapon, and controlling an arms race based on definitions of what constitutes a weapon is doomed to failure with the exception of those weapons clearly posing a substantial risk to humanity, such as nuclear and other weapons of mass destruction. For all other concerns, we should attempt to regulate and control the destructive behavior of nations rather than attempting to limit their technology. It is how they use their technology that matters. We will never completely prevent countries from engaging in war. However, we can bolster peaceful dispute methodologies to prevent escalation of such conflicts and provide deterrence against aggressive or irresponsible behavior. Current international agreements do not offer an enforceable means of addressing claims for destructive activity, for while there is a forum for adjudication, participation and enforcement continue to rely heavily on diplomacy. A standing committee is needed to provide a credible, knowledgeable, and equitable forum for regulating, monitoring, and adjudicating claims and disputes relating to the damage caused by objects launched into space, whether they are designed for destruction or not. A logical place for this committee would be the United Nations. As current deterrence and enforcement of adjudicated claims currently rest solely in diplomatic, or in extreme cases military, channels, a third option is needed such as using the current economic deterrence and enforcement capability of the World Trade Organization to address and collect on unresolved adjudicated state liabilities.

One way to achieve better access to new medicines is patent pools, which allow third parties to acquire non-exclusive licences for the intellectual property needed to develop products. While patent pools have existed for several decades in other fields of technology, such as in digital technologies, they are a relatively new concept in public health, where they have been applied to address some of the access challenges in low- and middle-income countries.3

To improve access to antiretroviral treatment in low- and middle-income countries, Unitaid established the Medicines Patent Pool in 2010 as the first public health patent pool. Later, the patent pool’s mandate was expanded to treatments for tuberculosis and hepatitis C. The patent pool has negotiated most of the licensing agreements with pharmaceutical companies that have enabled competitive generic manufacture of antiretrovirals in low- and middle-income countries before patent expiry. These licences have also facilitated the development of new formulations that are particularly needed in resource-constrained settings, such as certain fixed-dose combinations and paediatric formulations. To date, the patent pool’s generic partners have distributed 22 million patient-years of treatment, allowing global savings of 1.06 billion United States dollars (US$), according to a biannual analysis undertaken by a leading auditing company.4

Gu cited how coronavirus pandemic outbreak took place in an era of globalization, where people, information and resources flow through a market-oriented global system. However, when a major infectious disease occurs and its enormous negative externality causes the market-oriented global trading system fail, there is an "urgent need" for a strong international governance body to step in, said Gu. Unfortunately, effective global leadership and global collective action has not emerged from this crisis, he added. For instance, The [WHO] World Health Organization, as the coordinating body for global public health, has not had the support of some of the major powers to deal with such a major global public health crisis, said Gu. Gu called the spread of this epidemic as a crisis of global governance, not a crisis of globalization" and that the aftermath of this lack of global governance has been "disastrous." In fact, globalization has played a crucial role in the fight against the epidemic, said Gu. The world has provided China with scarce medical supplies. Likewise, when the United States and Europe situation worsened, the international community, led by China, provided much support as well. This process of mutual support therefore illustrates the importance of global production and supply chain systems in supporting global disasters, and in allowing for international aid to reach disaster areas quickly, said Gu. Some might think that a shortage for medical emergency supplies like masks due to more demand is a problem caused by the global supply chain and that the future solution is to localize medical supplies, Gu said. In times of crisis, however, the reality is that the principle of efficiency or timely supply of critical goods cannot be guaranteed. "Because the probability of such rare public health emergencies occurring frequently is very small, we can't know in advance which country the crisis will occur," he said. While political interference may affect globalization in the short term, globalization will not end, as long as enterprises seek to maximise profits, and consumers pursue their interests. Hence, as globalization is inevitable, countries should make strengthening global governance their top priority, because globalization without global governance is "fragile and even dangerous," said Gu. The world has undergone fundamental changes, with the growth of developing countries which still lack a voice on global governance. As the power of the U.S. continues to wane, it cannot sustain its unipolar hegemony, and is further weakened by Trump administration's decision to pull out in many areas of global governance, said Gu. The most important need now is for the world to form a multi-polar system of governance as soon as possible, he said. This can be done through a reform of the existing governance system, as well as establishing new institutions. But either way, multilateralism and the participation of developing countries should be important elements, said Gu. For this to happen, cooperation between the two major powers of China and the United States is essential to solve many of the existential crisis facing the world.