Pools eliminate exclusive rights to produce drugs, increases cooperation between companies

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

Patent pools thus represent • A novel approach to access to essential medicines that would lower transaction costs between patent owners; • A historically useful tool for certain situations, as shown in the airplane industry; and, • Depending on licensing terms, a way to separate the innovation process from the manufacturing one, lowering costs of medicines.