Pools cause internal monopolization, locks out new entrants and
Erik Hovenkamp and Herbert Hovenkamp 17, Herbert Hovenkamp served on the ABA t advise the President on antitrust matters and is a professor of law at the University of Pennsylvania Cary Law School and Wharton, Erik Hovenkamp is a post doctorate fellow at Harvard Law School and has a PhD in economics from Northwestern and is a professor of law at Cornell, 4-10-2017, "Patent Pools and Related Technology Sharing", Cambridge Handbook of Antitrust, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2645905//susu Pooling and Collusion Threats
While most patent pools provide overall social benefits, certain practices or structures within them can pose competitive challenges. The primary antitrust risk associated with pooling is collusion, which depends on two key factors. First is the market structure and the pool's influence within its market. Second is the nature of pricing and exclusivity arrangements within the pool (Merges, 1996).
Regarding market structure, cartels can only profit if they possess market power. Patent pools often cover entire industries, but they can also be limited to a small group of firms within a larger market that decide to share a unique technology. Whether this technology allows them to raise prices above costs is an empirical question. Naked price fixing is generally considered illegal per se. Courts have been cautious in applying this per se rule to agreements within pools, instead evaluating softer forms of price-affecting conduct under antitrust's rule of reason. This approach requires estimating the pool's market power.
The antitrust issue is further complicated by provisions in the Patent Act, which typically supersede broader antitrust laws. For example, the Patent Act allows patentees to grant licenses, including exclusive licenses (footnote 15). It also asserts that a patentee's unilateral refusal to license cannot be deemed unlawful, although it does not extend the same protection to concerted refusals (footnote 16). It is generally presumed that authorization to engage in a practice does not imply authorization to engage in anticompetitive behavior, a principle upheld by the Supreme Court in other statutory contexts (footnote 17).
Pooling agreements among members can take various forms. They may agree to share technology without any royalty, or certain members may charge royalties to others, particularly if participants have disparate patent portfolios or some members participate solely as licensees. Royalty rates might be fixed, annualized, or based on production volume or revenue. Members might also agree to limit the number of units embodying pooled patents that any member can produce.