PATENT POOL FORMATION AND SCOPE OF PATENTS

Basic innovations are often fundamental to the development of applications that may be developed by other innovators. In this setting, we investigate whether patent pools can rectify the lack of incentives for a developer to invest in applications. Following Green and Scotchmer, we wonder whether broad basic patents are necessary to provide enough incentives for basic innovators. We show that patent pools are more likely to be formed with patents of very different breadths, or patents of similarly wide breadths. Furthermore, although patent pools rectify the lack of developer incentives, they may reduce the incentive for doing basic research. (JEL K11, L4, O31)