Pooling Innovation - Bridging Regulatory Ambition and Stakeholder Resistance: The Role of Patent Pools

Abstract

This thesis investigates how the European Commission sought to improve licensing practices for standard essential patents (SEPs) through its 2023 SEP regulation proposal, and why the initiative ultimately met strong resistance from stakeholders. With a focus on the rapidly expanding Internet of Things (IoT) sector, where licensing structures are complex and transaction costs are high, this thesis analyses the Proposal’s four core mechanisms: a SEP register, essentiality checks, FRAND determinations, and aggregate royalty determinations. A thematic analysis of stakeholder feedback from corporations, patent pool administrators, professional associations, and European standardisation organisations reveals recurring concerns about legal uncertainty, administrative burdens, and potential negative effects on innovation. Although the Commission aimed to increase transparency and reduce litigation, many stakeholders argued that the Proposal risked disrupting established market practices and weakening Europe’s standardisation ecosystem. This thesis then evaluates whether patent pools can serve as a viable alternative to the withdrawn Proposal. Through a functional comparison supported by transaction cost theory and cumulative innovation theory, it finds that patent pools already perform many of the functions the Commission sought to regulate, often more efficiently and with stronger industry acceptance. The analysis shows that patent pools can reduce search, negotiation, and litigation costs, support cumulative innovation, and provide a more predictable framework for SEP licensing in the IoT sector. The study concludes that patent pools offer a promising, market-driven mechanism capable of bridging the gap between regulatory ambitions and stakeholder concerns, while fostering a more innovation-friendly SEP environment in Europe.