In today’s innovation driven economy, patents are crucial for preventing inventions but can also act as barriers for further progress. As industries become increasingly independent, mechanisms like patent pooling and cross licensing have emerged to facilitate access to patent technologies. These tools can reduce costly litigation and promote collaborative innovation, but they also raise legal and competition concerns. This blog ensures these concepts, their benefit, challenges and their impact on innovation and market competition.

What is Patent pooling?

Patent pooling is an agreement where multiple patent holders combine their patents into single package, which is then licensed to others as a bundle. This allows licensees to access multiple patents needed to manufacture or use a technology without negotiating with each patent owner individually.

For Example, MPEG LA is a well- known patent pool for video compression technologies, simplifying access to essential patents in digital media. Another recent example is the COVID-19 Technology access tool (C-TAP), initiated by the World Health Organization to facilitate equitable access to the health technologies during the pandemic .

Patent pools are particularly prevalent in industries where interoperability and compliance with standard is essential, such as telecommunications, semiconductors and biomedical devices.

Benefits patent pool includes the reduced transaction costs, decreased risk of patent litigation, and faster innovation cycles through industry standardization. However, Patent pools can also attract anti- trust concerns if they facilitate price- fixing, reduce competition, or excludes competitors unfairly .

To avoid such pitfalls, regulatory authorities often require that pooled patents be complimentary rather than substitutes and that the licensing terms remain transparent and non-discriminatory.

Understanding Cross- Licensing

Cross- licensing is a practice where two or more companies mutually grant rights to their patents, often to avoid costly infringement law suits. These agreements can be bilateral or multilateral and in common in industries with overlapping patent portfolios, such as technology and telecommunications.

[Image Sources: Shutterstock]

A famous example includes agreements between Microsoft and Google, allowing each to use certain patented technologies without litigation . While cross- licensing encourages collaboration ad efficient technology use, critics argue that it may disadvantage smaller companies lacking extensive patent portfolios, potentially creating market patent barriers . This dynamic sometimes referred to as “patent thickets” can disincentivize startups and SMEs (Small and medium enterprises) from entering certain technological domains.

Moreover, cross- licensing may enable larger firms to consolidate power by forming strategic alliances, thereby excluding disruptive innovators.

Therefore, regulators and stakeholders ensure that these agreements do not result in informal cartels that stifle competition or innovation.

Legal and Regulatory framework

Internationally, TRIPS Agreement under the world trade organization sets minimum standards for patent protection and enforcement, influencing national laws worldwide . In India, The Patents Act, 1970 governs patent rights and licensing, while the Competition Act, 2002 ensuring that licensing agreement anti- competitive practices.

The Competition Commission of India (CCA) plays a vital role in examining whether patent pools and cross licensing agreements violate competition norms, particularly focusing on issues related to Standard Essential Patents (SEPs) and FRAND (Fair, Reasonable and Non-Discriminatory) licensing obligations .

In the digital economy, the intersection between IP Law and competition law has become more pronounced. Regulators now focus not only on traditional IP abuse but also on how licensing terms affect data access, interoperability, downstream innovation.

For example, Indian and European competition authorities increasingly assess whether SEP Holders are engaging in ‘patent hold up’ and ‘royalty staking’ – practices that can unduly inflate licensing fees and disrupt market fairness.

Case Studies

One notable dispute was between Apple and Qualcomm, revolving around royalty payments and licensing terms of SEPs used in smartphones. The case highlighted challenges in balancing patent holders’ rights with fair access and competition .

Furthermore, the enforcement of FRAND terms aims to ensure SEP holders license their patents on reasonable terms, preventing monopolistic control over industry standards .

Another illustrative example involves the EU’s investigation into the Nokia- interdigital patent license arrangement, where the bundling the non- essential patents with SEPs raised concerns about coercive licensing.

These case show that while collaborative licensing arrangements can streamline innovation, they can also lead to abusive practices if not scrutinized carefully.

Economic and Innovation Impact

Patent pooling and cross licensing can significantly reduce litigation costs, enable collaborative innovation, and facilitate the rapid deployment of future technologies. They are particularly important in sectors like pharmaceuticals and telecommunications, where innovation depends on combining multiple patented inventions.

For instance, in the pharmaceutical sector, cross- licensing between biotech firms and biotechnical giants often accelerates drug development by pooling R&D resources, manufacturing know- how and regulatory data. Similarly, in the telecommunications sector, patent pools reduce legal uncertainties and foster global adoption of interoperable standards like 5G.

However, unchecked pooling or licensing can create barriers for small competitors, limiting market entry and stifling competition. Regulator must thus maintain a delicate balance between protecting intellectual property rights and promoting a competitive, innovation- friendly market environment .

There is also a broader public policy dimension: over- consolidation of patents in dominant pools may skew research priorities away from public- interest domains such as open science or affordable health care.

Patent pooling and cross- licensing, when implemented with transparency and regulatory oversight, serves as faster tools to foster innovation and improve access to technologies. They reduce litigation risks and enable collaborative development. However, if left unchecked, these mechanism risk enabling monopolistic dominance, hindering fair competition. As India strives to become an innovation hub, balancing IP Rights with public interest and competitive fairness is more crucial than ever.

The evolving landscape of the IP Law necessitates a multi- stakeholder approach involving governments, corporations, legal experts and civil society. Crafting robust legal safeguards around licensing practices is essential to ensure that innovation is both inclusive and sustainable.

As India strives to become an innovation hub, balancing IP Rights with public interest and competitive fairness is more crucial than ever. Ensuring that smaller players have essential technologies without facing exclusionary hurdles will be key to a truly dynamic and equitable innovation economy.

Author :-Shivanshi Goel, in case of any query, contact us at Global Patent Filing or write back us via email at support@globalpatentfiling.com.

REFERENCES

1. https://www.who.int/initiatives/covid-19-technology-access-pool

2. https://www.indiacode.nic.in/handle/123456789/1392?locale=en

3. https://www.indiacode.nic.in/handle/123456789/2010?view_type=browse

4. https://news.microsoft.com/ip-agreements/

5. https://www.cci.gov.in/public/images/annualreport/en/annual-report-2023-241734695318.pdf

6. https://www.wto.org/english/tratop_e/trips_e/intel2_e.htm

7. https://www.cafc.uscourts.gov/opinions-orders/23-1208.OPINION.4-23-2025_2503159.pdf

8. https://www.etsi.org/images/files/IPR/etsi-guide-on-ipr.pdf

9. https://www.wipo.int/publications/en/series/index.jsp?id=138