Abstract: The motive for the decision on organizing patent pools based on vertical structure under the action of network effect was studied, and two-staged dynamic game model was developed. In the first stage, the patent pool shall set up unit pool royalty rate in the upstream market of patent; in the second stage, the competition of output shall be done among the vertically integrated firms of the same patent pool in the downstream market of final goods. The unit pool royalty rate, the consumer demand and the profit of pool member were all computed on the condition of the network effect. A conclusion is therefore drawn that the network effect could reduce the unit pool royalty rate, and the consumer's demand is increasing with the enhancing network effect. So, gaining the benefits from the network effect is the important motive of the firms who organized patent pool.