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The private values of 'thickets' and 'fences': towards an updated picture of the use of patents across industries

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  • Markus Reitzig
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    Abstract

    On the basis of a novel data set of 612 European patents and related inventions from five different industries, it is shown that multiple patents per invention are filed in both discrete and complex technologies. Multivariate analysis of the data suggests that in selected discrete technologies, patent 'fences' may serve to exclude competitors whereas in complex technologies, 'thickets' represent exchange forums for complementary technology. The results expand on traditional views of profitable patent exploitation across industries and elaborate on the most recent findings by Cohen et al. (Cohen, W.M., Nelson, R.R. and Walsh, J.P. (2000) Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or not). Cambridge, MA: NBER.) The analysis suggests that different legislative issues arise from multiple patenting per innovation in complex and discrete technologies depending on the degree of technological complementarity. The results have unexpected policy implications in that they illustrate how patentees could eliminate competition in the form of substitute technologies through fencing. They have wide managerial implications regarding the valuation of patent portfolios and the design of corporate IP strategies.

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/1043859042000188719
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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Economics of Innovation and New Technology.

    Volume (Year): 13 (2004)
    Issue (Month): 5 ()
    Pages: 457-476

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    Handle: RePEc:taf:ecinnt:v:13:y:2004:i:5:p:457-476

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    Related research

    Keywords: Patent thicket; Patent fence; Invention value; Patent use; Patenting strategies;

    References

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    1. Bekkers,Rudi & Duysters,Geert & Verspagen,Bart, 2000. "Intellectual Property Rights, Strategic Technology Agreements and Market Structure, The Case of GSM," Research Memorandum, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT) 029, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    2. William D. Nordhaus, 1967. "The Optimal Life of a Patent," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 241, Cowles Foundation for Research in Economics, Yale University.
    3. Wesley M Cohen & Richard R Nelson & John P Walsh, 2003. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (Or Not)," Levine's Working Paper Archive 618897000000000624, David K. Levine.
    4. Jean O. Lanjouw & Ariel Pakes & Jonathan Putnam, 1996. "How to Count Patents and Value Intellectual Property: Uses of Patent Renewal and Application Data," NBER Working Papers 5741, National Bureau of Economic Research, Inc.
    5. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1988. "Appropriating the Returns from Industrial R&D," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 862, Cowles Foundation for Research in Economics, Yale University.
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    Cited by:
    1. Fred Ramb & Markus Reitzig, 2005. "Who do you trust while Shares are on a Roler-Coaster Ride? Balance Sheet and Patent Data as Sources of Investor Information During Volatile Market Times," DRUID Working Papers, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies 05-15, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    2. Sternitzke, Christian, 2013. "An exploratory analysis of patent fencing in pharmaceuticals: The case of PDE5 inhibitors," Research Policy, Elsevier, Elsevier, vol. 42(2), pages 542-551.
    3. Grimpe, Christoph & Hussinger, Katrin, 2014. "Pre-empted patents, infringed patents and firms’ participation in markets for technology," Research Policy, Elsevier, Elsevier, vol. 43(3), pages 543-554.

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