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Patent Thickets: Strategic Patenting of Complex Technologies

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  • James Bessen

    ()
    (Research on Innovation, Boston University School of Law)

Abstract

Patent race models assume that an innovator wins the only patent covering a product. But when technologies are complex, this property right is defective: ownership of a product’s technology is shared, not exclusive. In that case I show that if patent standards are low, firms build “thickets” of patents, especially incumbent firms in mature industries. When they assert these patents, innovators are forced to share rents under cross-licenses, making R&D incentives sub-optimal. On the other hand, when lead time advantages are significant and patent standards are high, firms pursue strategies of “mutual non-aggression.” Then R&D incentives are stronger, even optimal.

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File URL: http://www.researchoninnovation.org/thicket.pdf
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Bibliographic Info

Paper provided by Research on Innovation in its series Working Papers with number 0401.

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Date of creation: 2004
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Handle: RePEc:roi:wpaper:0401

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Web page: http://www.researchoninnovation.org

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References

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  1. Josh Lerner & Jean Tirole, 2004. "Efficient Patent Pools," American Economic Review, American Economic Association, vol. 94(3), pages 691-711, June.
  2. James Bessen & Robert M. Hunt, 2004. "An empirical look at software patents," Working Papers 03-17, Federal Reserve Bank of Philadelphia.
  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. Bessen, James, 2004. "Holdup and licensing of cumulative innovations with private information," Economics Letters, Elsevier, vol. 82(3), pages 321-326, March.
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Citations

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Cited by:
  1. Robert Hunt & James Bessen, 2004. "The software patent experiment," Business Review, Federal Reserve Bank of Philadelphia, issue Q3, pages 22-32.
  2. van Zeebroeck, Nicolas & van Pottelsberghe de la Potterie, Bruno & Guellec, Dominique, 2009. "Claiming more: the Increased Voluminosity of Patent Applications and its Determinants," Research Policy, Elsevier, vol. 38(6), pages 1006-1020, July.
  3. Ottoz Elisabetta & Cugno Franco, 2007. "Patent-Secret Mix in Complex Product Firms," Department of Economics and Statistics Cognetti de Martiis. Working Papers 200707, University of Turin.
  4. Robert M. Hunt, 2006. "When Do More Patents Reduce R&D?," American Economic Review, American Economic Association, vol. 96(2), pages 87-91, May.
  5. Yann Ménière & Sarah Parlane, 2008. "Innovation in the Shadow of Patent Litigation," Post-Print hal-00397130, HAL.
  6. Miller, David A., 2008. "Invention under uncertainty and the threat of ex post entry," European Economic Review, Elsevier, vol. 52(3), pages 387-412, April.
  7. Sebastian von Engelhardt & Sushmita Swaminathan, 2008. "Open Source Software, Closed Source Software or Both: Impacts on Industry Growth and the Role of Intellectual Property Rights," Discussion Papers of DIW Berlin 799, DIW Berlin, German Institute for Economic Research.
  8. Graevenitz, Georg von & Wagner, Stefan & Harhoff, Dietmar, 2011. "Incidence and Growth of Patent Thickets - The Impact of Technological Opportunities and Complexity," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 356, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  9. Antonelli, Cristiano, 2003. "The Governance of Technological Knowledge: Strategies, Processes and Public Policies," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 200306, University of Turin.
  10. Yann Ménière & Sarah Parlane, 2004. "A Dynamic Model of Cross Licensing," Working Papers 200424, School Of Economics, University College Dublin.
  11. Alexandre Almeida & Aurora A.C. Teixeira, 2007. "Does Patenting negatively impact on R&D investment?An international panel data assessment," FEP Working Papers 255, Universidade do Porto, Faculdade de Economia do Porto.
  12. Jeroen de Jong & Eric von Hippel, 2010. "Open, distributed and user-centered: Towards a paradigm shift in innovation policy," Scales Research Reports H201009, EIM Business and Policy Research.

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