Licensing Complementary Patents: â€œPatent Trollsâ€, Market Structure, and â€œExcessiveâ€ Royalties
AbstractThe infamous Blackberry case brought new attention to so-called â€œpatent trollsâ€ and began the general association of trolls with â€œnon-practicingâ€ patent holders. This has had important legal consequences: Namely, patent holders have been denied injunctive relief because they did not practice the patents themselves. In this paper we analyze how patent holders â€“â€“ both non-practicing and vertically integrated â€“â€“ choose their royalties depending on the structure of the upstream and downstream markets and the types of licensing agreements available. We show that a vertically integrated firm has an incentive to raise its rivalsâ€™ costs and to restrict entry on the downstream market; incentives that do not hold for non-integrated patent holders. An automatic presumption that a non-integrated patent holder will charge higher royalties than a vertically integrated company is therefore unfounded. Whether a company charges â€œexcessiveâ€ royalties depends on whether there is scope for hold-up, either because of sunk investments on the part of potential licensees or because of â€œweakâ€ patents held by the licensor. These factors are orthogonal to whether patent holders are practicing or not
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich in its series Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems with number 275.
Date of creation: Sep 2009
Date of revision:
Contact details of provider:
Postal: Geschwister-Scholl-Platz 1, D-80539 Munich, Germany
Web page: http://www.sfbtr15.de/
More information through EDIRC
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-10-10 (All new papers)
- NEP-IND-2009-10-10 (Industrial Organization)
- NEP-INO-2009-10-10 (Innovation)
- NEP-IPR-2009-10-10 (Intellectual Property Rights)
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alexandra Frank).
If references are entirely missing, you can add them using this form.