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Patent Thickets, Licensing and Innovative Performance

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  • Müller, Elisabeth
  • MacGarvie, Megan J.
  • Cockburn, Iain M.

Abstract

We examine the relationship between fragmented intellectual property (IP) rights and innovative performance, taking into consideration the role played by in-licensing of IP. Controlling for a variety of firm and market characteristics, we find that firms facing more fragmented IP landscapes are more likely to report expenditures on in-licensing and for those firms that do incur license costs we find a weak positive association between licensing expenditure and fragmented IP rights in the relevant technology. We also observe a negative relationship between IP fragmentation and innovative performance, but only for firms that engage in in-licensing and only for product innovation. The relationship between fragmentation and innovative performance also depends on the size of a firm's patent portfolio, which suggests an important strategic role for defensive patenting in the context of fragmented property rights. --

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Bibliographic Info

Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 08-101.

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Date of creation: 2008
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Handle: RePEc:zbw:zewdip:7475

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Keywords: patent thickets; licensing; innovative performance;

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  1. Carl Shapiro, 2004. "Navigating the Patent Thicket: Cross Licenses, Patent Pools and Standard Setting," Levine's Working Paper Archive 122247000000000539, David K. Levine.
  2. Ashish Arora & Andrea Fosfuri & Alfonso Gambardella, 2004. "Markets for Technology: The Economics of Innovation and Corporate Strategy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262511819, December.
  3. Adam B. Jaffe & Josh Lerner & Scott Stern, 2001. "Innovation Policy and the Economy, Volume 1," NBER Books, National Bureau of Economic Research, Inc, number jaff01-1, October.
  4. Mueller, Elisabeth & Harhoff, Dietmar & Haeussler, Carolin, 2009. "To Be Financed or Not : The Role of Patents for Venture Capital Financing," ZEW Discussion Papers 09-003, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  5. Joshua S. Gans & Scott Stern, 2000. "When Does Funding Research by Smaller Firms Bear Fruit?: Evidence from the SBIR Program," NBER Working Papers 7877, National Bureau of Economic Research, Inc.
  6. James Bessen & Robert M Hunt, 2004. "An Empirical Look at Software Patents," Levine's Working Paper Archive 122247000000000167, David K. Levine.
  7. Bessen, James, 2004. "Holdup and licensing of cumulative innovations with private information," Economics Letters, Elsevier, Elsevier, vol. 82(3), pages 321-326, March.
  8. Bronwyn Hall, 2004. "Exploring the patent explosion," ESRC Centre for Business Research - Working Papers, ESRC Centre for Business Research wp291, ESRC Centre for Business Research.
  9. Czarnitzki, Dirk & Kraft, Kornelius, 2005. "License Expenditures of Incumbents and Potential Entrants: An Empirical Analysis of Firm Behavior," ZEW Discussion Papers 05-35, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  10. Siebert, Ralph & Graevenitz, Georg von, 2006. "How Licensing Resolves Hold-Up: Evidence from a Dynamic Panel Data Model with Unobserved Heterogeneity," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 105, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  11. Joshua S. Gans & David H. Hsu & Scott Stern, 2000. "When Does Start-Up Innovation Spur the Gale of Creative Destruction?," NBER Working Papers 7851, National Bureau of Economic Research, Inc.
  12. Bruno Cassiman & Reinhilde Veugelers, 2000. "External technology sources: Embodied or disembodied technology acquisition," Economics Working Papers 444, Department of Economics and Business, Universitat Pompeu Fabra.
  13. James Bessen & Eric Maskin, 2009. "Sequential innovation, patents, and imitation," RAND Journal of Economics, RAND Corporation, vol. 40(4), pages 611-635.
  14. Iain M. Cockburn & Megan MacGarvie, 2007. "Patents, Thickets, and the Financing of Early-Stage Firms: Evidence from the Software Industry," NBER Working Papers 13644, National Bureau of Economic Research, Inc.
  15. Alberto Galasso & Mark Schankerman, 2008. "Patent Thickets and the Market for Innovation: Evidence from Settlement of Patent Disputes," CEP Discussion Papers dp0889, Centre for Economic Performance, LSE.
  16. Suzanne Scotchmer, 1991. "Standing on the Shoulders of Giants: Cumulative Research and the Patent Law," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 29-41, Winter.
  17. A. Jorge Padilla & Damien Geradin & Anne Layne-Farrar, 2007. "Royalty Stacking In High Tech Industries: Separating Myth From Reality," Working Papers, CEMFI wp2007_0701, CEMFI.
  18. Geradin, Damien & Layne-Farrar, Anna & Padilla, Atilano Jorge, 2007. "Royalty Stacking in High Tech Industries: Separating Myth from Reality," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6091, C.E.P.R. Discussion Papers.
  19. Link, Albert N. & Scott, John T., 2003. "U.S. science parks: the diffusion of an innovation and its effects on the academic missions of universities," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 21(9), pages 1323-1356, November.
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Citations

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Cited by:
  1. Fischer, Timo & Henkel, Joachim, 2012. "Patent trolls on markets for technology – An empirical analysis of NPEs’ patent acquisitions," Research Policy, Elsevier, Elsevier, vol. 41(9), pages 1519-1533.
  2. Schwiebacher, Franz, 2013. "Does fragmented or heterogeneous IP ownership stifle investments in innovation?," ZEW Discussion Papers 13-096, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Schwiebacher, Franz, 2012. "Complementary assets, patent thickets and hold-up threats: Do transaction costs undermine investments in innovation?," ZEW Discussion Papers 12-015, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Dan Andrews & Chiara Criscuolo, 2013. "Knowledge-Based Capital, Innovation and Resource Allocation," OECD Economics Department Working Papers 1046, OECD Publishing.
  5. Dr Chiara Rosazza Bondibene, 2012. "A Study of Patent Thickets," NIESR Discussion Papers, National Institute of Economic and Social Research 11129, National Institute of Economic and Social Research.
  6. Gambardella, Alfonso & Giarratana, Marco S., 2013. "General technological capabilities, product market fragmentation, and markets for technology," Research Policy, Elsevier, Elsevier, vol. 42(2), pages 315-325.
  7. NAGAOKA Sadao & NISHIMURA Yoichiro, 2014. "Complementarity, Fragmentation, and the Effects of Patent Thickets," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 14001, Research Institute of Economy, Trade and Industry (RIETI).
  8. 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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