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The New Patent Intermediaries: Platforms, Defensive Aggregators, and Super-Aggregators

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  • Andrei Hagiu
  • David B. Yoffie

Abstract

The patent market consists mainly of privately negotiated, bilateral transactions, either sales or cross-licenses, between large companies. There is no eBay, Amazon, New York Stock Exchange, or Kelley's Blue Book equivalent for patents, and when buyers and sellers do manage to find each other, they usually negotiate under enormous uncertainty: prices of similar patents vary widely from transaction to transaction and the terms of the transactions (including prices) are often secret and confidential. Inefficient and illiquid markets, such as the one for patents, generally create profit opportunities for intermediaries. We begin with an overview of the problems that arise in patent markets, and how traditional institutions like patent brokers, patent pools, and standard-setting organizations have sought to address them. During the last decade, a variety of novel patent intermediaries has emerged. We discuss how several online platforms have started services for buying and selling patents but have failed to gain meaningful traction. And new intermediaries that we call defensive patent aggregators and superaggregators have become quite influential and controversial in the technology industries they touch. The goal of this paper is to shed light on the role and efficiency tradeoffs of these new patent intermediaries. Finally, we offer a provisional assessment of how the new patent intermediary institutions affect economic welfare.

Suggested Citation

  • Andrei Hagiu & David B. Yoffie, 2013. "The New Patent Intermediaries: Platforms, Defensive Aggregators, and Super-Aggregators," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 45-66, Winter.
  • Handle: RePEc:aea:jecper:v:27:y:2013:i:1:p:45-66
    Note: DOI: 10.1257/jep.27.1.45
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.27.1.45
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Jay Pil Choi & Heiko Gerlach, 2017. "A Theory of Patent Portfolios," American Economic Journal: Microeconomics, American Economic Association, vol. 9(1), pages 315-351, February.
    2. Andreas Panagopoulos & Kyriakos Drivas, 2016. "Using the Patent Term Changes in Assessing the Evolution of Patent Valuation from Filing to Maturity," Working Papers 1608, University of Crete, Department of Economics.
    3. Stefano Comino & Fabio Maria Manenti, 2015. "Intellectual Property and Innovation in Information and Communication Technology (ICT)," JRC Working Papers JRC97541, Joint Research Centre (Seville site).
    4. Dietmar Harhoff & Georg von Graevenitz & Stefan Wagner, 2016. "Conflict Resolution, Public Goods, and Patent Thickets," Management Science, INFORMS, vol. 62(3), pages 704-721, March.
    5. Hagiu, Andrei & Wright, Julian, 2015. "Multi-sided platforms," International Journal of Industrial Organization, Elsevier, vol. 43(C), pages 162-174.
    6. Dushnitsky, Gary & Klueter, Thomas, 2017. "Which industries are served by online marketplaces for technology?," Research Policy, Elsevier, vol. 46(3), pages 651-666.
    7. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, March.
    8. Stefano Comino & Fabio M. Manenti & NIkolaus Thumm, 2017. "The Role of Patents in Information and Communication Technologies (ICTs). A survey of the Literature," "Marco Fanno" Working Papers 0212, Dipartimento di Scienze Economiche "Marco Fanno".
    9. Alexandrov, Alexei & Pittman, Russell & Ukhaneva, Olga, 2017. "Royalty stacking in the U.S. freight railroads: Cournot vs. Coase," MPRA Paper 78249, University Library of Munich, Germany.
    10. Rosemarie Ziedonis & Carlos Serrano & Yael Hochberg, 2015. "Patent collateral, investor commitment, and the market for venture lending," 2015 Meeting Papers 1170, Society for Economic Dynamics.
    11. Christian Le Bas & Julien Pénin, 2014. "Patents and innovation : Are the brakes broken, or how to restore patents’ dynamic efficiency ?," Working Papers of BETA 2014-02, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    12. Caviggioli, Federico & Ughetto, Elisa, 2016. "Buyers in the patent auction market: Opening the black box of patent acquisitions by non-practicing entities," Technological Forecasting and Social Change, Elsevier, vol. 104(C), pages 122-132.
    13. Haber, Stephen H. & Werfel, Seth H., 2016. "Patent trolls as financial intermediaries? Experimental evidence," Economics Letters, Elsevier, vol. 149(C), pages 64-66.
    14. Yael V. Hochberg & Carlos J. Serrano & Rosemarie H. Ziedonis, 2014. "Patent Collateral, Investor Commitment, and the Market for Venture Lending," NBER Working Papers 20587, National Bureau of Economic Research, Inc.
    15. Francesco Angelini & Massimiliano Castellani, 2017. "Understanding the artwork pricing: some theoretical models," Working Paper series 17-25, Rimini Centre for Economic Analysis, revised Mar 2018.
    16. Koutroumpis, Pantelis & Leiponen, Aija & Thomas, Llewellyn D W, 2017. "The (Unfulfilled) Potential of Data Marketplaces," ETLA Working Papers 53, The Research Institute of the Finnish Economy.
    17. Sanderson, Susan Walsh & Simons, Kenneth L., 2014. "Light emitting diodes and the lighting revolution: The emergence of a solid-state lighting industry," Research Policy, Elsevier, vol. 43(10), pages 1730-1746.
    18. Yael V. Hochberg & Carlos J. Serrano & Rosemarie H. Ziedonis, 2014. "Patent collateral investor commitment and the market for venture lending," Economics Working Papers 1448, Department of Economics and Business, Universitat Pompeu Fabra.
    19. Yael V. Hochberg & Carlos Serrano & Rosemarie H. Ziedonis, 2014. "Patent Collateral, Investor Commitment, and the Market for Venture Lending," Working Papers 792, Barcelona Graduate School of Economics.
    20. Gideon Markman & Peter Gianiodis & Andreas Panagopoulos, 2016. "Factor Market Rivalry and Inter Industry Competitive Dynamics," Working Papers 1611, University of Crete, Department of Economics.
    21. Yael V. Hochberg & Carlos J. Serrano & Rosemarie H. Ziedonis, 2015. "Patent collateral, investor commitment and the market for venture lending," Working Papers 1519, Banco de España;Working Papers Homepage.
    22. Kiebzak, Stephen & Rafert, Greg & Tucker, Catherine E., 2016. "The effect of patent litigation and patent assertion entities on entrepreneurial activity," Research Policy, Elsevier, vol. 45(1), pages 218-231.
    23. Giovanni Dosi & Joseph Stiglitz, 2013. "The Role of Intellectual Property Rights in the Development Process, with Some Lessons from Developed Countries: An Introduction," LEM Papers Series 2013/23, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

    More about this item

    JEL classification:

    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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