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Elves or Trolls? The role of nonpracticing patent owners in the innovation economy

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  • Damien Geradin
  • Anne Layne-Farrar
  • A. Jorge Padilla

Abstract

Firm structure and the degree of vertical integration lie at the core of a key intellectual property concern currently under debate: "patent trolls." While court opinions and competition agency decisions have focused on "non-practicing" patent holders as synonymous with trolls and hold up problems, this view of upstream specialists is far too narrow. In fact, patents in the hands of nonpracticing entities can increase competition, increase innovation, lower downstream prices, and enhance consumer choice. We explain why and when and argue for more business-model-neutral policy when it comes to patent licensing. Clearly, patents are a complex subject that cannot be portrayed as either all good or all bad; tradeoffs will always be involved. Likewise, patents in the hands of nonpracticing entities cannot be viewed as either all good or all bad. Without a better understanding of the many complicated effects of patents in high technology markets, we run the very real risk of misguided policy decisions. In light of that risk, we argue that more attention needs to be devoted to finding meaningful ways of identifying harmful behaviors, rather than on categorical labels based on firm structure or business model. Copyright 2012 The Author 2011. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Suggested Citation

  • Damien Geradin & Anne Layne-Farrar & A. Jorge Padilla, 2012. "Elves or Trolls? The role of nonpracticing patent owners in the innovation economy," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 21(1), pages 73-94, February.
    • Handle: RePEc:oup:indcch:v:21:y:2012:i:1:p:73-94
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    Citations

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    Cited by:

    1. Teece, David J., 2018. "Profiting from innovation in the digital economy: Enabling technologies, standards, and licensing models in the wireless world," Research Policy, Elsevier, vol. 47(8), pages 1367-1387.
    2. Giuditta De Prato & Daniel Nepelski, 2012. "International patenting strategies in ICT," JRC Research Reports JRC79479, Joint Research Centre, revised Nov 2012.
    3. Christian Bessy, 2019. "The transformations of conventions for patent use and the role of legal intermediaries," Working Papers halshs-01872163, HAL.
    4. van der Waal, Mark B. & Feddema, Jelle J. & van de Burgwal, Linda H.M., 2023. "Mapping the broad societal impact of patents," Technovation, Elsevier, vol. 128(C).
    5. Mukund Chari & H. Kevin Steensma & Charles Connaughton & Ralph Heidl, 2022. "The influence of patent assertion entities on inventor behavior," Strategic Management Journal, Wiley Blackwell, vol. 43(8), pages 1666-1690, August.
    6. Li, Hai & Qing, Qiankai & Wang, Juan & Hong, Xianpei, 2021. "An analysis of technology licensing and parallel importation under different market structures," European Journal of Operational Research, Elsevier, vol. 289(1), pages 132-143.

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