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The private values of 'thickets' and 'fences': towards an updated picture of the use of patents across industries

  • Markus Reitzig
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    On the basis of a novel data set of 612 European patents and related inventions from five different industries, it is shown that multiple patents per invention are filed in both discrete and complex technologies. Multivariate analysis of the data suggests that in selected discrete technologies, patent 'fences' may serve to exclude competitors whereas in complex technologies, 'thickets' represent exchange forums for complementary technology. The results expand on traditional views of profitable patent exploitation across industries and elaborate on the most recent findings by Cohen et al. (Cohen, W.M., Nelson, R.R. and Walsh, J.P. (2000) Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or not). Cambridge, MA: NBER.) The analysis suggests that different legislative issues arise from multiple patenting per innovation in complex and discrete technologies depending on the degree of technological complementarity. The results have unexpected policy implications in that they illustrate how patentees could eliminate competition in the form of substitute technologies through fencing. They have wide managerial implications regarding the valuation of patent portfolios and the design of corporate IP strategies.

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/1043859042000188719
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    Article provided by Taylor & Francis Journals in its journal Economics of Innovation and New Technology.

    Volume (Year): 13 (2004)
    Issue (Month): 5 ()
    Pages: 457-476

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    Handle: RePEc:taf:ecinnt:v:13:y:2004:i:5:p:457-476
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    1. Bekkers, Rudi & Duysters, Geert & Verspagen, Bart, 2002. "Intellectual property rights, strategic technology agreements and market structure: The case of GSM," Research Policy, Elsevier, vol. 31(7), pages 1141-1161, September.
    2. Gilbert, R. & Shapiro, C., 1988. "Optimal Patent Length And Breadth," Papers 28, Princeton, Woodrow Wilson School - Discussion Paper.
    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. William D. Nordhaus, 1967. "The Optimal Life of a Patent," Cowles Foundation Discussion Papers 241, Cowles Foundation for Research in Economics, Yale University.
    5. Jean O. Lanjouw & Ariel Pakes & Jonathan Putnam, 1996. "How to Count Patents and Value Intellectual Property: Uses of Patent Renewal and Application Data," NBER Working Papers 5741, National Bureau of Economic Research, Inc.
    6. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1988. "Appropriating the Returns from Industrial R&D," Cowles Foundation Discussion Papers 862, Cowles Foundation for Research in Economics, Yale University.
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