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Patent Thickets: Strategic Patenting of Complex Technologies


  • James Bessen

    () (Research on Innovation, Boston University School of Law)


Patent race models assume that an innovator wins the only patent covering a product. But when technologies are complex, this property right is defective: ownership of a product’s technology is shared, not exclusive. In that case I show that if patent standards are low, firms build “thickets” of patents, especially incumbent firms in mature industries. When they assert these patents, innovators are forced to share rents under cross-licenses, making R&D incentives sub-optimal. On the other hand, when lead time advantages are significant and patent standards are high, firms pursue strategies of “mutual non-aggression.” Then R&D incentives are stronger, even optimal.

Suggested Citation

  • James Bessen, 2004. "Patent Thickets: Strategic Patenting of Complex Technologies," Working Papers 0401, Research on Innovation.
  • Handle: RePEc:roi:wpaper:0401

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    References listed on IDEAS

    1. Josh Lerner & Jean Tirole, 2004. "Efficient Patent Pools," American Economic Review, American Economic Association, vol. 94(3), pages 691-711, June.
    2. James Bessen & Robert M. Hunt, 2007. "An Empirical Look at Software Patents," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(1), pages 157-189, March.
    3. Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2000. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)," NBER Working Papers 7552, National Bureau of Economic Research, Inc.
    4. Bessen, James, 2004. "Holdup and licensing of cumulative innovations with private information," Economics Letters, Elsevier, vol. 82(3), pages 321-326, March.
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    1. repec:spr:scient:v:90:y:2012:i:2:d:10.1007_s11192-011-0532-5 is not listed on IDEAS
    2. Robert M. Hunt, 2006. "When Do More Patents Reduce R&D?," American Economic Review, American Economic Association, vol. 96(2), pages 87-91, May.
    3. Georg Graevenitz & Stefan Wagner & Dietmar Harhoff, 2013. "Incidence and Growth of Patent Thickets: The Impact of Technological Opportunities and Complexity," Journal of Industrial Economics, Wiley Blackwell, vol. 61(3), pages 521-563, September.
    4. Alexandre Almeida & Aurora A.C. Teixeira, 2007. "Does Patenting negatively impact on R&D investment?An international panel data assessment," FEP Working Papers 255, Universidade do Porto, Faculdade de Economia do Porto.
    5. Elisabetta Ottoz & Franco Cugno, 2008. "Patent--Secret Mix in Complex Product Firms," American Law and Economics Review, Oxford University Press, vol. 10(1), pages 142-158.
    6. Yann Ménière & Sarah Parlane, 2008. "Innovation in the Shadow of Patent Litigation," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 32(2), pages 95-111, March.
    7. Antonelli, Cristiano, 2003. "The Governance of Technological Knowledge: Strategies, Processes and Public Policies," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 200306, University of Turin.
    8. Miller, David A., 2008. "Invention under uncertainty and the threat of ex post entry," European Economic Review, Elsevier, vol. 52(3), pages 387-412, April.
    9. van Zeebroeck, Nicolas & van Pottelsberghe de la Potterie, Bruno & Guellec, Dominique, 2009. "Claiming more: the Increased Voluminosity of Patent Applications and its Determinants," Research Policy, Elsevier, vol. 38(6), pages 1006-1020, July.
    10. Sebastian von Engelhardt & Sushmita Swaminathan, 2008. "Open Source Software, Closed Source Software or Both: Impacts on Industry Growth and the Role of Intellectual Property Rights," Discussion Papers of DIW Berlin 799, DIW Berlin, German Institute for Economic Research.
    11. Yann Ménière & Sarah Parlane, 2004. "A dynamic model of cross licensing," Working Papers 200424, School of Economics, University College Dublin.
    12. Robert M. Hunt & James Bessen, 2004. "The software patent experiment," Business Review, Federal Reserve Bank of Philadelphia, issue Q3, pages 22-32.
    13. Jeroen de Jong & Eric von Hippel, 2010. "Open, distributed and user-centered: Towards a paradigm shift in innovation policy," Scales Research Reports H201009, EIM Business and Policy Research.

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