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findings suggest that patent pools actually inhibit, rather than enhance, systemic innovation by
participating firms.
@article{kato2004patent,
title={Patent pool enhances market competition},
author={Kato, A.},
journal={International Review of Law and Economics},
volume={24},
number={2},
pages={255--268},
year={2004},
publisher={Elsevier},
filename={Kato (2004) - Patent Pool Enhances Market Competition.pdf}
}
Econ: patent pools: substitutes inc. welfare
He considers the
role of patent pools in “patent thicket,” which means that there are so many patents issued
that a single newpatent will likely infringe on some other patents. This situation discourages
and retards research, development and commercialization. His paper concentrates on the
A. Kato / International Review of Law and Economics 24 (2004) 255–268 257
complements problem and claims that cross-licensing or patent pools may alleviate this
problem.
@article{kesselheim2005university,
title={University-based science and biotechnology products},
author={Kesselheim, A.S. and Avorn, J.},
journal={JAMA: the journal of the American Medical Association},
volume={293},
number={7},
pages={850--854},
year={2005},
publisher={Am Med Assoc},
filename={Kesselheim Avorn (2005) - University Based Science And Biotechnology Products.pdf}
}
Biology: University Science, Biotech and pharma
Private corporations
can then commercialize these
insights by designing and marketing
new therapeutics or other medical technologies
based on them. In this chain
of development, allowing patenting of
each incremental innovation could risk
generating a dense thicket of overlapping
intellectual rights and thus hinder
research efforts. However, restricting
patenting rights to the end product
alone ignores earlier scientific and financial
contributions. Where intellectual
property law draws the line has billiondollar
ramifications for universities and
academic medical centers attempting to
support their research budgets, for
patients who depend on the creation of
innovative medical products, and for
society, which ultimately benefits from
and pays for these discoveries.
@article{kieff2011removing,
jstor_articletype = {research-article},
title = {Removing Property from Intellectual Property and (Intended?) Pernicious Impacts on Innovation and Competition},
author = {Kieff, F. Scott},
journal = {Supreme Court Economic Review},
jstor_issuetitle = {},
volume = {19},
number = {1},
jstor_formatteddate = {January 2011},
pages = {pp. 25-50},
url = {http://www.jstor.org/stable/10.1086/664561},
ISSN = {07369921},
abstract = {Commentators have poured forth a loud and sustained outcry over the past few years that sees property rule treatment of intellectual property (IP) as a cause of excessive transaction costs, thickets, anticommons, hold-ups, hold-outs, and trolls, which unduly tax and retard innovation, competition, and economic growth. The popular response has been to seek a legislative shift towards some limited use of weaker, liability rule treatment, usually portrayed as “just enough” to facilitate transactions in those special cases where the bargaining problems are at their worst and where escape hatches are most needed. This essay is designed to make two contributions. First, it shows how a set of changes in case law over just the past few years have hugely re-shaped the patent system from having several major, and helpful, liability-rule pressure-release valves, into a system that is fast becoming almost devoid of significant property rule characteristics, at least for those small entities that would most need property rule protection. The essay then explores some harmful effects of this shift, focusing on the ways liability rule treatment can seriously impede the beneficial deal-making mechanisms that facilitate innovation and competition. The basic intuition behind this bad effect of liability rules is that they seriously frustrate the ability for a market-challenging patentee to attract and hold the constructive attention of a potential contracting party (especially one that is a larger more established party) while preserving the option to terminate the negotiations in favor of striking a deal with a different party. At the same time, liability rules can have an additional bad effect of helping existing competitors to coordinate with each other over ways to keep out new entrants. The essay is designed to contribute to the literature on IP in particular, as well as the broader literatures on property and coordination, by first showing how a seemingly disconnected set of changes to the legal rules impacting a particular legal regime like the patent system can have unintended and sweeping harmful consequences, and then by exploring why within the more middle range of the spectrum between the two poles of property rules and liability rules, a general shift towards the property side may be preferred by those seeking an increase in access and competition.},
language = {English},
year = {2011},
publisher = {The University of Chicago Press},
copyright = {Copyright © 2011 The University of Chicago Press},
filename={Kieff (2011) - Removing Property From Intellectual Property And Intended.pdf}
}
Law: Property rules and legal regime
The essay is
designed to contribute to the literature on IP in particular,
as well as the broader literatures on property and coordination,
by fi rst showing how a seemingly disconnected set of
changes to the legal rules impacting a particular legal regime
like the patent system can have unintended and sweeping
harmful consequences, and then by exploring why within the
more middle range of the spectrum between the two poles of
property rules and liability rules, a general shift towards the
property side may be preferred by those seeking an increase in
access and competition.
In the vast majority of the intellectual property (IP) literature,
property rule treatment of IP is said to cause excessive transaction
costs, thickets, anticommons, hold-ups, hold- outs, and trolls,
unduly taxing and retarding innovation, competition, and economic
growth.5 The popular view of IP for the past several years has been
that property rule treatment is stopping deals from getting done, leaving
desired users of IP subject matter unable to engage in suffi cient
productive activities.
@article{kim2004vertical,
title={Vertical structure and patent pools},
author={Kim, S.H.},
journal={Review of Industrial Organization},
volume={25},
number={3},
pages={231--250},
year={2004},
publisher={Springer},
filename={Kim (2004) - Vertical Structure And Patent Pools.pdf}
}
Econ: Theory: patent Pools: complements
The proliferation of fragmented and overlapping patent rights is increasingly
being recognized as a serious problem; referred to as a ‘‘patent thicket’’ (or
‘‘anticommons’’ by Heller and Eisenberg, 1998). Besides the additional
transaction costs incurred in navigating a patent thicket, Shapiro (2001) has
called attention to another source of inefficiency – the complements problem.
@article{king2007clearing,
title={Clearing the Patent Thicket: The Supreme Court and Congress Undertake Patent Reform},
author={King, S.M.},
journal={Intell. Prop. \& Tech. LJ},
volume={9},
pages={13--13},
year={2007},
filename={King (2007) - Clearing The Patent Thicket.pdf}
}
Law: Patent Reform
All
three developments have led to what is perceived as a
marked increase in junk patents, as well as what Carl
Shapiro has termed a “patent thicket”—overlapping
sets of patent rights leading to a maze of cross-licensing
agreements, as well as the rise of hold-up litigation.
@article{kwon2012patent,
title={Patent Thicket, Secrecy, and Licensing},
author={Kwon, I.},
journal={The Korean Economic Review},
volume={28},
number={1},
pages={27--49},
year={2012},
filename={Kwon (2012) - Patent Thicket Secrecy And Licensing.pdf}
}
Econ: Theory: Race for complementary patents
However, as new products
increasingly depend on more complex and complementary technologies, there exist
growing concerns that stronger patent protection may allow a single patent holder
to prevent other firms from commercializing all their new products that rely on that
patent, and discourage innovation as a consequence, called the hold-up problem (e.g.,
Hall and Ziedonis 2001, Parchomovsky and Wagner 2005, Shapiro 2001)
Note, however, that such hold-up problems can be solved or significantly
diminished through licensing contracts, because the owners of complementary
patents stand to lose their profits under the hold-up situation. Then, one can argue
that with licensing contracts, stronger patent protection should encourage
innovation even when firms compete for complementary patents, called a patent
thicket.
@article{lanjouw2004protecting,
jstor_articletype = {research-article},
title = {Protecting Intellectual Property Rights: Are Small Firms Handicapped?},
author = {Jean O. Lanjouw and Mark Schankerman},
journal = {Journal of Law and Economics},
jstor_issuetitle = {},
volume = {47},
number = {1},
jstor_formatteddate = {April 2004},
pages = {pp. 45-74},
url = {http://www.jstor.org/stable/10.1086/380476},
ISSN = {00222186},
abstract = {Abstract This paper studies the determinants of patent suits and settlements during 1978–99 by linking information from the U.S. patent office, the federal courts, and industry sources. We find that litigation risk is much higher for patents that are owned by individuals and firms with small patent portfolios. Patentees with a large portfolio of patents to trade, or other characteristics that facilitate “cooperative” resolution of disputes, are much less likely to prosecute infringement suits. However, postsuit outcomes do not depend on these characteristics. These findings show that small patentees are at a significant disadvantage in protecting their patent rights because their greater litigation risk is not offset by more rapid resolution of their suits. Our empirical estimates of the heterogeneity in litigation risk can help in developing private patent litigation insurance to mitigate the adverse affects of high enforcement costs.},
language = {English},
year = {2004},
publisher = {The University of Chicago Press for The Booth School of Business of the University of Chicago and The University of Chicago Law School},
copyright = {Copyright © 2004 The University of Chicago},
filename={Lanjouw Schankerman (2004) - Protecting Intellectual Property Rights Are Small Firms Handicapped.pdf}
}
Law/Econ: Empirical: Patent litigation incidence
Thicket in footnote only
We find that litigation risk is much higher for patents that are owned by
individuals and firms with small patent portfolios. Patentees with a large portfolio
of patents to trade, or other characteristics that facilitate “cooperative” resolution of
disputes, are much less likely to prosecute infringement suits. However, postsuit
outcomes do not depend on these characteristics. These findings show that small
patentees are at a significant disadvantage in protecting their patent rights because
their greater litigation risk is not offset by more rapid resolution of their suits.
@techreport{lampe2009patent,
title={Do patent pools encourage innovation? Evidence from the 19th-century sewing machine industry},
author={Lampe, R.L. and Moser, P.},
year={2009},
institution={National Bureau of Economic Research},
filename={Lampe Moser (2009) - Do Patent Pools Encourage Innovation.pdf}
}
Econ: Empirical: Pools (historic)
Thickets in many footnotes, not in main body
@techreport{lampe2012patent,
title={Do patent pools encourage innovation? Evidence from 20 US Industries under the New Deal},
author={Lampe, R.L. and Moser, P.},
year={2012},
institution={National Bureau of Economic Research},
filename={Lampe Moser (2012) - Do Patent Pools Encourage Innovation.pdf}
}
Econ: Empirical: Pools (historic)
We also investigate whether part of the observed decline may be driven by a
reduction in lower-quality or “strategic” patents. For example, the creation of a pool may
reduce the need for member firms to create patent thickets by reducing the threat of
litigation (e.g., Shapiro 2001; Gilbert 2004)
Good refs?
@article{layne2011join,
title={To join or not to join: examining patent pool participation and rent sharing rules},
author={Layne-Farrar, Anne and Lerner, Josh},
journal={International Journal of Industrial Organization},
volume={29},
number={2},
pages={294--303},
year={2011},
publisher={Elsevier},
filename={LayneFarrar Lerner (2011) - To Join Or Not To Join.pdf}
}
Econ: Empirical: Patent Pools: Vert Int and symmetry lead to joining, large founding groups and numeric prop. sharing rules don't
In recognition that participation in modern patent pools is voluntary, we present empirical evidence on
participation rates and the factors that drive the decision to join a pool, including the profit sharing rules
adopted by the pool's founders. In most participation contexts, the at-risk group is extremely difficult, if not
impossible, to identify. For pools centered on technologies that result from a standard-setting process, in
contrast, we are able to identify a relatively unambiguous population of patents eligible for inclusion but that
have not been included in the pool. We find that vertically integrated firms, with patents and downstream
operations, are more likely to join a patent pool and among those firms that do join, those with relatively
symmetric patent contributions (in terms of value) to a standard appear more likely to accept numeric
patent share rules for dividing royalty earnings.
Following on the
heels of the intense interest in the theories of “patent thickets” and
“royalty stacking” (e.g., Shapiro, 2001, 2006), and the increased
proliferation of organizations that promulgate technical standards for
products and services, patent pools are emerging as an important topic
for economic analysis.
@article{layne2007pricing,
title={Pricing Patents for Licensing in Standard-Setting Organizations: Making Sense of FRAND Commitments},
author={Layne-Farrar, A. and Padilla, A.J. and Schmalensee, R.},
journal={Antitrust LJ},
volume={74},
pages={671},
year={2007},
publisher={HeinOnline},
filename={LayneFarrar (2007) - Pricing Patents for Licensing in Standard-Setting Organizations.pdf}
}
Econ: Theory: Pricing Licenses in SSOs
It would thus exacerbate any worries over patent proliferation and patent thickets, already a hotly debated in the
academic literature and popular press.
@article{leaffer2009patent,
title={Patent Misuse and Innovation},
author={Leaffer, M.},
journal={J. High Tech. L.},
volume={10},
pages={142},
year={2009},
publisher={HeinOnline},
filename={Leaffer (2009) - Patent Misuse And Innovation.pdf}
}
Law: Patents vs. antitrust
Single company
acquisition of a dense web of overlapping patents-patent
thickets 15-may create a seemingly impenetrable web which a
company must hack its way through in order to commercialize
new technology.16
A firm with a
large patent portfolio enveloping a competitor's key
technologies-one that could be termed a "patent thicket"-has
the potential to use it to suppress competition in the ultimate
goods market
Whether patent misuse should exist independently from
the antitrust inquiry is a question of vigorous debate. As the
above discussion demonstrates, this issue has been
enthusiastically debated on both sides, where Congress and
particularly the Federal Circuit have called into question the
misuse doctrine's independent existence
@article{lee2006examining,
title={Examining the Viability of Patent Pools for the Growing Nanotechnology Patent Thicket},
author={Lee, A.},
journal={Nanotech. L. \& Bus.},
volume={3},
pages={317},
year={2006},
publisher={HeinOnline},
filename={Lee (2006) - Examining The Viability Of Patent Pools For The Growing Nanotechnology Patent Thicket.pdf}
}
Mgmt: Patent pools in Nanotech
Patent pool can be more formally defined as “the aggregation of intellectual property rights which are the subject of cross-licensing, whether they are transferred directly by patentee to licensee or through some medium, such as a joint venture, set up specifically to administer the patent pool”.26 They are often viewed as the “simplest solution” to intellectual property rights (IPR) bottlenecks with multiple stakeholders that have overlapping sets of IP (a.k.a patent thickets) or are uncertain if there is possible infringement of patent issues (a.k.a. Patent Hold-Up).27
@article{lei2009patents,
title={Patents versus patenting: implications of intellectual property protection for biological research},
author={Lei, Z. and Juneja, R. and Wright, B.D.},
year={2009},
filename={Lei Juneja Wright (2009) - Patents Versus Patenting.pdf}
}
Biology: (Nature): Academic biological research and patents
Our respondents do not encounter an anticommons
or a patent thicket. Rather, they
believe that institutionally mandated MTAs put
sand in the wheels of a lively system of intradisciplinary
exchanges of research tools. Seeing
no countervailing effect on the supply of these
tools, they conclude that patenting impedes the
progress of research.
@article{lemley2005patenting,
title={Patenting nanotechnology},
author={Lemley, M.A.},
journal={Stanford Law Review},
pages={601--630},
year={2005},
publisher={JSTOR},
filename={Lemley (2005) - Patenting Nanotechnology.pdf}
}
Law: Discussion: Nanotech
Some fear that ownership of nanotechnology patents is too fragmented, risking the development of a patent "thicket."77 Miller offers several examples of nanoscale technologies that have overlapping patents covering the same basic invention, including the carbon nanotube and semiconducting nanocrystals.78 Others point to similar overlaps involving drug delivery nanoparticles.7 Further, companies that want to use nanotechnology to produce products may need to use a range of different building-block inventions - for example, using patented atomic force microscopes to detect and align atoms into patented materials that are then manipulated into patented structures used in constructing a patented end product. If each step has one or perhaps several different patents, all owned by different people, the company will need a lot of licenses.
@article{lemley2007ten,
title={Ten things to do about patent holdup of standards (and one not to)},
author={Lemley, M.A.},
journal={BCL Rev.},
volume={48},
pages={149},
year={2007},
publisher={HeinOnline},
filename={Lemley (2007) - Ten Things To Do About Patent Holdup Of Standards And One Not To.pdf}
}
Law: Discussion/Policy: SSOs and patent hold-up
Thicket in footnote only
@article{lemley2005probabilistic,
title={Probabilistic Patents},
author={Lemley, M.A. and Shapiro, C.},
journal={The Journal of Economic Perspectives},
volume={19},
number={2},
pages={75--98},
year={2005},
publisher={JSTOR},
filename={Lemley Shapiro (2005) - Probabilistic Patents.pdf}
}
Econ: Theory: Probabilistic Patents!
Patent owners also improve their chance of winning the patent lottery by filing
multiple patents on closely related technologies, thereby increasing the chance that
their patents will cover technology that becomes widely adopted by market participants.
In a number of key industries, particularly semiconductors (Hall and
Ziedonis, 2001) and computer software (Bessen and Hunt, 2004), companies file
numerous patent applications on related components that are integrated into a
single functional product. The result is a "patent thicket," in which hundreds of
This content downloaded on Mon, 28 Jan 2013 19:30:04 PM
All use subject to JSTOR Terms and Conditions
82 Journal of Economic Perspectives
patents can apply to a single product (Shapiro, 2001; FTC, 2003). If the holder of
a large patent portfolio asserts its patents against another company and claims that
the other company is infringing dozens or even hundreds of its patents, the target
company faces a very complex and costly undertaking if it chooses to fight all of
those patent infringement claims in court, knowing that it has to win all or nearly
all of the individual patent cases to avoid paying significant royalties or even being
enjoined from selling its product (Parchomovsky and Wagner, 2004).
Similarly, patent thickets can have deleterious effects on both competition and
innovation. One way to cut through the patent thicket is for incumbents with
extensive patent portfolios to enter into broad cross-licenses (that is, exchanges of
roughly symmetric patent positions) to "clear" the thicket. However, new entrants
who lack large patent portfolios may be at a major disadvantage in this situation
because they have no patents to trade. Without such cross-licenses, the result is
inefficient "royalty stacking," in which a manufacturer without its own patent
portfolio must pay royalties to a number of separate companies.6 Defensive patenting
is a natural, even inevitable, strategy in industries with patent thickets, but
defensive patenting itself can increase the density of the thicket.
@article{lemley2006patent,
title={Patent holdup and royalty stacking},
author={Lemley, M. and Shapiro, C.},
year={2006},
filename={Lemley Shapiro (2006) - Patent Holdup And Royalty Stacking.pdf}
}
Econ: Theory: Royalty stacking and hold-up
We have occasionally seen problems like this before, see Ted Sabety, Nanotechnology Innovation and
the Patent Thicket: Which IP Policies Promote Growth?, 15 Alb. L.J. Sci. & Tech. 477, 495-503 (2005)
(discussing example of radio patents in the 1920s), but they are much more common now than in the past.
Royalty stacking, patent thickets, and the related “anti-commons” problem have been a source of
concern in the semiconductor and biotechnology industries for some time.38 While the precise
extent of these problems remains unclear, empirical evidence of has mounted that royalty
stacking is far more than a theoretical possibility.
@article{lerner2003structure,
title={The structure and performance of patent pools: empirical evidence},
author={Lerner, J. and Strojwas, M. and Tirole, J.},
journal={Working paper},
year={2003},
filename={Lerner Strojwas Tirole (2003) - The Structure And Performance Of Patent Pools Empirical Evidence.pdf}
}
Econ: Empirical: Pools
Numerous commentators have suggested that
the proliferation of these awards has had socially detrimental consequences: overlapping
intellectual property rights may make it difficult for inventors to commercialize new
innovations. (Gallini [2002] reviews this literature.) Patent pools have been proposed by
Merges [1999], Shapiro [2000], and the U.S. Patent and Trademark Office (Clark, et al.
[2001]) as a way in which firms can address these “patent thicket” problems.
@article{lerner2007design,
title={The design of patent pools: The determinants of licensing rules},
author={Lerner, J. and Tirole, J. and Strojwas, M.},
journal={The RAND Journal of Economics},
volume={38},
number={3},
pages={610--625},
year={2007},
publisher={Wiley Online Library},
filename={Lerner Tirole Strojwas (2007) - The Design Of Patent Pools The Determinants Of Licensing Rules.pdf}
}
Econ: Empirical: Patent pool licensing
Identical quote to above, but different paper.
@article{lerner2005theeconomics,
jstor_articletype = {research-article},
title = {The Economics of Technology Sharing: Open Source and Beyond},
author = {Lerner, Josh and Tirole, Jean},
journal = {The Journal of Economic Perspectives},
jstor_issuetitle = {},
volume = {19},
number = {2},
jstor_formatteddate = {Spring, 2005},
pages = {pp. 99-120},
url = {http://www.jstor.org/stable/4134939},
ISSN = {08953309},
abstract = {},
language = {English},
year = {2005},
publisher = {American Economic Association},
copyright = {Copyright © 2005 American Economic Association},
filename={Lerner Tirole (2005) - The Economics Of Technology Sharing Open Source And Beyond.pdf}
}
@techreport{lerner2002efficient,
title={Efficient patent pools},
author={Lerner, J. and Tirole, J.},
year={2002},
institution={National Bureau of Economic Research},
filename={Lerner Tirole (2002) - Efficient Patent Pools.pdf}
}
Econ: Theory: Patent pools
Innovations in computer hardware, software, and biotechnology often build on a number of other innovations owned by a diverse set
of owners and as a result ?patent thicket" problems - overlapping patent claims that preclude
the adoption of new technologies - can be severe.1
There is now widespread agreement among policymakers and economists that patent pools
may beneÞt both intellectual property owners and consumers, provided that the pools include
patents that are complementary or blocking.
@incollection{lerner2008public,
title={Public policy toward patent pools},
author={Lerner, J. and Tirole, J.},
booktitle={Innovation Policy and the Economy, Volume 8},
pages={157--186},
year={2008},
publisher={University of Chicago Press},
filename={Lerner Tirole (2008) - Public Policy Toward Patent Pools.pdf}
}
Econ: Theory: Policy: Pools (welfare)
the fundamental tension in
regulators' views of antitrust activities. Many observers have suggested
that patent-thicket problems?where key patents are widely held?af
fect many emerging industries. Patent thickets may lead to three prob
lems. First, royalty stacking may result: each individual patent holder
may charge a royalty that seems reasonable when viewed in isolation,
but together they represent an unreasonable burden. Second, even if
other firms agree to license their patents at a modest rate, a hold-out
problem may result if a single firm then sets a high license fee for its tech
nology Finally, the very process of arranging the needed licenses may
prove to be time consuming. Patent pools thus offer a one-stop shop
through which these problems can be avoided.
@techreport{lerner2003cooperative,
title={Cooperative marketing agreements between competitors: evidence from patent pools},
author={Lerner, J. and Tirole, J. and Strojwas, M.},
year={2003},
institution={National Bureau of Economic Research},
filename={Lerner Tirole Strojwas (2003) - Cooperative Marketing Agreements Between Competitors.pdf}
}
DISCARD: Appears to be almost identical to: Lerner Strojwas Tirole (2003) - The Structure And Performance Of Patent Pools Empirical Evidence
@article{lerner2007impact,
title={What is the impact of software patent shifts? Evidence from Lotus v. Borland},
author={Lerner, J. and Zhu, F.},
journal={International Journal of Industrial Organization},
volume={25},
number={3},
pages={511--529},
year={2007},
publisher={Elsevier},
filename={Lerner Zhu (2007) - What Is The Impact Of Software Patent Shifts.pdf}
}
Econ: Empirical: Copyright and patents as substitutes in software
The environment is a complex one: many other changes,
such as the widespread dissemination of the Internet, may have differentially affected firms
during this period. While our result contradicts the claim by Bessen and Hunt (2004) that software
patents substitute for R&D at the firm level, increased reliance on patenting could at the same time
contribute to patent thickets that slow down overall innovation in the industry. Therefore, the
patent thicket problem – an overlapping set of patent rights requiring those seeking to
commercialize new technology obtain licenses from multiple patentees (Shapiro, 2001) – could
still exist
@article{lin2001research,
title={Research Versus Development: Patent Pooling, Innovation and Standardization in the Software Industry},
author={Lin, D.},
journal={J. Marshall Rev. Intell. Prop. L.},
volume={1},
pages={i},
year={2001},
publisher={HeinOnline},
filename={Lin (2001) - Research Versus Development.pdf}
}
Law: Patent pools in software
Despite the impressive pace of modern invention, commentators have observed a certain “patent thicket” effect that may be impeding what has become an increasingly difficult road to the commercialization of new technologies.1 Specifically, as new technologies build upon old technologies, they necessarily become increasingly complex, and as a result, are often subject to the protection of multiple patents, covering both the new cumulative technologies as well as old foundational technologies.2 The difficulties of acquiring licenses (e.g., hold-out problems) for all such patents has the potential to stifle the development and commercialization of these new technologies. As such, patent pooling, once condemned as facilitating antitrust violations in past
@article{lin2011licensing,
title={Licensing Strategies in the Presence of Patent Thickets},
author={Lin, L.},
journal={Journal of Product Innovation Management},
volume={28},
number={5},
pages={698--725},
year={2011},
publisher={Wiley Online Library},
filename={Lin (2011) - Licensing Strategies In The Presence Of Patent Thickets.pdf}
}
Econ: Theory: Licensing strategies
On the other hand, patents already granted can
make the development of cumulative technologies
prohibitively expensive, especially when the innovator
needs to license patents held by many firms or
faces potential litigation from patent holders. Related,
and often overlapping, patents owned by many entities
are often described as ‘‘patent thickets’’ and researchers
have argued that patent thickets can be
detrimental to innovation, especially in information
industries such as software (see, among others, Heller
and Eisenberg, 1998; Lessig, 2001; Shapiro, 2001; Bessen
and Maskin, 2009). One notable, and perhaps
unexpected, example of high licensing costs for downstream
firms is Microsoft. As one of the largest software
companies, Microsoft needs to license many
patented software components from independent
software vendors (ISV). In 2005, Microsoft paid
about $1 billion to license intellectual property from
other companies while collecting only $100 million in
royalties on its own patents (Ricadela, 2006).
@article{liu2008internal,
title={Internal sequential innovations: How does interrelatedness affect patent renewal?},
author={Liu, K. and Arthurs, J. and Cullen, J. and Alexander, R.},
journal={Research Policy},
volume={37},
number={5},
pages={946--953},
year={2008},
publisher={Elsevier},
filename={Liu (2008) - Internal Sequential Innovations.pdf}
}
However, research often assumes that a firm’s patented
innovations are independent from each other.We draw upon evolutionary economics and
suggest that some of a firm’s patents share important genealogical relationships, which we
refer to as internal sequential innovations.
With the
power of the intellectual regime, internal sequential innovations
offer a larger thicket of protection that can define
the underlying technologies in a set of overlapping patents.
That is, a sequence of patents revolving around the same
technological trajectory can define the intellectual property
more precisely and protect it with an enlarged degree
of coverage. The holder of such patented innovations can
thereafter exclude competitors from the collective scope of
the claims laid out in all of the sequential patents (Wagner
and Parchomovsky, 2005).
@techreport{llanes2009anticommons,
title={Anticommons and optimal patent policy in a model of sequential innovation},
author={Llanes, G. and Trento, S.},
year={2009},
institution={Harvard Business School},
filename={Llanes Trento (2009) - Anticommons And Optimal Patent Policy In A Model Of Sequential Innovation.pdf}
}
Econ: Theory: Sequential innovation model with a thicket
As the number of inputs needed in research increases, the innovator
faces a patent thicket and is threatened by the possibility of
hold-up, namely the risk that a useful innovation is not developed because
of lack of agreement with the patent holders. This problem has
been dubbed the tragedy of the anticommons (Heller 1998, Heller and
Eisenberg 1998).
@article{macdonald2004means,
title={When means become ends: considering the impact of patent strategy on innovation},
author={Macdonald, S.},
journal={Information Economics and Policy},
volume={16},
number={1},
pages={135--158},
year={2004},
publisher={Elsevier},
filename={Macdonald (2004) - When Means Become Ends.pdf}
}
Mgmt: Strategy: Discussion: Strategic use of patents
Among the patent strategies
recommended by consultants are:
• patent in a thicket around key patents held by competitors
The costs of navigating through mazes of
overlapping patent rights – through patent thickets – are likely to be considerable
(Shapiro, 2001), and are likely to be an obstacle to innovation. In industries
where the pace of change is rapid, where innovation is complex and dependent on
information from a multitude of sources, patent problems once found pragmatic
solutions.
Mostly, your patents are used in horse trading. You come together and
say, �Here�s our portfolio.� In [the communications equipment] industry,
things all build on each other. We all overlap on each others� patents.
Eventually we come to some agreement. �You can use ours and we can
use yours�. (quoted in Cohen et al., 2000, p. 19)
@article{mallo2008patent,
title={Patent-related barriers to market entry for generic medicines in the European Union: A review of weaknesses in the current European patent system and their impact on market access of generic medicines},
author={Mallo, L. and Roox, K. and Pike, J. and Brown, A. and Becker, S. and Thaler, G.},
journal={Journal of Generic Medicines: The Business Journal for the Generic Medicines Sector},
volume={5},
number={4},
pages={255--280},
year={2008},
publisher={SAGE Publications},
filename={Mallo (2008) - Patent Related Barriers To Market Entry For Generic Medicines In The European Union.pdf}
}
Policy: Pharma and Generic meds
Certain structural defi ciencies and weaknesses
in the current examination procedure,
however, result in the grant of patents of
variable quality, giving a patent owner /
originator company facing expiry of a basic
product patent the opportunity to create what
is known as a ‘ patent thicket ’ (see below). The
most obvious structural issues are discussed
below.
One of the strategies
employed is the use of follow-on patents on
nonessential features, a practice known as
evergreening. Originators fi le numerous
follow-on patent applications covering a drug
in the hope that at least one of them will be
granted and survive a litigation challenge. The
consequence of this is often an extensive
thicket or cloud of patents around a drug,
@article{mann2004myth,
title={The myth of the software patent thicket},
author={Mann, R.J.},
journal={bepress Legal Series},
pages={183},
year={2004},
publisher={bepress},
filename={Mann (2004) - The Myth Of The Software Patent Thicket.pdf}
}
Law/Mgmt: Software Patent Thicket CORE PAPER
It then presents
evidence about existing practices in the industry suggests that technology in fact is readily
available, rebutting the prominent claims of a patent “thicket” that is supposedly stifling
innovation in the industry. On the contrary, I argue, to the extent patents have an important effect
in the industry, it is an effect that inures primarily to the benefit of the smaller firms trying to find
a foothold from which they can compete.
The broadest form of the criticism – associated with Carl Shapiro and Larry Lessig –
argues that the rapid proliferation of software patents has created a “patent thicket” that
deters innovation, particularly by small firms that are not well placed to compete against
the portfolios of their larger and better-heeled competitors
Larry
Lessig presents it forcefully as a matter of truth that the proliferation of software patents
has created a patent “thicket” (Shapiro’s term)256 or an “anticommons” (a term Lessig
draws from Michael Heller’s work with Becky Eisenberg257). This concern also pervades
James Bessen’s work (by himself and with other co-authors).258 Specifically, the idea is
that there are so many overlapping patents in the industry that potential innovators cannot
readily obtain the approvals necessary to conduct their research.259
The idea of a “thicket” or “anticommons” in the software industry is difficult to
credit.261 When raised in my interviews, that thesis universally was rejected.262 The
basic premise of the model is that assets will go unused because of the costs of obtaining
the permissions necessary to use them.263 As discussed above, there is nothing
theoretically impossible about that outcome. The important question, however, is
whether this is in fact what has happened in the software industry.
@article{marco2008therole,
jstor_articletype = {research-article},
title = {The Role of Patent Rights in Mergers: Consolidation in Plant Biotechnology},
author = {Marco, Alan C. and Gordon C. Rausser},
journal = {American Journal of Agricultural Economics},
jstor_issuetitle = {},
volume = {90},
number = {1},
jstor_formatteddate = {Feb., 2008},
pages = {pp. 133-151},
url = {http://www.jstor.org/stable/30139496},
ISSN = {00029092},
abstract = {Few empirical studies have addressed the impact of the patent system on industry structure. Using firm-level patent data for firms in plant biotechnology, we develop a measure of patent enforceability. Duration models show that patent statistics are useful predictors of the timing of consolidation and that patent enforceability is an important factor influencing the likelihood of consolidation. Acquisitions in plant biotechnology may be motivated by the enforcement of patent rights when firms have overlapping technologies; some merger activity may be explained by attempts to avoid mutually blocking technology, as exemplified by the case of Roundup Ready corn.},
language = {English},
year = {2008},
publisher = {Oxford University Press on behalf of the Agricultural & Applied Economics Association},
copyright = {Copyright © 2008 Agricultural & Applied Economics Association},
filename={Marco Rausser (2008) - The Role Of Patent Rights In Mergers.pdf}
}
Econ: Patent rights in mergers in biotech
No real mention of thickets but uses past patent litigation etc.
@article{maskus2006reforming,
title={Reforming US patent policy: getting the incentives right},
author={Maskus, K.E.},
journal={Innovations: Technology, Governance, Globalization},
volume={1},
number={4},
pages={127--153},
year={2006},
publisher={MIT Press},
filename={Maskus (2006) - Reforming Us Patent Policy Getting The Incentives Right.pdf}
}
Policy: Reforming patent policy
In addition to the costs of individual patents, researchers have to contend with
“patent thickets.” That is, complex technologies, such as biomedical research tools,
embody a number of technological inputs, many of which are patented. A different
company, in turn, could own each patent. Negotiating these thickets raises the cost of
securing rights. Weaker patent standards encourage patent proliferation and an
enlargement of the thickets for research in areas such as biotechnology, agricultural
chemicals, and pharmaceuticals.
@article{masur2010costly,
title={Costly Screens and Patent Examination},
author={Masur, J.S.},
journal={Journal of Legal Analysis},
volume={2},
number={2},
pages={687--734},
year={2010},
publisher={Oxford University Press},
filename={Masur (2010) - Costly Screens And Patent Examination.pdf}
}
Law/Policy: Reforming the patent office - screening against low quality (crap paper?)
Third, there are patents of low private
value and low (or negative) social value; this class of patents includes
both discarded, unenforced patents that increase the search costs and
risk imposed on commercial firms—the ‘‘patent thicket,’’ in popular parlance
(Shapiro 2001)—and worthless, largely unenforceable patents usable
only for extracting nuisance settlements (see Section 2.2.).
As an initial matter, search and information costs for the
entering firm will be high regardless of whether these patents are ever
enforced, as the market entrant is forced to comb through a dense ‘‘patent
thicket’’ in order to ascertain the boundaries of existing property rights
(Ayres & Parchomovsky 2007, 6–17; Merges & Duffy 2007, 615–616). It
may also be difficult and costly for new firms to credibly signal necessary
third parties such as banks, investors, and customers that a set of threatening
patents are invalid, particularly when those third parties are not experts
in the relevant technologies.
Most significantly, nascent market participants might face higher up-front 28
costs if litigation uncertainties and information asymmetries force the firmto
pay small licensing fees or settlements to a series of patent-holders who
choose to file nuisance lawsuits
@article{mcafee2004barrier,
title={What is a Barrier to Entry?},
author={McAfee, R.P. and Mialon, H.M. and Williams, M.A.},
journal={American Economic Review},
pages={461--465},
year={2004},
publisher={JSTOR},
filename={McAfee Mialon Williams (2004) - What Is A Barrier To Entry.pdf}
}
Econ: Definition of barriers to entry!
@article{menezes2004amodel,
jstor_articletype = {research-article},
title = {A Model of Seller Holdout},
author = {Menezes, Flavio and Pitchford, Rohan},
journal = {Economic Theory},
jstor_issuetitle = {},
volume = {24},
number = {2},
jstor_formatteddate = {Aug., 2004},
pages = {pp. 231-253},
url = {http://www.jstor.org/stable/25055812},
ISSN = {09382259},
abstract = {We model a buyer who wishes to combine objects owned by two separate sellers in order to realize higher value. Sellers are able to avoid entering into negotiations with the buyer, so that the order in which they negotiate is endogenous. Holdout occurs if at least one of the sellers is not present in the first round of negotiations. We demonstrate that complementarity of the buyer's technology is a necessary condition for equilibrium holdout. Moreover, a rise in complementarity leads to an increased likelihood of holdout, and an increased efficiency loss. Applications include patents, the land assembly problem, and mergers.},
language = {English},
year = {2004},
publisher = {Springer},
copyright = {Copyright © 2004 Springer},
filename={Menezes Pitchford (2004) - A Model Of Seller Holdout.pdf}
}
Econ: Theory: Model of seller holdout
@article{meniere2008patent,
title={Patent law and complementary innovations},
author={M{\'e}ni{\`e}re, Y.},
journal={European Economic Review},
volume={52},
number={7},
pages={1125--1139},
year={2008},
publisher={Elsevier},
filename={Meniere (2008) - Patent Law And Complementary Innovations.pdf}
}
Econ: Theory: Model of complementary patent innovation
It is also
very frequent in ICT industries such as electronics, computer hardware and soft-
ware, where ?rms have to navigate "patent thickets" (Shapiro, 2001)
As regards complementary innovations, the optimal patenting rule depends
on a trade-o¤ between the pro?t loss due to scattered complementary patents,
and the possible bene?t of patent disclosure. The scattering of complementary
patents between di¤erent owners creates a double marginalization issue. Since
each patentee behaves as a monopolist, the Cournot (1838) theorem predicts
that prices do not maximize the ?rms?pro?ts (Shapiro, 2001; Lerner & Tirole,
2005)1 . The requirement that complementary innovations be bundled prior to
patenting can be a way to prevent this pro?t loss. However, small innovations are
not disclosed when innovations have to be bundled prior to patenting (Scotchmer
and Green, 1990). As a result, ?rms lose the possibility to quit the race after a
?rst innovation has been patented, which leads to R&D cost duplications.
I show that patent disclosure has a positive social e¤ect, although it does not
permit a fully e¢ cient coordination between ?rms. In this context, bundling
innovations prior to patenting can be more e¢ cient if innovations can be devel-
oped quickly. As I argue in the Conclusion, this condition is consistent with the
legal de?nition of the "inventive step" patentability requirement.
@article{merges1996contracting,
title={Contracting into liability rules: Intellectual property rights and collective rights organizations},
author={Merges, R.P.},
journal={Cal L. Rev.},
volume={84},
pages={1293},
year={1996},
publisher={HeinOnline},
filename={Merges (1996) - Contracting Into Liability Rules.pdf}
}
Law: Foundational 1996 article that claims thickets are already solved!
As intellectual property rights have gained in prominence, businesspeople
and scholars alike have complained of the increasing burden
of obtaining intellectual property licenses and, failing this,
litigating intellectual property disputes. Intellectual property experts,
especially scholars, have responded to this burgeoning thicket of rights
with a series of initiatives to expedite deal making by means of statutory
compulsory licensing. These licenses are classic examples of "liability
rulesh" in the foundational legal entitlements framework of Guido Calabresi
and A. Douglas Melamed. They appear to be a compromise:
they address the mushrooming transactional hurdle created by new and
stronger intellectual property rights, while preserving most of the economic
advantages that accompany strengthened rights. In this Article,
Professor Merges argues that proposals to create more compulsory licenses
are rooted in a faulty theoretical framework. Based on a survey
of the diverse institutions various industries have cultivated to handle
intellectual property transactions, Merges contends that "repeat players"
(individuals and firms that frequently need to exchange rights) can
and often do take steps to overcome transactional bottlenecks.
This Article is aimed at providing conceptual guidance for those
who need to traverse the new thicket of intellectual property rights
(IPRs).' Each vine, each plant, standing in one's path represents a distinct
IPR owned by an individual. To pass through, one needs a license
from each owner. Where a single right blocks the path, this is easy: a
single licensing contract does the trick. Today, however, business people
more often than not encounter a tangled, twisted mass of IPRs, which
criss-cross the established walkways of commerce. Progress along this
path does not come cheaply; rather, it requires numerous contracts with
multiple, independent right holders.
@article{merges2006introductory,
title={Introductory Note to Brief of Amicus Curiae in eBay v. MercExchange},
author={Merges, R.P.},
journal={Berkeley Tech. LJ},
volume={21},
pages={997},
year={2006},
publisher={HeinOnline},
filename={Merges (2006) - Introductory Note To Brief Of Amicus Curiae In Ebay V MercExchange.pdf}
}
Law: Troll, injuction
This is commonly described as a "patent thicket": "a
dense web of overlapping intellectual property rights that a company must
hack its way through in order to actually commercialize new technology."
Carl Shapiro,
The patent thicket and other well-recognized inefficiencies in the current
patent system provide the raw material for patent trolls' machinations.
@article{mertes2010managing,
title={Managing the patent thicket and maximizing patent lifetime in vaccine technology},
author={Mertes, M.M.M. and St{\"o}tter, G.},
journal={Human Vaccines},
volume={6},
number={10},
pages={860--863},
year={2010},
publisher={Landes Bioscience},
filename={Mertes Stotter (2010) - Managing The Patent Thicket And Maximizing Patent Lifetime In Vaccine Technology.pdf}
}
Law/Policy: Thickets in vaccines (short)
Managing the patent thicket in the
fields of vaccine technology is challenging
as one product may be covered by a
plurality of exclusive IP rights that have
to be considered when developing a
product and building up a patent portfolio.
Consequently, licensing is a key point
in the vaccine industry. If a basic patent is
held by a powerful patent holder refusing
to grant a license under reasonable commercial
terms or abuses a market-dominating
position, it should be examined,
whether the requirements to request a
compulsory license are fulfilled.
@article{meurer2002business,
title={Business method patents and patent floods},
author={Meurer, M.J.},
journal={Wash. UJL \& Pol'y},
volume={8},
pages={309},
year={2002},
publisher={HeinOnline},
filename={Meurer (2002) - Business Method Patents And Patent Floods.pdf}
}
Law: Business method patents
Furthermore, a thicket of patents may stultify development of
technology because of the cost of securing patent licenses from the
large numbers of patent owners.
I fear that customer service methods are especially likely
to create a patent thicket that slows cumulative innovation and
diffusion, and institutions like patent pools may not emerge to solve
these problems because of the uncertain valuation of these inventions
and the heterogeneity of the inventions and patent owners. Trade
secret law rather than patent law will often protect administrative
methods, so making them patentable subject matter might not have
significant effects.
@book{mossoff2009stitch,
title={A stitch in time: The rise and fall of the sewing machine patent thicket},
author={Mossoff, A.},
year={2009},
publisher={George Mason University School of Law},
filename={Mossoff (2009) - A Stitch In Time The Rise And Fall Of The Sewing Machine Patent Thicket.pdf}
}
Econ: History: 'First' Patent Thicket
Scholarly interest in how anticommons theory applies to patents has skyrocketed since
Professor Michael Heller first proposed a decade ago that excessively fragmented interests in
land can frustrate its commercial development. There is now a vigorous debate on whether
anticommons exist in patent law, and, if so, whether these “patent thickets” impede innovation in
patented products. This article contributes to this debate by analyzing the rise and fall of the first
patent thicket in American history: the “Sewing Machine War” of the 1850s. The invention of the
sewing machine in the antebellum era represents many firsts in the American legal system—the
first patent thicket, the first “patent troll,” and the first patent pool. Significantly, this case study
verifies that patent thickets exist and that they can frustrate commercial development of new
products. But it also challenges widely held assumptions in the patent thicket literature. Many
scholars believe that this is largely a modern problem arising from a host of allegedly new issues
in the patent system, such as incremental high-tech innovation, excessive litigation, and the rise
of “patent trolls.” Yet the sewing machine patent thicket exhibited all of these phenomena,
revealing that patent thickets have long existed within the historically successful American
patent system. The denouement of the sewing machine patent thicket in the Sewing Machine
Combination of 1856, the first privately formed patent pool, further challenges the widely held
belief that patent thickets are best solved through new statutes, regulations or court decisions
that limit property rights in patents. To the contrary, the Sewing Machine Combination was
formed against the backdrop of the strong protection of patent rights in the antebellum
era. Thus, the story of the invention of the sewing machine is a striking account of early
American technological, commercial and legal ingenuity, which heralds important empirical
lessons for how patent thicket theory is understood and applied today.
@article{mossoff2011rise,
title={Rise and Fall of the First American Patent Thicket: The Sewing Machine War of the 1850s, The},
author={Mossoff, A.},
journal={Ariz. L. Rev.},
volume={53},
pages={165},
year={2011},
publisher={HeinOnline},
filename={Mossoff (2011) - Rise And Fall Of The First American Patent Thicket.pdf}
}
See above. Possibly a later version?
When Michael Heller proposed that excessively fragmented property rights in land can frustrate its commercial development, patent scholars began debating whether Heller’s anticommons theory applies to property rights in inventions. Do ?patent thickets? exist? The rise and fall of the first American patent thicket—the Sewing Machine War of the 1850s—confirms that patent thickets do exist and that they can frustrate commercial development of new products. But this historical patent thicket also challenges the widely held assumption that this is a modern problem arising from allegedly new issues in the patent system, such as incremental high-tech innovation and the impact of ?patent trolls.? The Sewing Machine War exhibited all of these phenomena, proving that these are hoary issues in patent law. The denouement of this patent thicket in the Sewing Machine Combination of 1856, the first privately formed patent pool, further challenges the conventional wisdom that patent thickets are best solved through public-ordering regimes that limit property rights in patents. The invention and incredible commercial success of the sewing machine is a striking account of early American technological, commercial, and legal ingenuity, which heralds important empirical lessons for how patent thicket theory is understood and applied today.
@book{muris2001competition,
title={Competition and intellectual property policy: The way ahead},
author={Muris, T.J.},
year={2001},
publisher={US FTC},
filename={Muris (2001) - Competition And Intellectual Property Policy The Way Ahead.pdf}
}
Policy: FTC speech!
On the one hand, some observers believe that this patent explosion could injure competition by
making it more difficult for rival inventors to sell competing products. According to Professor Carl Shapiro, a
"patent thicket" has formed, which he describes as "a dense web of overlapping...
@article{murray2006when,
jstor_articletype = {research-article},
title = {When Ideas Are Not Free: The Impact of Patents on Scientific Research},
author = {Murray, Fiona and Stern, Scott},
journal = {Innovation Policy and the Economy},
jstor_issuetitle = {},
volume = {7},
number = {},
jstor_formatteddate = {2006},
pages = {pp. 33-69},
url = {http://www.jstor.org/stable/25056189},
ISSN = {15313468},
abstract = {This chapter describes the impact of formal intellectual property rights on the production and diffusion of "dual knowledge"-ideas that are simultaneously of value as a scientific discovery and as a useful, inventive construct. We argue that a great deal of knowledge generated in academia, particularly in the life sciences, falls into this category (sometimes referred to as Pasteur's Quadrant). The production and diffusion of dual purpose knowledge challenges the premise of most science policy analysis, which is implicitly based on a clear separation between basic scientific knowledge and applied knowledge useful in the development of new technology. Instead, dual knowledge simultaneously makes both a basic and an applied contribution. We review qualitative and quantitative evidence relating to the policy challenges raised by the production and dissemination of dual knowledge, highlighting three broad findings. First, rather than facing a fundamental tradeoff between applied research and more fundamental scientific knowledge, research agencies can and do invest in dual purpose knowledge. Indeed, the dual purpose knowledge framework suggests a distinct rationale for public sector involvement in the funding and conduct of research: the social impact of a given piece of knowledge may be enhanced when knowledge is produced and disclosed in accordance with the norms of the scientific research community (particularly compared to secrecy). Second, we suggest that, within Pasteur's Quadrant, the increased use of formal IPR seems to be significantly shaping the structure, conduct and performance of both university and industry researchers. On the one hand, from the perspective of individual researchers, patenting does not seem to come at the expense of scientific publication, and both respond to the process of scientific discovery. There is some evidence, however, that patent grant may reduce the extent of use of knowledge: the citation rate to a scientific article describing a dual-purpose discovery experiences a modest decline after patent rights are granted over that knowledge. Finally, the impact of patents may be indirect; rather than directly impacting behavior through patent enforcement, scientific conduct may be affected through related mechanisms such as material transfer agreements. Not simply a legal document within a seamless web of cooperation, nor a bludgeon to stop scientific progress in its tracks, patents seem to be changing the "rules of the game" for scientific exchange, cooperation, and credit.},
language = {English},
year = {2006},
publisher = {The University of Chicago Press},
copyright = {Copyright © 2006 The National Bureau of Economic Research},
filename={Murray Stern (2006) - When Ideas Are Not Free The Impact Of Patents On Scientific Research.pdf}
}
Econ: Discussion with some empirics: Effect on academic research of patents
In other
words, recent empirical evidence points to the presence of a "licensing
thicket": the proliferation of both patents and contractual mechanisms
such as MTAs limiting the exchange and diffusion of scientific research
materials and knowledge.
Overall, it is important to emphasize that each of these pieces of
empirical evidence should be treated with considerable caution: tracing
out the impact of policy and institutions on the creation and diffusion
of knowledge is a formidable task. This research is recent and a great
deal of further theoretical and empirical work remains to be done. With
these important caveats in mind, the empirical evidence to date does
seem to suggest that IPR and related institutions have real impacts on
the conduct and nature of research in Pasteur's Quadrant, and offers a
novel perspective on innovation policy, particularly in the life sciences.
@article{nagaoka2006empirical,
title={An Empirical Assessment of the Effects of Patent Thickets},
author={Nagaoka, S. and Nishimura, Y.},
journal={unpublished, Hitotsubashi University},
year={2006},
filename={Nagaoka Nishimura (2006) - An Empirical Assessment Of The Effects Of Patent Thickets.pdf}
}
Econ: JUST ONE PAGE - APPEARS A CORE PAPER (though weak)
In this paper we assess empirically how a “patent thicket” affects the patenting
propensity and the use of the patents as well as whether it negatively affects the
appropriability of the R&D and patenting by a firm.
Our major findings are the following four: Firstly, a firm with higher sales per
capita tends to have a higher propensity to patent its inventions in an industry in
which there is extensive cross-licenses. Secondly, while a firm with extensive crosslicensing
has a lower rate of patent utilization, there is no evidence that a firm in an
industry with higher patent thicket has a lower rate of internally utilizing the granted
patents. Thirdly, a firm in an industry with higher patent thicket has a lower proportion
of blocking patents in the total granted patents. Fourthly, there is no strong evidence
that R&D spending or patent acquisition has a significantly lower effect on the firm’s
profitability for a firm in an industry with higher patent thicket.
@article{napoleon2009impact,
title={Impact of Global Patent and Regulatory Reform on Patent Strategies for Biotechnology},
author={Napoleon, V.J.},
journal={Pitt. J. Tech. L. \& Pol'y},
volume={9},
pages={1},
year={2009},
publisher={HeinOnline},
filename={Napoleon (2009) - Impact Of Global Patent And Regulatory Reform On Patent Strategies For Biotechnology.pdf}
}
Law/Policy (badly written): patent reform in biotech
As we discussed, at the broadest level biotechnology is an industry that includes innovation and commercialization that are supported by patents. The breadth of patent filings and the issuance of patents on more basic discoveries are on the rise.
This pattern, however, has created what some would characterize as a “Patent Thicket”59 in biotechnology. That is, emerging from the overabundance of patent filings and associated activity is “a dense web of overlapping intellectual property rights”60 that requires those seeking to commercialize new technology to obtain licenses from multiple patentees.61 Pharmaceutical companies typically grow a patent thicket seeking a wide range of chemical variants and analogs, methods of synthesizing the drug, chemical intermediates in this synthesis, different crystal forms, different finished dosage forms and various methods of use.62 Obtaining permission from various patent holders for use of patents can prove to be difficult particularly if the patent holder’s objective in creating the thicket is to block innovation by outsiders. Because useful innovation in biotechnology requires multiple inventive steps and technologies, we could conceivably witness cumulative innovation with infringement on many patents which ultimately serves as a drag on innovation and commercialization.
@article{nielsen2006compulsory,
title={Compulsory Patent Licensing: Is It a Viable Solution in the United States},
author={Nielsen, C.M. and Samardzija, M.R.},
journal={Mich. Telecomm. \& Tech. L. Rev.},
volume={13},
pages={509},
year={2006},
publisher={HeinOnline},
filename={Nielsen Samardzija (2006) - Compulsory Patent Licensing.pdf}
}
Law: Compulsory Licensing
Many of the patents overlap and block the use of other
patents, thereby creating a “patent thicket”—a “dense web
Patent trolls notwithstanding, the ability to bring a product to market
in the presence of a patent thicket and the stacking royalties must separately
be addressed. Patent clearinghouses (“PCHs”) and patent pools
have been proposed and utilized. Sometimes, however, patent owners
simply refuse to license the patent rights needed to produce a product—
particularly where the demand for a hefty royalty cannot be met or a
threat by a patent troll is involved.
To tackle the issue of obtaining a license from a non–practicing patentee,
such as a patent troll, or in the event that a patent owner wishes to
opt out of the PCH or patent pool, compulsory patent licensing may be a
viable, or only, solution
@article{noel2006strategic,
title={Strategic patenting and software innovation},
author={Noel, M.D. and Schankerman, M.},
year={2006},
publisher={CEPR Discussion Paper},
filename={Noel Schankerman (2006) - Strategic Patenting And Software Innovation.pdf}
}
Econ: Reduced form model with empirics. CORE PAPER
Strategic patenting is widely believed to raise the costs of innovating, especially in industries
characterised by cumulative innovation. This paper studies the effects of strategic patenting
on R&D, patenting and market value in the computer software industry. We focus on two key
aspects: patent portfolio size which affects bargaining power in patent disputes, and the
fragmentation of patent rights (.patent thickets.) which increases the transaction costs of
enforcement. We develop a model that incorporates both effects, together with R&D
spillovers. Using panel data for the period 1980-99, we find evidence that both strategic
patenting and R&D spillovers strongly affect innovation and market value of software firms.
In such industries, it is a widely held view that patenting
activity creates a ?thicket?of fragmented property rights that impedes R&D activity by constrain-
ing the ability of ?rms to operate without extensive licensing of complementary technologies.
There are four key empirical ?ndings in the paper. First, there are large, positive technology
spillovers from R&D for software ?rms. Second, we ?nd that patenting by technology rivals reduces
the ?rm?s R&D investment, patenting and market value. Third, greater concentration (less frag-
mentation) of patent rights among rivals reduces both R&D and patenting by the ?rm ?re?ecting
less need to have an arsenal of patents to resolve disputes when there are fewer players ?but it
increases market value because transaction costs are lower. Finally, we ?nd that there is a large
patent premium in the stock market valuation of these software ?rms, which accounts for about
twenty percent of the overall private returns to R&D investments.
@article{packalen2010complements,
title={Complements and potential competition},
author={Packalen, Mikko},
journal={International Journal of Industrial Organization},
volume={28},
number={3},
pages={244--253},
year={2010},
publisher={Elsevier},
filename={Packalen (2010) - Complements And Potential Competition.pdf}
}
Econ: Theory: Underlying theory on licensing complements
In this paper we examine the effect of cooperation between complementary incumbent monopolists on
consumer welfare. While divided technical leadership makes it difficult for firms to integrate into
complementary markets, firms induce entry in complementary markets by reducing the cost of entry in
those markets. This is accomplished through, for example, the development and dissemination of royaltyfree
intellectual property. We present and analyze a model in which incumbents can influence the ease of
entry in complementary markets. Cooperation between complementary monopolists decreases consumer
welfare by reducing or even eliminating the entry inducement incentive but increases consumer welfare by
eliminating double marginalization. We show that cooperation may decrease consumer welfare, contrary to
Cournot's celebrated double monopoly result, and that the welfare comparison can be determined in terms
of straightforward economic concepts. We also present and analyze a model in which each incumbent can
induce entry in the complementary market through long-term price commitments which are common in
patent licensing.
@article{palangkaraya2011misclassification,
jstor_articletype = {research-article},
Title = {Misclassification Between Patent Offices: Evidence From A Matched Sample Of Patent Applications},
author = {Palangkaraya, Alfons and Webster, Elizabeth and Jensen, Paul H.},
journal = {The Review of Economics and Statistics},
jstor_issuetitle = {},
volume = {93},
number = {3},
jstor_formatteddate = {August 2011},
pages = {pp. 1063-1075},
url = {http://www.jstor.org/stable/23016095},
ISSN = {00346535},
abstract = {In this paper, we estimate the extent of misclassification in patent examination decisions between the European Patent Office (EPO) and the Japanese Patent Office (JPO), that is, applications that are incorrectly refused a patent or incorrectly granted a patent. Using a proxy for inventive step as the predictor of the correct decision, we find that the probability that a "true grant" application is refused is 6.1%, while the probability that a "true refusal" application is granted is 9.8%. However, we find no evidence of an increasing trend of granting "bad" patents at the EPO and JPO.},
language = {English},
year = {2011},
publisher = {The MIT Press},
copyright = {Copyright © 2011 The MIT Press},
filename={Palangkaraya Webster Jensen (2011) - Misclassification Between Patent Offices.pdf}
}
Abstract—In this paper, we estimate the extent of misclassification in
patent examination decisions between the European Patent Office (EPO)
and the Japanese Patent Office (JPO), that is, applications that are incorrectly
refused a patent or incorrectly granted a patent. Using a proxy for
inventive step as the predictor of the correct decision, we find that the
probability that a ‘‘true grant’’ application is refused is 6.1%, while the
probability that a ‘‘true refusal’’ application is granted is 9.8%. However,
we find no evidence of an increasing trend of granting ‘‘bad’’ patents at
the EPO and JPO.
Second, our notion of a correct decision rests on the legal
meaning of validity (that is, novelty, nonobviousness, and
usefulness). From an economic perspective, however,
whether an invention should be patentable depends on the
relative net change to the incentive to invent and innovate
and the size of the deadweight monopoly losses. The latter
includes strategic ways to construct undesirable patent
thickets, build patent portfolios to extract additional bargaining
power in cross-licensing arrangements, or other
rent-seeking activities. Our estimated size of misclassification
effectively overlooks these issues. However, it is plausible
that the legal and economic interpretations of patent
validity are correlated.
@article{parchomovsky2005patent,
jstor_articletype = {research-article},
title = {Patent Portfolios},
author = {Gideon Parchomovsky and Wagner, R. Polk},
journal = {University of Pennsylvania Law Review},
jstor_issuetitle = {},
volume = {154},
number = {1},
jstor_formatteddate = {Nov., 2005},
pages = {pp. 1-77},
url = {http://www.jstor.org/stable/25047582},
ISSN = {00419907},
abstract = {},
language = {English},
year = {2005},
publisher = {The University of Pennsylvania Law Review},
copyright = {Copyright © 2005 The University of Pennsylvania Law Review},
filename={Parchomovsky Wagner (2005) - Patent Portfolios.pdf}
}
Law: Patent Portfolio theory...
This article develops a comprehensive theory of patent value, responding to
growing empirical evidence that the traditional appropriability premise of pat
ents is fundamentally incomplete in the modern innovation environment. We
find that for patents, the whole is greater than the sum of its parts: the true
value of patents lies not in their individual worth, but in their aggregation into
a collection of related patents?a patent portfolio.
"Patent thickets" refer to the fact that in many areas of technology, great num
bers of related patents exist at any particular time, and many might have applicability
to any commercial product. See, e.g., Carl Shapiro, Navigating
The patent portfolio theory also predicts that certain components
of the cost of innovation will increase in the future. As we explained
above, to achieve an effective portfolio, firms must obtain a significant
number of related patents.212 The concentration of related patents in
the hands of certain firms will raise the information and transaction
costs associated with innovation. In a portfolio-driven environment,
innovators will be forced to spend more time acquiring information
about preexisting patents213 and negotiating licenses with their hold
ers. As several commentators have pointed out, in such a patent
intensive environment, one should also expect occasional holdup
problems and bargaining failures.214 As a result, innovation becomes
more costly, at least for firms that do not have strong patent portfolios
of their own.
The portfolio theory not only explains the existence of "patent
thickets," but also suggests that the problem is highly unlikely to go
away.
@article{paredes2006written,
title={Written Description Requirement in Nanotechnology: Clearing a Patent Thicket},
author={Paredes, J.P.},
journal={J. Pat. \& Trademark Off. Soc'y},
volume={88},
pages={489},
year={2006},
publisher={HeinOnline},
filename={Paredes (2006) - Written Description Requirement In Nanotechnology.pdf}
}
Law: Nanotech: written description requirement
The
notion of a patent thicket is where an
overlapping set of patent rights requires
that those seeking to commercialize new
technology obtain licenses from multiple
patentees.6 If you get monopoly rights
down at the bottom, "you may stifle competition
that uses those patents later on
and so the breadth and utilization of
patent rights can be used not only to stifle
competition, but also have adverse effects
in the long run on innovation."7
Moreover, the quality of these
nanotechnology patents has been repeatedly
called into question," so the navigation
of a patent thicket will have to be
around these questionable patents.
One of the policy purposes of the written
description requirement has been the quid
pro quo of the patent bargain, which
requires the patentee to describe the
invention in such terms that any person
skilled in the art to which it pertains may
construct and use it after expiration of the
patent .6
became more clear that the
purpose of the written description
requirement is to "ensure that the scope of
the right to exclude, as set forth in the
claims, does not overreach the scope of
the inventor's contribution to the field of
art as described in the patent specification."
@article{pray2005innovation,
title={Innovation and dynamic efficiency in plant biotechnology: An introduction to the researchable issues},
author={Pray, C. and Oehmke, J.F. and Naseem, A.},
year={2005},
publisher={AgBioForum},
filename={Pray Oehmke Naseem (2005) - Innovation And Dynamic Efficiency In Plant Biotechnology.pdf}
}
Econ: Innovation and dyn. eff. in biotech
The agricultural biotechnology industry is characterized by
heavy investment in research and development, dynamic technical
change, and increasing concentration in both the output
market and the ownership of intellectual properties that support
ongoing innovation. This raises questions about the industry’s
ability to continue to deliver path-breaking innovations. This
paper lays out these questions, describes the relevant data
(including the newly available agricultural biotechnology intellectual
property database), and provides a conceptual framework
for addressing the questions. The empirical discussion and conceptual
framework in this paper constitute a structure upon
which the remaining articles in this issue build to address the
overall question of how best we can maintain socially desirable
rates of innovation and dynamic efficiency in plant biotechnology.
The 1990s witnessed legal challenges to many
key patents, complaints by scientists and industry that
they could not commercialize products that relied on
intellectual properties patented by private firms, record
numbers of mergers and acquisitions to integrate the
biotechnology and seed industries, and complex thickets
of interwoven patents that prevented even the most
skilled negotiators from obtaining rights to disseminate
innovative technologies. Industry responded by aggressively
consolidating, so that enabling intellectual properties
were owned by the same company, which could
then move forward with the commercialization of new
agricultural technologies.
As the technology has developed, patenting has
become increasingly widespread in every major area of
agricultural biotechnology. Every successive five-year
period has seen more patented innovation than the last
period—in every technology. It is unclear whether this
supports the anticommons/patent thicket concern.
@article{quillen2001continuing,
title={Continuing patent applications and performance of the US patent and trademark office},
author={Quillen, C.D. and Webster, O.H.},
journal={Fed. Cir. BJ},
volume={11},
pages={1},
year={2001},
publisher={HeinOnline},
filename={Quillen Webster (2001) - Continuing Patent Applications And Performance Of The Us Patent And Trademark Office.pdf}
}
Law: Empirical: Patent continuations
The United States is unique in permitting patent applicants to refile their
patent applications as continuation and continuation-in-part applications claiming
the benefit of the filing date of a prior application and restart the examination
process all over again. Data provided by the USPTO concerning continuing
application filings for its fiscal years 1993-1998 reveal that 28.4% of the utility,
plant, and reissue (UPR) applications filed in those years were not new or original
applications, but were continuing applications claiming the benefit of the filing
dates of previously filed applications.
Doesn't directly mention thickets
@article{rai2003engaging,
jstor_articletype = {research-article},
title = {Engaging Facts and Policy: A Multi-Institutional Approach to Patent System Reform},
author = {Rai, Arti K.},
journal = {Columbia Law Review},
jstor_issuetitle = {},
volume = {103},
number = {5},
jstor_formatteddate = {Jun., 2003},
pages = {pp. 1035-1135},
url = {http://www.jstor.org/stable/1123832},
ISSN = {00101958},
abstract = {The Court of Appeals for the Federal Circuit, charged with adjudicating appeals in patent cases, has adopted an unusual approach that arrogates power over fact finding while it simultaneously invokes rule-formalism. Although the Federal Circuit's approach may be justified by the fact-finding and policy application deficiencies of the trial courts and the Patent and Trademark Office (PTO), it has had a negative impact on innovation policy and has resulted in a patent system that is sorely in need of reform. This Article argues that because of the interdependence of the various institutions within the patent system, reform of the system must be both multi-institutional and closely attentive to the institutional competence of the system's actors. Although Congress should clearly bolster the PTO's fact-finding abilities, giving plenary responsibility over factual questions to the PTO would not be cost effective. Accordingly, Congress should endow the system with improved fact-finding expertise through the institution of specialized trial courts. As for actual policy formulation, each of the available institutional options--the legislature, the PTO, and the courts--has substantial associated liabilities. On balance, however, the Federal Circuit is probably best positioned to formulate patent policy, so long as the fact-finding expertise of inferior institutions is bolstered and additional appellate mechanisms are instituted. By paying attention to institutional design and revising our institutions accordingly, we can achieve the patent system we should have had all along.},
language = {English},
year = {2003},
publisher = {Columbia Law Review Association, Inc.},
copyright = {Copyright © 2003 Columbia Law Review Association, Inc.},
filename={Rai (2003) - Engaging Facts And Policy.pdf}
}
Law: patent reform
Defensive patenting has become particularly prominent in certain industries like
the semiconductor industry, where innovation is cumulative, and a thicket of relevant
patents often exists.
More?
over, the guidelines on utility incorporate, at least implicitly, economic
concerns that setting the utility standard too low could impede scientific
progress by creating a transaction-cost-heavy thicket of patents on basic
research.443
@inproceedings{regibeau2011assessment,
title={Assessment of potential anticompetitive conduct in the field of intellectual property rights and assessment of the interplay between competition policy and IPR protection},
author={Regibeau, Pierre and Rockett, Katharine},
booktitle={Prepared for the European Commission, Publications Office of the European Union, ISBN 978-92-79-22210-8},
year={2011},
filename={Regibeau Rockett (2011) - Assessment Of Potential Anticompetitive Conduct.pdf}
}
Policy: Anticompetitive behaviour and patents - CORE PAPER. Solid Lit Review.
Over the last 10 years or so, there has been a growing policy concern about so-called patent
thickets. The terms “thicket” has been used somewhat indiscriminately in competition law
circles to describe various types of concentration of IPRs3. In this report, we use the term in
a much more specific and precise sense. Following Shapiro’s definition, patent thickets are
“an overlapping set of patent rights requiring that those seeking to commercialise new
technology obtain licenses from multiple partners”.4 Two conditions must then be fulfilled for
a thicket to arise. Firstly, the production and sale of a given product involves the use of a
large number of patent rights. Secondly, the ownership of those rights is dispersed.
4.Shapiro (2001), p. 119.
@article{reichman2007harmonization,
jstor_articletype = {research-article},
title = {Harmonization without Consensus: Critical Reflections on Drafting a Substantive Patent Law Treaty},
author = {Reichman, Jerome H. and Dreyfuss, Rochelle Cooper},
journal = {Duke Law Journal},
jstor_issuetitle = {},
volume = {57},
number = {1},
jstor_formatteddate = {Oct., 2007},
pages = {pp. 85-130},
url = {http://www.jstor.org/stable/40040588},
ISSN = {00127086},
abstract = {In this Article, we contend that the World Intellectual Property Organization's proposed Substantive Patent Law Treaty (SPLT) is premature. Developing countries are struggling to adjust to the heightened standards of intellectual property protection required by the TRIPS Agreement of 1994. With TRIPS, at least, these countries obtained side payments (in the form of trade concessions) to offset the rising costs of knowledge products. A free-standing instrument, such as the SPLT, would shrink the remaining flexibilities in the TRIPS Agreement with no side payments and no concessions to the catch-up strategies of developing countries at different stages of technological advancement. More controversially, we argue that a deep harmonization would boomerang against even its developed country promoters by creating more problems than it would solve. There is no vision of a properly functioning patent system for the developed world that commands even the appearance of a consensus. The evidence shows, instead, that the worldwide intellectual property system has entered a brave new scientific epoch, in which experts have only tentative, divergent ideas about how best to treat a daunting array of new technologies. The proposals for reconciling the needs of different sectors, such as information technology and biotechnology, pose hard, unresolved issues at a time when the costs of litigation are rising at the expense of profits from innovation. These difficulties are compounded by the tendency of universities to push patenting up stream, generating new rights to core methodologies and research tools. As new approaches to new technologies emerge in different jurisdictions, there is a need to gather empirical evidence to determine which, if any, of these still experimental solutions are preferable over time. Our argument need not foreclose other less intrusive options and measures surveyed in the Article that can reduce the costs of delaying harmonization. However, the international community should not rush to freeze legal obligations regarding the protection of intellectual property. It should wait until economists and policymakers better understand the dynamics of innovation and the role that patent rights play in promoting progress and until there are mechanisms in place to keep international obligations responsive to developments in science, technology, and the organization of the creative community.},
language = {English},
year = {2007},
publisher = {Duke University School of Law},
copyright = {Copyright © 2007 Duke University School of Law},
filename={Reichman Dreyfuss (2007) - Harmonization Without Consensus.pdf}
}
Law: patent reform
For example, the risk of debilitating suits motivates participants to acquire multiple patents, hoping that with enough potential counterclaims, they can fend off or negotiate their way out of difficulty. The result is a vicious cycle: thickets of rights that are expensive (or nearly impossible) to clear, requiring an ever-larger arsenal of defensive protection
@article{reitzig2004private,
title={The private values of ‘thickets’ and ‘fences’: towards an updated picture of the use of patents across industries},
author={Reitzig, M.},
journal={Economics of Innovation and New Technology},
volume={13},
number={5},
pages={457--476},
year={2004},
publisher={Taylor \& Francis},
filename={Reitzig (2004) - The Private Values Of Thickets And Fences.pdf}
}
Econ: Empirical: Thickets different in discrete vs. complex tech. CORE PAPER.
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.
@article{reitzig2007sharks,
title={On sharks, trolls, and their patent prey—Unrealistic damage awards and firms’ strategies of “being infringed”},
author={Reitzig, M. and Henkel, J. and Heath, C.},
journal={Research Policy},
volume={36},
number={1},
pages={134--154},
year={2007},
publisher={Elsevier},
filename={Reitzig Henkel Heath (2007) - On Sharks Trolls And Their Patent Prey.pdf}
}
Econ: Theory: Trolls
As both
articles show, the “strategic use” of patents (the two most important
types being blocking and cross-licensing with patent ‘thickets’ playing
a major role for the latter), has classically been discussed from the perspective
of those patent holders who either engage in the production
of their own technological goods or consider themselves professional
intellectual property suppliers who repeatedly interact with manufacturers.
The strategy of “being infringed” as pursued by trolls is a
different phenomenon. While not entirely new(see Section 4.1, quoting
Lemelson versus Mattel), the broad systematic use of troll strategies
appears to be very recent, however.
@article{rey2012abuse,
title={Abuse of dominance and licensing of intellectual property},
author={Rey, P. and Salant, D.},
journal={International Journal of Industrial Organization},
year={2012},
publisher={Elsevier},
filename={Rey Salant (2012) - Abuse Of Dominance And Licensing Of Intellectual Property.pdf}
}
Econ: Theory: Underlying theory of thickets
Patent thickets, layers of licenses a �rm needs to be able to o�er products that embody
technologies owned by multiple �rms, and licensing policies have drawn increasing
scrutiny from policy makers. Patent thickets involve complementary products, which
gives rise to double marginalization { the so-called royalty stacking problem { and has
the potential to retard di�usion of new technologies and reduce consumer welfare.1
One is the patent thicket problem,
which is an extension of Cournot's 1838 complementary product oligopoly model to
IP.5 When there are two or more owners of essential IP, each fails to take into account
the impact of its licensing policy on the owners of complementary IP; this results in
double-marginalization
Patent thickets have long been a concern due to the potential for delaying deployment
of products and adversely a�ecting consumers. To examine the implications of such
patent thickets, we consider a model in which the upstream IP owner or owners sell
into a market in which there are di�erentiated products and positive �xed entry costs.
It is well known that, in the absence of vertical licensing agreements, there can be
excessive entry, due to business stealing e�ects, or insu�cient entry, if �rms entering
the market appropriate only part of the surplus they generate. We revisit this issue,
taking into account the upstream owner(s)' licensing policy
@inproceedings{rubinfeld2004strategic,
title={The strategic use of patents: Implications for antitrust},
author={Rubinfeld, D.L. and Maness, R.},
booktitle={Antitrust, Patent and Copyright Conference},
year={2004},
filename={Rubinfeld Maness (2004) - The Strategic Use Of Patents Implications For Antitrust.pdf}
}
Law: Creating a thicket to raise rivals cost
To see more specifically how a firm could use a large patent portfolio to raise rivals’
costs, consider the case of a differentiated product oligopoly where innovation and product
design are important elements of competition among rivals. In this case, a firm with a large
patent portfolio surrounding competitors’ key technologies (i.e., a “patent thicket”) has the
opportunity to use its patent portfolio to lessen competition in the final goods market.17
@article{sabety2004nanotechnology,
title={Nanotechnology innovation and the patent thicket: Which IP policies promote growth},
author={Sabety, T.},
journal={Alb. LJ Sci. \& Tech.},
volume={15},
pages={477},
year={2004},
publisher={HeinOnline},
filename={Sabety (2004) - Nanotechnology Innovation And The Patent Thicket.pdf}
}
Law: Thickets in nanotech (comparison with radio industry)
Yet, several commentators have raised concerns
that the extraordinary pace of patenting of nanotechnology5
will result in a patent deadlock6 that will stifle innovation and
impede economic growth.7
@article{santore2010patent,
jstor_articletype = {research-article},
title = {Patent Pools as a Solution to Efficient Licensing of Complementary Patents? Some Experimental Evidence},
author = {Rudy Santore and Michael McKee, and David Bjornstad},
journal = {Journal of Law and Economics},
jstor_issuetitle = {},
volume = {53},
number = {1},
jstor_formatteddate = {February 2010},
pages = {pp. 167-183},
url = {http://www.jstor.org/stable/10.1086/600078},
ISSN = {00222186},
abstract = {Abstract Production requiring licensing groups of complementary patents implements a coordination game among patent holders, who can price patents by choosing among combinations of fixed and royalty fees. Summed across patents, these fees become the total producer cost of the package of patents. Royalties, because they function as excise taxes, add to marginal costs, resulting in higher prices and reduced quantities of the downstream product and lower payoffs to the patent holders. Using fixed fees eliminates this inefficiency but yields a more complex coordination game in which there are multiple equilibria, which are very fragile in that small mistakes can lead the downstream firm to not license the technology, resulting in inefficient outcomes. We report on a laboratory market investigation of the efficiency effects of coordinated pricing of patents in a patent pool. We find that pool-like pricing agreements can yield fewer coordination failures in the pricing of complementary patents.},
language = {English},
year = {2010},
publisher = {The University of Chicago Press for The Booth School of Business of the University of Chicago and The University of Chicago Law School},
copyright = {Copyright © 2010 The University of Chicago},
filename={Santore McKee Bjornstad (2010) - Patent Pools As A Solution To Efficient Licensing Of Complementary Patents.pdf}
}
Law/Econ: Theory with Empircs: patent pools
More recently, a National Academy of Sciences (2006) committee studied the issue,
concluding that even though evidence of blocking or market failures has yet to emerge, the anticommons
or patent thickets may well emerge as profit opportunities in biomedical markets grow
Shapiro (2001) broadens the concept as a “patent thicket” in
which possible outcomes include excessively high fees for the use of the patent set, uncertainty
regarding potential patent infringement, and, in the limit, holdup problems.
@article{sanyal2005peanut,
jstor_articletype = {research-article},
title = {Peanut Butter Patents versus the New Economy: Does the Increased Rate of Patenting Signal More Invention or Just Lower Standards?},
Author = {Sanyal, Paroma And Jaffe, Adam B. And Sanyal, Panoma},
journal = {Annals of Economics and Statistics / Annales d'Économie et de Statistique},
jstor_issuetitle = {Contributions in memory of Zvi Griliches},
volume = {},
number = {79/80},
jstor_formatteddate = {JULY/DECEMBER 2005},
pages = {pp. 211-240},
url = {http://www.jstor.org/stable/20777576},
ISSN = {0769489X},
abstract = {The explosion in the patenting rate in the U.S. during the last half of the 1990s is often attributed partly to an apparent decline in examination standards. We estimate a simultaneous equation model accounting for the fact that a decline in examination standards would itself induce an increase in dubious applications. We have a multi-dimensional panel, with data on the application and grant rates and country of origin and destination. We find that a 'loosening' of the grants standard by 1 percent increases applications by 8 percent in the full sample and by 3 percent in the Non-US sample. After accounting for the endogenous application response, the application elasticity of grants is around 0.124 for the full sample and 0.145 for the Non-US one. Countries whose patent applications are more likely to be successful in the US are more likely to be successful in other countries as well. These findings confirm that inventors respond to increased likelihood of success at the patent office by filing more applications, but also confirm earlier findings that the surge in patenting in the US in the last two decades appears to be driven to a significant extent by an increase in the underlying invention rate. L'explosion du taux de délivrance de brevets aux Etats-Unis durant la seconde moitié des années 90 est souvent attribuée en partie à un relâchement des niveaux d'exigence requis à l'examen des inventions. Nous estimons un modèle d'équations simultanées rendant compte du fait qu'un abaissement du niveau d'exigence devrait induire une augmentation des demandes douteuses. Nous utilisons un panel multi-dimensionnel, contenant des données sur la nature des demandes de brevet, les taux de délivrance, les pays d'origine et de destination. Nous trouvons qu'une diminution du niveau d'exigence pour la délivrance des brevets de 1% augmente le nombre de demandes de 8% dans l'échantillon total et de 3% dans l'échantillon non-US. En tenant compte de l'endogénéité.},
language = {English},
year = {2005},
publisher = {L'INSEE / GENES on behalf of ADRES},
copyright = {Copyright © 2005 L'INSEE / GENES},
filename={Sanyal Jaffe Sanyal (2005) - Peanut Butter Patents Versus The New Economy.pdf}
}
Econ: Empirical: looser standards dramatically increase patenting
ABSTRACT. - The explosion in the patenting rate in the U.S. during the last half of the 1990s is often attributed partly to an apparent decline in examination standards. We estimate a simultaneous equation model accounting for the fact that a decline in examination standards would itself induce an increase in dubious applications. We have a multi-dimensional panel, with data on the application and grant rates and country of origin and destination. We find that a loosening' of the grants standard by 1 percent increases applications by 8 percent in the full sample and by 3 percent in the Non-US sample. After accounting for the endogenous application response, the application elasticity of grants is around 0.124 for the full sample and 0.145 for the Non-US one. Countries whose patent applications are more likely to be successful in the US are more likely to be successful in other countries as well. These findings confirm that inventors respond to increased likelihood of success at the patent office by filing more applications, but also confirm earlier findings that the surge in patenting in the US in the last two decades appears to be driven to a significant extent by an increase in the underlying invention rate.
@book{schacht2006patent,
title={Patent reform: Issues in the biomedical and software industries},
author={Schacht, W.H.},
year={2006},
publisher={Congressional Research Service (7 April 2006), available at:< http://sharp. sefora. org/wp-content/uploads/2007/12/rl33367. pdf},
filename={Schacht (2006) - Patent Reform Issues In The Biomedical And Software Industries.pdf}
}
PolicyReport: Patent reform (rpt for congress)
Concerns have been expressed in the academic community that the propensity
to patent and the extensive use of cross licensing has resulted in a “patent thicket”
where ownership of patent title is used to block others from innovating. According
to Bessen and Hunt, “This may have increased the attractiveness of a strategy that
emphasizes patent rights over a strategy based on R&D.”61 However, other experts
maintain that this might not be a true assessment of the situation. In an article for the
Virginia Journal of Law and Technology, David Evans and Anne Layne-Farrar argue
it is not clear that a patent thicket exists. “Other industries with longstanding histories
of patenting could be categorized as having cumulative and sequential R&D, yet they
do not display signs of innovation gridlock.”62 There are additional ways to prevent
the use of patents to block innovation including the use of pro-competitive patent
pools and antitrust enforcement.
@article{scheffman2003twenty,
title={Twenty years of raising rivals' costs: History, assessment, and future},
author={Scheffman, D.T. and Higgins, R.S.},
journal={Geo. Mason L. Rev.},
volume={12},
pages={371},
year={2003},
publisher={HeinOnline},
filename={Scheffman Higgins (2003) - Twenty Years Of Raising Rivals Costs History Assessment And Future.pdf}
}
Law: Raising rival's cost
More difficult to reach are what appear to be anti-consumer (but may
be more difficult to reach as anticompetitive) activities by “patent vultures,”
and the use of patent thickets (sometimes combined with high stakes
(for the defendant) actions at the International Trade Commission)
@article{schmalensee2009standard,
title={Standard-Setting, Innovation Specialists And Competition Policy},
author={Schmalensee, R.},
journal={The Journal of Industrial Economics},
volume={57},
number={3},
pages={526--552},
year={2009},
publisher={Wiley Online Library},
filename={Schmalensee (2009) - Standard Setting Innovation Specialists And Competition Policy.pdf}
}
Econ: Theory: Standard setting
To the extent that patent policy inflates the number of patents that must be licensed in order to practice a standard, it contributes to what has beecalled a ‘patent thicket’ through which standard-setting must pass. This clearly complicates
3
standard-setting and may make standards less socially valuable.10 As my concern here is with antitrust policy, however, I will treat patent policy as given.
One might argue that the rate of innovation or at least of patenting is in fact too high in some sectors, particularly those in which the patent thicket problem is severe. A problem 26
with this argument is that the returns to major innovations would be reduced by collective negotiation, not just the returns to the minor advances that contribute more to patent thickets than to real progress. Alternatively, one could contend that in many industries the probability that any given innovation will be involved in standard-setting is low enough that the general use of collective negotiation in standard-setting would not have a major impact on the expected returns to innovation. This argument does not seem persuasive in the IT/communications sector, however, where standard-setting is of central importance.
@article{schmidt2007negotiating,
title={Negotiating the RNAi patent thicket},
author={Schmidt, C.},
journal={Nature biotechnology},
volume={25},
number={3},
pages={273--280},
year={2007},
publisher={New York, NY: Nature Pub. Co., 1996-},
filename={Schmidt (2007) - Negotiating The Rnai Patent Thicket.pdf}
}
Biology: Thicket due to a single firm in RNA interference?
Currently based in San Francisco, Sirna spent
its recent past accumulating one of the broadest
RNAi patent estates in existence. Merck now
owns that estate, and all the uncertainty that
comes with it. As a Nobel-prize winning technology,
RNAi could become biotech’s third act,
after gene cloning and monoclonal antibodies.
But no one can say whether it will ever bring
useful drugs to market.
@article{schmidt2008complementary,
title={Complementary Patents and Market Structure},
author={Schmidt, K.},
year={2008},
publisher={CEPR Discussion Paper No. DP7005},
filename={Schmidt (2008) - Complementary Patents And Market Structure.pdf}
}
Econ: Theory: Model of complementary patent problems
Thus, if a downstream firm wants to produce goods that are based
on the standard it requires access to each of the essential patents. All the patents are perfect
complements. Therefore each of the upstream IP holders has monopoly power over the
downstream market. This “patent thicket” (Shapiro, 2001) gives rise to a complements
problem: each patent holder does not internalize the negative external effect on the revenues
of the other patent holders when setting his royalties, so the sum of all royalties will be
inefficiently high. In addition, there is a vertical double marginalization problem if firms on
the downstream market have market power. These externalities affect not only the prices
charged downstream, they also affect the incentives to enter the downstream market with new
product varieties and to develop new technology that improves the quality of the standard.
@article{schneider2008fences,
title={Fences and competition in patent races},
author={Schneider, C.},
journal={International Journal of Industrial Organization},
volume={26},
number={6},
pages={1348--1364},
year={2008},
publisher={Elsevier},
filename={Schneider (2008) - Fences And Competition In Patent Races.pdf}
}
Econ: Theory: Fencing with substitutes
This paper studies the behaviour of ?rms facing the decision to cre-
ate a patent fence, de?ned as a portfolio of substitute patents. We set
up a patent race model, where ?rms can decide either to patent their
inventions, or to rely on secrecy. It is shown that ?rms build patent
fences, when the duopoly pro?ts net of R&D costs are positive. We
also demonstrate that in this context, a ?rm will rely on secrecy when
the speed of discovery of the subsequent invention is high compared
to the competitor?s. Furthermore, we compare the model under the
First-to-Invent and First-to-File legal rules. Finally, we analyze the
welfare implications of patent fences.
However, ?rms patent for di¤erent reasons in ?discrete? product
industries, in which an invention can be protected by a limited number of
patents and in ?complex?product industries, where a single patent is not
enough to protect an invention. More precisely, ?rms will patent a coherent
group of inventions, which form what is sometimes called a patent "bulk",
aimed at protecting one product. The "bulk" can either be a "fence" of
substitute patents or a "thicket" of complementary patents (see Reitzig, 2004
and Cohen et al., 2000).
While the issue of "thickets" of complementary technologies in cumula-
tive innovations has been extensively analyzed2, as well as the institutional
solutions to overcome this problem (Lerner and Tirole, 2005 and Shapiro,
2001), little attention has been paid to fencing patents so far.
@article{shand2007trends,
title={Trends in intellectual property and nanotechnology: implications for the global south},
author={Shand, H. and Wetter, K.J.},
journal={Journal of Intellectual Property Rights},
volume={12},
pages={111--117},
year={2007},
filename={Shand Wetter (2007) - Trends In Intellectual Property And Nanotechnology.pdf}
}
Law: nanotech
Not copyable. Not good either - no support for argument that there is a thicket and it is a problem.
@article{sharrott2006intellectual,
title={Intellectual Property Developments in Biochip Nanotechology},
author={Sharrott, D. and Sayeed, H.A.},
journal={Nanotech. L. \& Bus.},
volume={3},
pages={20},
year={2006},
publisher={HeinOnline},
filename={Sharrott Sayeed (2006) - Intellectual Property Developments In Biochip Nanotechology.pdf}
}
Law: thicket in DNA microarrays (some nanotech genetic thingies)
When the
National Institutes of Health applied for the first EST patents in 1991, the possibility arose that such
patents could overlap with and possibly invalidate later patents directed toward fully-sequenced,
expressed genes.8 Commentators describe this proliferation of overlapping patents as a potential “patent
thicket”—a tangle of intellectual property rights through which companies must cut to bring new
technologies to market.9 In the thicket, scientists and corporations might be forced to renegotiate
constantly for the right to exercise any individual gene patent, or to use commercial products obtained
from that gene.
Until recently, the most significant IP concern about biochips involved the patentability of expressed
sequence tags
On September 7, 2005, the Federal Circuit signaled its agreement with the PTO guidelines by
holding that ESTs are unpatentable because of a lack of specific and substantial utility.13 In re Fisher
involved an appeal from the Board of Patent Appeals and Interferences for an invention relating to ESTs
purified from maize plants. The Federal Circuit held that, absent clear identification of the related maize
plant genes, the claimed ESTs were not “researched and understood to the point of providing an
immediate, well-defined, real world benefit to the public meriting the grant of a patent.”14 The Court
majority was unmoved by the argument that ESTs could offer substantial utility as laboratory research
tools.15
In re Fisher marks a paradigm shift in biotechnology innovation. The Federal Circuit appears intent
on preventing patent thickets from taking root in genetic applications. How In re Fisher will affect
business growth and research and development in the microfluidics industry will be of intense interest to
investors in the coming months and years.
@article{serafino2007survey,
title={Survey of patent pools demonstrates variety of purposes and management structures},
author={Serafino, D.},
journal={Knowledge Ecology International. http://keionline. org/content/view/69/1},
year={2007},
filename={Serafino (2007) - Survey Of Patent Pools Demonstrates Variety Of Purposes And Management Structures.pdf}
}
Econ: Theory and Empirics: Licensing to resolve the thicket
In some high technology industries the process of research and development is comparable to
the continuous extension of a pyramid through the addition of new building blocks at the top
[Shapiro (2001)]. Here, the pyramid serves as a metaphor for the cumulativeness of scientific
research in complex product industries.1
Firms increasingly protect their contributions to this pyramid with patents. As a result
several high technology industries are now affected by a “patent thicket” [Heller and Eisenberg
(1998); Hall and Ziedonis (2001); Shapiro (2001)]. In a patent thicket many rival firms hold
patents protecting components of a single technology. Whenever a firm uses such a technology
it is vulnerable to hold up by firms holding blocking patents [Grindley and Teece (1997),
Jaffe (2000), Shapiro (2001)]. The threat posed by blocking patents frequently induces firms
to build up a large portfolio of patents. This creates a strong bargaining position for the firm
owning the portfolio in any disputes with rivals. In a patent thicket all firms face the prospect
of hold up and have strong incentives to patent, which perpetuates the patent thicket. Hold
up in a patent thicket may be resolved through licensing of blocking patents. Therefore, an
understanding of how licensing works in industries affected by patent thickets is increasingly
important.
@incollection{shapiro2001navigating,
title={Navigating the patent thicket: Cross licenses, patent pools, and standard setting},
author={Shapiro, C.},
booktitle={Innovation Policy and the Economy, Volume 1},
pages={119--150},
year={2001},
publisher={MIT Press},
filename={Shapiro (2001) - Navigating The Patent Thicket.pdf}
}
CORE PAPER!!!
REVIEW IT CAREFULLY (AGAIN)
@article{shapiro2003antitrust,
title={Antitrust limits to patent settlements},
author={Shapiro, C.},
journal={RAND Journal of Economics},
pages={391--411},
year={2003},
publisher={JSTOR},
filename={Shapiro (2003) - Antitrust Limits To Patent Settlements.pdf}
}
Patents, patent litigation, and patent settlements increasingly influence competition. Settlements
ofpatent disputesc ome in manyforms,i ncludingl icensing and cross-licensinga greementsp, atent
pools, mergers, and joint ventures. While frequently procompetitive, such settlements can stifle
competition and harm consumers. I propose a specific antitrust rule limiting such settlements: a
settlement must leave consumers at least as well off as they would have been from ongoing patent
litigation. After establishing that profitable settlements satisfying this constraint generally exist,
I show how this antitrust rule can be used to evaluate three types of settlements: mergers, patent
pools, and negotiated entry dates.
Making matters even more complex, many products can potentially infringe multiple patents. As
described in Shapiro (2001), more and more companies are facing a patent thicket requiring them
to obtain multiple licenses to bring their products safely to market.
@article{siebert2006jostling,
title={Jostling for advantage: Licensing and entry into patent portfolio races},
author={Siebert, R. and Von Graevenitz, G.},
year={2006},
publisher={CEPR Discussion Paper},
filename={Siebert VonGraevenitz (2006) - Jostling For Advantage Licensing And Entry Into Patent Portfolio Races.pdf}
}
Econ: Theory: Licensing and entry in a thicket CORE PAPER
Licensing in a patent thicket allows firms to either avoid or resolve hold-up. Firms’ R&D
incentives depend on whether they license ex ante or ex post. We develop a model of a
patent portfolio race, which allows for endogenous R&D efforts, to study firms’ choice
between ex ante and ex post licensing. The model shows that firms’ relationships in product
markets and technology space jointly determine the type of licensing contract chosen.
In particular, product market competitors are more likely to avoid patent portfolio races,
since the threat of hold-up increases. On the other hand, more valuable technologies are
more likely to give rise to patent portfolio races. We also discuss the welfare implications
of these results.
Rival firms, in complex product industries, are often owners of complementary assets.1 Therefore,
firms in these industries are more frequently forced to license technologies from each
other than rival firms in other industries. Increasingly, rival firms in complex product industries
protect these component technologies with patents [Hall (2004)]. It is, therefore, likely
that ownership of technologies underlying a complex product is highly dispersed and a “patent
thicket” emerges [Heller and Eisenberg (1998); Hall and Ziedonis (2001); Shapiro (2001)].
Firms caught in a patent thicket must cooperate by licensing technologies, otherwise mutual
blocking of technological improvements is likely and competition degenerates into litigation.
@article{siebert2008does,
title={Does Licensing Resolve Hold Up in the Patent Thicket?},
author={Siebert, R. and Graevenitz, G.},
year={2008},
filename={Siebert Graevenitz (2008) - Does Licensing Resolve Hold Up In The Patent Thicket.pdf}
}
Econ: Empirical: Licensing and thickets CORE PAPER
In a patent thicket licensing provides a mechanism to either avoid or resolve hold up.
We study the choice between ex ante licensing to avoid hold up and ex post licensing
to resolve it. Firms’ choice of licensing contract is studied in the context of a patent
portfolio race. We show that high expected blocking leads to ex ante licensing while ex
post licensing arises if expected blocking is low but realized blocking is high. Also, ex
ante licensing reduces firms’ R&D incentives. A sample selection model of licensing is
derived from the theoretical model. In this framework theoretical predictions on effects
of blocking are tested with data from the semiconductor industry. We show that licensing
helps firms to resolve blocking. However, licensing is not a cure all: it decreases as
fragmentation of property rights increases and arises mainly between large firms with
similar market shares. Using a treatment effects model we also confirm the prediction
that ex ante licensing reduces the level of R&D investment.
Firms increasingly protect their contributions to this pyramid with patents. As a result
several high technology industries are now affected by a “patent thicket” [Heller and Eisenberg
(1998); Hall and Ziedonis (2001); Shapiro (2001)]. In a patent thicket many rival firms hold
patents protecting components of a single technology. Whenever a firm uses such a technology
it is vulnerable to hold up by firms holding blocking patents [Grindley and Teece (1997),
Jaffe (2000), Shapiro (2001)]. The threat posed by blocking patents frequently induces firms
to build up a large portfolio of patents. This creates a strong bargaining position for the firm
owning the portfolio in any disputes with rivals. In a patent thicket all firms face the prospect
of hold up and have strong incentives to patent, which perpetuates the patent thicket. Hold
up in a patent thicket may be resolved through licensing of blocking patents. Therefore, an
understanding of how licensing works in industries affected by patent thickets is increasingly
important.
Our results indicate that licensing in the semiconductor industry is undertaken primarily
by larger and more symmetric pairs of firms. We show that licensing choices made by such
firms is consistent with a model of patent portfolio races in which licensing guarantees freedom
to operate. This contrasts with existing models of licensing which focus on technology
35
exchange and or attempts to affect the intensity of product market competition [Scotchmer
(2004), Shapiro (2003a)]. We also show that licensing ex ante, before R&D investments are
made allows firms to reduce the levels of patenting. This finding further supports the patent
portfolio race model of patenting in the semiconductor industry.
Finally, we find that the fragmentation
of patent rights reduces firms’ propensity to license ex ante and ex post. Thus a deepening of
36
patent thickets resulting from more complex blocking relationships seems to undermine the
usefulness of licensing to resolve blocking.
Worryingly our results also indicate that licensing becomes less important as patent
ownership becomes more fragmented.
@article{siebert2010licensing,
title={Licensing in the Patent Thicket-Timing and Benefits},
author={Siebert, R.B. and Von Graevenitz, G.},
year={2010},
filename={Siebert VonGraevenitz (2010) - Licensing In The Patent Thicket Timing And Benefits.pdf}
}
Econ: Theory and empirics: licensing in thickets
CORE PAPER. Seems a combination of two of the above.
Licensing can be a solution for hold-up in patent thickets. In this paper we study whether
licensing is an effective solution for hold-up. To do this we distinguish between ex ante
and ex post licensing. A theoretical model shows that firms’ expectations of blocking in
a patent thicket determine whether they license ex ante while ex post licensing arises if
expected blocking was low but realized blocking turns out to be high. It can also be shown
that ex ante licensing will allow firms to reduce their patenting efforts. A sample selection
model of licensing is derived from the theoretical model. Applying this to data from the
semiconductor industry we show that licensing does help firms to resolve blocking. However,
the probability of observing licensing decreases as fragmentation of property rights
increases and arises mainly between large firms with similar market shares. Licensing
experience is also an important determinant of licensing. As expected ex ante licensing
allows firms to reduce the level of patenting.
In a patent thicket many firms hold patents protecting components of a single technology.
Whenever a firm uses such a technology it is vulnerable to hold-up by firms holding blocking
patents (Grindley and Teece, 1997; Shapiro, 2001). The threat posed by blocking patents
frequently induces firms to build large patent portfolios in costly patent portfolio races. These
bolster firms’ bargaining positions in disputes with rivals (Grindley and Teece, 1997; Lemley,
2001). Patent thickets undermine the proper functioning of patent systems: they raise costs of
using complex technology and increase incentives to acquire marginal patents.
These results imply that licensing has important benefits for large firms in the semiconductor
industry. Ex ante licensing reduces competitive pressure and the intensity of patent
portfolio races if firms expect blocking to be high. As the theoretical model indicates, these
are precisely the settings in which the pressure to patent is greatest. Ex post licensing allows
firms at least to exchange blocking patents in settings in which patent portfolio races are less
intense. Our results show clearly that ability to license is an acquired skill that helps firms
regulate the intensity of competition for patents. This is especially true for ex ante licensing.
Worryingly, our results also indicate that licensing becomes less important as patent ownership
becomes more fragmented.
@article{siebert2010jostling,
title={Jostling for advantage or not: Choosing between patent portfolio races and ex ante licensing},
author={Siebert, R. and Von Graevenitz, G.},
journal={Journal of economic behavior \& organization},
volume={73},
number={2},
pages={225--245},
year={2010},
publisher={Elsevier},
filename={Siebert VonGraevenitz (2010) - Jostling For Advantage Or Not.pdf}
}
Econ: Theory and empirics: licensing in thickets
CORE PAPER. Seems a combination of two of the above.
Complex high technology industries are increasingly affected by patent thickets in which
firms’ patents mutually block the use of important technologies. Firms facing patent thickets
patent intensively to acquire bargaining chips and use licensing to ensure freedom
to operate. Such licensing allows rivals to either avoid or resolve hold-up from blocking
patents. R&D incentives depend on whether licensing takes place ex ante or ex post. We
model the choice between ex ante licensing and entry into patent portfolio races leading to
ex post licensing. It is shown that higher degrees of blocking lead firms to license ex post,
while stronger product market competition leads firms to license ex ante. Empirical results
support these theoretical predictions.
A patent thicket consists of complementary patents related to one technology. The patents in a patent
thicket belong to many rival firms. In the absence of cross-licensing agreements, or patent pools, use of the technology is
blocked.
@article{somaya2003strategic,
jstor_articletype = {research-article},
title = {Strategic Determinants of Decisions Not to Settle Patent Litigation},
author = {Somaya, Deepak},
journal = {Strategic Management Journal},
jstor_issuetitle = {},
volume = {24},
number = {1},
jstor_formatteddate = {Jan., 2003},
pages = {pp. 17-38},
url = {http://www.jstor.org/stable/20060509},
ISSN = {01432095},
abstract = {Settlement outcomes in patent litigation are modeled as resulting from strategies pursued by firms with their patented technologies. Hypotheses are derived for two types of influences: the use of patents as isolating mechanisms to protect valuable strategic stakes, and their 'defensive' role in obtaining access to external technologies through mutual hold-up. Parameter estimates from a sample selection probit model provide support for the strategic stakes hypotheses, while the evidence for mutual hold-up is inconclusive. Interindustry comparisons show that nonsettlement of patent suits in both research medicines and computers is increased by strategic stakes and, in addition, mutual hold-up appears to play an important role in computer patent suits.},
language = {English},
year = {2003},
publisher = {Wiley},
copyright = {Copyright © 2003 Wiley},
filename={Somaya (2003) - Strategic Determinants Of Decisions Not To Settle Patent Litigation.pdf}
}
Econ/Mgmt: ICT and Biotech: When to settle suits
Settlement outcomes in patent litigation are modeled as resulting from strategies pursued by firms
with their patented technologies. Hypotheses are derived for two types of influences: the use of
patents as isolating mechanisms to protect valuable strategic stakes, and their 'defensive
'role
in obtaining access to external technologies through mutual hold-up. Parameter estimates from
a sample selection probit model provide support for the strategic stakes hypotheses, while the
evidence for mutual hold-up is inconclusive. Interindustry comparisons show that nonsettlement
of patent suits in both research medicines and computers is increased by strategic stakes and, in
addition, mutual hold-up appears to play an important role in computer patent suits. Copyright
Computer suits are much more likely to
include more than one patent, consistent with
the perception that individual computer patents
are much less effective at blocking rivals (Cohen
et al., 2000), and that thickets of patents may
be required instead. Patent challenges (suits filed
by the nonpatentee) are somewhat more common
in research medicines, but the difference is
not significant. Consistent with the settlement
inducing role of mutual hold-up in systems
product industries (Hypothesis 4b), computer
suits in the sample are more likely (8%) than
research medicine suits (1.5%) to be a part of
counter-suits between rivals in litigation.10
When strong,
watertight patents are available, as in pharma
ceuticals, firms may be able to rely on them
to isolate key commercial opportunities (Merges,
1998). On the other hand, in systems products
industries, thickets of patents may be necessary
to foil attempts to invent around the patent, and
obtain a robust patent position. Moreover, defen
sive patenting?the building of large patent port
folios?may become necessary if rivals, aided by a
strong enforcement regime, are able to effectively
threaten to hold up a firm's commercial operations
(Hall and Ziedonis, 2001).
@article{somaya2011innovation,
title={Innovation in Multi-Invention Contexts: Mapping Solutions to Technological and Intellectual Property Complexity},
author={Somaya, D. and Teece, D. and Wakeman, S.},
journal={California Management Review},
volume={53},
number={4},
pages={47--79},
year={2011},
publisher={JSTOR},
filename={Somaya Teece Wakeman (2011) - Innovation In Multi Invention Contexts.pdf}
}
Mgmt: Firm Strategy in response to thickets etc.
Scholars such as Michael Heller and Rebecca Eisenberg, Carl
Shapiro, and others have drawn attention—arguably too much attention—to
the transactional problems created for innovators by such dispersed ownership
and the density (or so-called thickets) of patents.58 Less attention has been paid
by those authors to the equally important role of patents for supporting innovation
in multi-invention settings. Innovators and entrepreneurs are often among
the most enthusiastic supporters of the patent system because they perceive it as
providing safeguards from misappropriation of their inventions.59 Research has
also shown that innovators are often able to devise “working solutions” to navigate
patent access concerns, and that patents may in turn be crucial for enabling
transactions in technology.60
@article{sternitzke2008visualizing,
title={Visualizing patent statistics by means of social network analysis tools},
author={Sternitzke, C. and Bartkowski, A. and Schramm, R.},
journal={World Patent Information},
volume={30},
number={2},
pages={115--131},
year={2008},
publisher={Elsevier},
filename={Sternitzke Bartkowski Schramm (2008) - Visualizing Patent Statistics By Means Of Social Network Analysis Tools.pdf}
}
Networks: CORE PAPER
The present paper reviews the literature on social network analysis with applications to bibliometric data, and in particular, patent
information. Several approaches of network analysis are conducted in the field of optoelectronics to exemplify the power of network
analysis tools. Cooperation networks between inventors and applicants are illustrated, emphasizing bibliometric measures such as activity,
citation frequency, etc. as well as network theoretical measures, e.g. centrality or betweenness. In this context it is found that inventors
who serve as interfaces or links between different inventor groups apply for technologically broader patents, hence, benefiting from
their access to different knowledge through their position. Furthermore, citation networks of patent documents as well as patent applicants
were drawn. Here, patent thickets could be identified. The position of applicants within citation networks seems to be useful in
explaining behaviour of the applicants in the marketplace, such as cooperation or patent infringement trials.
On the second level, key patents, characterized by a high
citation frequency within a network, and their relationship
to other patents can be identified more easily. It was
showed that such analyses can be deployed to identify patent
thickets [9]. When inventors or patent applicants are
considered as nodes within a network, it can be demonstrated
to what extent they build upon each others knowledge.
Closeness between two nodes in a network signifies
that they are technologically related. If, for instance, two
applicants are situated closely together, and they do not
cooperate, then they should be engaged in a high level of
technological competition. However, if they cooperate,
then it seems rather that they jointly develop new technology,
using complementary competencies. To calculate the
citation ties between applicants to better assess technological
competitiveness between these players, two approaches
are chosen:
(i) Simple counts, i.e. if applicant A cited six patent families
from applicant B, then six citations are counted.
(ii) Multiple citation counts, i.e. if applicant A cited six
patent families from applicant B, but if each patent
family was cited twice (e.g. from two different patent
families of applicant A) then twelve citations are
counted. This approach should deliver more exact
results than the former.
@article{strandburg2006law,
title={Law and the Science of Networks: An Overview and an Application to the ``Patent Explosion"},
author={Strandburg, K.J.},
journal={bepress Legal Series},
pages={1617},
year={2006},
publisher={bepress},
filename={Strandburg (2006) - Law And The Science Of Networks.pdf}
}
Law/Econ: Citations measures description (good). CORE PAPER, also useful for OTHER research
At the same time, developments in the law, including the establishment of a
single appellate court -- the Federal Circuit Court of Appeals -- to hear the vast majority
of patent appeals in the United States, have led to debate as to whether the legal system is
becoming increasingly “patent-friendly;” whether patents are being issued for lower
quality innovations; and whether the legal rights awarded to patentees are becoming
stronger.52
There are dire predictions of a patent “thicket,”65 in
which technological progress is made increasingly difficult by the need to negotiate
multiple levels of “blocking patent” rights on each of the many patented components
which may be needed to produce a new commercial product.66 One way to avoid a
potential thicket is for competing patent holders to negotiate cross-licenses or “patent
pools.” Such agreements between competitors raise concerns about collusion, however,
and the societal ramifications depend upon the extent to which cross-licensing lowers
barriers to the use of complementary technologies (as opposed to allowing competitors to
avoid competition from substitute technologies).67
Patents and their citations form a directed network (meaning that citations go
from later patents to earlier patents and not in the opposite direction) in which patents are
the network “nodes” and citations are directed “links.” Citations convey valuable
information about the relationships between the technologies covered by the citing and
cited patents. The patent citation network thus can be viewed as a kind of map of the
space of patented technology, indicating the relationships between various pieces of
“property” in that space.77 As discussed in Part III.B, the evolution of the network may
help to illuminate whether patents are being awarded for more trivial technological steps.
While the precise significance of a patent citation varies, a citation sometimes
indicates that the claims of the cited patent encompass the claims of the citing patent and
that a “blocking patent” situation exists so that permission from both patent owners is
needed in order to use the invention claimed in the citing patent.
As will be discussed in
Part V, we believe it is likely that the structure of the patent citation “map” can be mined
for signatures of patent “thickets,” in which there is a high density of overlapping patent
claims, so as to test, for example, whether such “thickets” are increasingly prevalent in
the patent system.
A high density of patents in a particular technological “niche” need not always
indicate a patent thicket, however. Closely related patented technologies may be
potential substitutes for one another -- creating something more like patent supermarkets
offering many nearly interchangeable options than patent thickets. If these patents are
separately owned, competition between patent holders will reduce licensing fees and the
issue of hold-up will not arise.
Setting aside some technical issues about how to
compare citation densities from different sized network samples, citation density is a
useful way to assess the level of technological interrelatedness in a particular field.124
Density alone cannot distinguish between patent thickets and patent supermarkets, in
which closely related technologies compete for licensing “customers,” however. The
mere existence of a citation from one patent to another cannot tell us which scenario is
most likely. Determining the meaning of a particular citation is an extremely laborintensive
process requiring understanding of the legal and technical relationship between
the citing and cited patents. To investigate the existence of patent thickets and the
potential for related antitrust problems, some structural metric that is sensitive to the
character of a citation is highly desirable. It may be possible to design such a metric
based on transitivity concepts.
@article{taylor2003american,
title={American Patent Policy, Biotechnology, and African Agriculture: The Case for Policy Change},
author={Taylor, M.R. and Cayford, J.},
journal={Harv. JL \& Tech.},
volume={17},
pages={321},
year={2003},
publisher={HeinOnline},
filename={Taylor Cayford (2003) - American Patent Policy Biotechnology And African Agriculture.pdf}
}
Law: Effect of thickets on biotech for developing nations
According to one commentator writing about biotechnology
patents in the pharmaceutical field, “[w]ith cumulative
innovation and multiple blocking patents, stronger patent rights can
have the perverse effect of stifling, not encouraging, innovation.”71
(“PTO”) have created what some call a “patent
thicket” around biotechnology and how the PTO’s pro-patent culture
affects the proliferation of patents. We then identify policies affecting
access to patented technology and U.S. foreign policy on patents,
which may have more long-term impact on access to biotechnology in
developing countries than the PTO’s domestic patenting practices
@article{tullis2005application,
title={Application of the Government License Defense to Federally Funded Nanotechnology Research: The Case for a Limited Patent Compulsory Licensing Regime},
author={Tullis, T.K.},
journal={UCLA L. Rev.},
volume={53},
pages={279},
year={2005},
publisher={HeinOnline},
filename={Tullis (2005) - Application Of The Government License Defense To Federally Funded Nanotechnology Research.pdf}
}
Law: Policy Discussion: Solve thicket in nanotech using the Gov. License Defence.
GOVERNMENT LICENSE DEFENSE
IN FEDERALLY FUNDED NANOTECHNOLOGY RESEARCH
Unfortunately, the rush to secure worldwide intellectual property
rights in nanotechnology could lead to the development of a "patent
thicket." This term, coined by intellectual property scholars, refers to an
overlapping set of patent rights that requires researchers, inventors, and
entrepreneurs seeking to commercialize new technologies to obtain licenses
from multiple patentees. 5 The development of such a patent thicket could
deter further innovation, 6 and the active enforcement by nanotechnology
patent holders of their exclusivity rights ultimately could result in the creation
of a nanotechnology anticommons-a situation in which a scarce
resource becomes prone to underuse because there are too many owners
holding the right to exclude others from that resource, and no one has an
effective privilege of use.'
@article{turner2011patent,
title={Patent Thickets, Trolls and Unproductive Entrepreneurship},
author={Turner, J.},
journal={Trolls and Unproductive Entrepreneurship (October 1, 2011)},
year={2011},
filename={Turner (2011) - Patent Thickets Trolls And Unproductive Entrepreneurship.pdf}
}
Econ: Theory: Model of endogeneous thickets with trolls
I introduce and analyze an equilibrium model of invention, patenting and infringement under
monopolistic competition. Profitable use of inventions requires adaptation to complementary
technologies. With patents, a thicket of conflicting rights emerges and costly infringements
occur. This taxes invention and lowers welfare. When an inventor may be a “troll”—patent
without inventing—the rate of invention falls further. Intuitively, some trolls would invent if
it were impossible to be a troll. More technology is patented with trolls, so the thicket grows
and welfare falls. Being a troll is unprofitable unless a critical mass of inventions, made by
other firms, exists.
Patents grant their owners (“patentees”) the right to exclude others from using their
inventions. When multiple patents cover complementary components of a given technology,
a common contemporary phenomenon (Heller and Eisenberg 1998), multiple owners can
exclude each other from using the technology. Hence, producers often must navigate a
“thicket” of conflicting rights just to use their own inventions
My monopolistic competition model lets firms’ decisions of whether to invest in new
input technology and whether to patent both determine and depend on the endogenous rate
of invention and patenting in the economy. This enables study of how the complementarity
of technology affects incentives to invent both directly and through influencing the rate of
patenting. I show that an increase in input complementarity lowers equilibrium invention,
and typically raises the rate of patenting, by both increasing dispute costs paid and by
increasing the payoff to would-be patentees. This predicts that troll behavior should be
most harmful in industries where input complementarities are greatest.
@article{ukipo2011patentthickets,
title={Patent Thickets: An overview},
author={Intellectual Property Office Patent Informatics Team},
journal={UK Intellectual Property Office},
year={2011},
filename={UKIPO (2011) - Patent Thickets An Overview.pdf}
}
Policy Report: CORE PAPER - Includes lit, terms and industry analysis and more
The phrase “patent thicket” is a descriptive term which highlights issues that new entrants to a market may face when attempting to innovate within, or enter into, a technology space having existing intellectual property rights. The most generally used definition of a thicket is that coined by Shapiro:
“a dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology”
Equal weighting is given to fragmented technological areas (areas where there are large numbers of small patent holdings), or areas where there are small numbers of large players with large patent holdings, each of which creates a thicket that any entrants into the area will have to negotiate in order to be able to operate.
There is no clear consensus on terms used to describe patent thickets and the entities involved with them. If these terms were applied consistently, further debate on any issues could be conducted on a level playing field. Any change in policy associated with patent thickets should be carefully considered for its potential impact across different technology landscapes.
@article{vanoverwalle2010turning,
jstor_articletype = {research-article},
title = {Turning Patent Swords into Shares},
author = {Van Overwalle, Geertrui},
journal = {Science},
jstor_issuetitle = {},
volume = {330},
number = {6011},
series = {New Series},
jstor_formatteddate = {17 December 2010},
pages = {pp. 1630-1631},
url = {http://www.jstor.org/stable/40964338},
ISSN = {00368075},
abstract = {},
language = {English},
year = {2010},
publisher = {American Association for the Advancement of Science},
copyright = {Copyright © 2010 American Association for the Advancement of Science},
filename={VanOverwalle (2010) - Turning Patent Swords Into Shares.pdf}
}
SciencePolicy: genes and thickets 2pgs.
Problems arise when “patent thickets” (a web
of overlapping patents through which a company
must “hack” in order to commercialize
a technology) emerge ( 12). Accumulation, or
“stacking,” of royalties that have to be paid
when confronted with a patent thicket may
lead to a “tragedy of the anti-commons” ( 13),
@article{van2006clearing,
title={A clearing house for diagnostic testing: the solution to ensure access to and use of patented genetic inventions?},
author={Van Zimmeren, E. and Verbeure, B. and Matthijs, G. and Van Overwalle, G.},
journal={Bulletin of the World Health Organization},
volume={84},
number={5},
pages={352--359},
year={2006},
publisher={SciELO Public Health},
filename={VanZimmeren (2006) - A Clearing House For Diagnostic Testing.pdf}
}
WHO Bulletin: 8 pages. Advocates clearing houses
Abstract In genetic diagnostics, the emergence of a so-called “patent thicket” is imminent. Such an overlapping set of patent
rights may have restrictive effects on further research and development of diagnostic tests, and the provision of clinical diagnostic
services. Currently, two models that may facilitate access to and use of patented genetic inventions are attracting much debate in
various national and international fora: patent pools and clearing houses. In this article, we explore the concept of clearing houses.
@article{verbeure2006patent,
title={Patent pools and diagnostic testing},
author={Verbeure, B. and van Zimmeren, E. and Matthijs, G. and Van Overwalle, G.},
journal={TRENDS in Biotechnology},
volume={24},
number={3},
pages={115--120},
year={2006},
publisher={Elsevier},
filename={Verbeure (2006) - Patent Pools And Diagnostic Testing.pdf}
}
Biology: 6pgs. Advocates Pools for diagnostic testing
There is increasing concern that overlapping patents in
the field of genetics will create a costly and legally
complex situation known as a patent thicket, which,
along with the associated issues of accumulating
royalty payments, can act as a disincentive for
innovation.
@article{von2011measure,
title={How to measure patent thickets -- A novel approach},
author={Von Graevenitz, G. and Wagner, S. and Harhoff, D.},
journal={Economics Letters},
volume={111},
number={1},
pages={6--9},
year={2011},
publisher={Elsevier},
filename={VonGraevenitz Wagner Harhoff (2011) - How To Measure Patent Thickets A Novel Approach.pdf}
}
Econ: CORE PAPER!
2007). These patent explosions have had particularly
strong impact on technologies characterized by modular design and
high complexity of products such as electronics and semiconductors.
The combination of complex technology and high volume patenting
creates patent thickets, which can be defined as dense webs of
overlapping patent rights (Shapiro, 2001).
@article{von2012incidence,
title={Incidence and Growth of Patent Thickets-The Impact of Technological Opportunities and Complexity},
author={von Graevenitz, G. and Wagner, S. and Harhoff, D.},
journal={Journal of Industrial Economics},
year={2012},
filename={vonGraevenitz (2012) - Incidence And Growth Of Patent Thickets.pdf}
}
Econ: CORE PAPER
fragmentation index has predominantly been studied in complex industries (Ziedonis, 2004,
Schankerman and Noel, 2006) where increasing fragmentation raises firms’ patent applications.
This is attributed to firms’ efforts to reduce potential hold-up by opportunistic patentees
owning critical or blocking patent rights – a situation which is associated with the existence of
patent thickets. This index does not measure hold-up potential as precisely as the complexity
measure we discuss above.
The complexity measure combines information on actual blocking relationships within
technological opportunities which the fragmentation index does not.
@article{wagner2003information,
jstor_articletype = {research-article},
title = {Information Wants to Be Free: Intellectual Property and the Mythologies of Control},
author = {Wagner, R. Polk},
journal = {Columbia Law Review},
jstor_issuetitle = {},
volume = {103},
number = {4},
jstor_formatteddate = {May, 2003},
pages = {pp. 995-1034},
url = {http://www.jstor.org/stable/1123783},
ISSN = {00101958},
abstract = {This Essay challenges a central tenet of the recent criticism of intellectual property rights: the suggestion that the control conferred by such rights is detrimental to the continued flourishing of a public domain of ideas and information. In this Essay, Professor Wagner argues that such theories understate the significance of the intangible nature of information, and thus overlook the contribution that even perfectly controlled intellectual creations make to the public domain. In addition, this Essay shows that perfect control of propertized information--an animating assumption in much of the contemporary criticism--is both counterfactual and likely to remain so. These findings suggest that increasing the appropriability of information goods is likely to increase, rather than diminish, the quantity of "open" information. Further, the benefits of control in fostering coordination and enabling flexibility in arrangements are essential elements of promoting progress in a changing world.},
language = {English},
year = {2003},
publisher = {Columbia Law Review Association, Inc.},
copyright = {Copyright © 2003 Columbia Law Review Association, Inc.},
filename={Wagner (2003) - Information Wants To Be Free.pdf}
}
Law: Theory/Discussion: Don't worry about the 'control' aspect, information will be free anyway
Contemporary criticism of intellectual property rights is notable for
its clear focus on the control inherent in the system of government-extended
grants of exclusivity-in particular the assertion that such control
is in tension with the development of a public domain of information.2
This development is (and has been) both intellectually and rhetorically
significant. Intellectually, by emphasizing the effects of control, these
critics can support intellectual property generally, yet condemn it specifically,
where the pernicious side effects of the mechanism are seen. In a
way, this approach seems to have largely transcended the more abstract
question of whether intellectual property is a socially useful tool, and focused
our attention on the specifics.3 Rhetorically, an entire vocabulary
has been built to support this line of argument. Control-talk is of "the
second enclosure movement,"4 the lurking "tragedy of the anticom-
mons,"5 or the dangers of "patent thickets"6 -not to mention the phenomenon
of litigation efforts (or perhaps social movements?) sporting
their own slogans (and logos), such as "Free the Mouse," "Create Like It's
1790," or "When Copyright Attacks."7
This Essay challenges a major tenet of this control-criticism: the
claim that control will reduce the availability of information in the public
domain.8 The core contention here is that the critics understate-perhaps
dramatically-the contribution that even "perfect" control of intellectual
creations makes to the public domain, just as they overstate the
current and potential effectiveness of this control. Combining this understanding
with the dynamic incentive-effects of intellectual property
rights suggests that such rights (even in strong forms) are likely to increase
the content of the public domain rather than decrease it. Thus,
while there are perhaps other reasons to limit the scope and enforceability
of intellectual property rights, concern about the withering of the public
domain seems not to be one of them.
Notwithstanding
efforts to the contrary, information cannot truly be controlled, at least
not in the way that the control-critics suggest. That is, the "fencing" of
information is a remarkably futile proposition; the control we offer owners
of intellectual property rights is simply not the control we offer landowners.
It should not be, but more importantly, it cannot be. It turns out
that information does "want to be free."' 4 Understanding that this is the
great strength of intellectual property, as well as the great challenge, offers
a new perspective on the function of control and the benefits of
strong intellectual property rights.'5
@article{wang2010rise,
title={Rise of the patent intermediaries},
author={Wang, A.W.},
journal={Berkeley Tech. LJ},
volume={25},
pages={159},
year={2010},
publisher={HeinOnline},
filename={Wang (2010) - Rise Of The Patent Intermediaries.pdf}
}
Law: Intermediaries as a solution to thickets
In this age
of patent thickets,60 an organization must tread carefully lest it infringe
countless patents just by doing business,61 and an aggregate license to a large
cluster of patents in the appropriate field of technology can provide peace
of mind. Moreover, an aggregate license lowers the search costs for a
member company planning to embark on a plan of research and
development in a particular field. Defensive aggregation services strive for
complete adoption by all players in the market and the resulting obsolescence
of expenditures on patent searches and license negotiations. Though this
scenario may never actually come to pass, companies are likely to have great
interest in partnering with an entity able to bring them closer to this ideal.
@article{ziedonis2004don,
title={Don't fence me in: Fragmented markets for technology and the patent acquisition strategies of firms},
author={Ziedonis, R.H.},
journal={Management Science},
volume={50},
number={6},
pages={804--820},
year={2004},
publisher={INFORMS},
filename={Ziedonis (2004) - Dont Fence Me In.pdf}
}
Econ: CORE PAPER!!!
