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Patent Thickets: Strategic Patenting of Complex Technologies

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Author Info
James Bessen () (Research on Innovation, Boston University School of Law)

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Abstract

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

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Paper provided by Research on Innovation in its series Working Papers with number 0401.

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Date of creation: 2004
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Handle: RePEc:roi:wpaper:0401

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Web page: http://www.researchoninnovation.org

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. James Bessen & Robert M. Hunt, 2007. "An Empirical Look at Software Patents," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 16(1), pages 157-189, 03. [Downloadable!] (restricted)
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  2. Josh Lerner & Jean Tirole, 2004. "Efficient Patent Pools," American Economic Review, American Economic Association, vol. 94(3), pages 691-711, June. [Downloadable!]
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  3. Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2000. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)," NBER Working Papers 7552, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Bessen, James, 2004. "Holdup and licensing of cumulative innovations with private information," Economics Letters, Elsevier, vol. 82(3), pages 321-326, March. [Downloadable!] (restricted)
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  1. Robert M. Hunt, 2006. "When Do More Patents Reduce R&D?," Levine's Bibliography 122247000000001065, UCLA Department of Economics. [Downloadable!]
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  2. Robert Hunt & James Bessen, 2004. "The software patent experiment," Business Review, Federal Reserve Bank of Philadelphia, issue Q3, pages 22-32. [Downloadable!]
  3. Nicolas van Zeebroeck & Bruno Van Pottelsberghe & Dominique Guellec, 2006. "Claiming more: the increased voluminosity of patent applications and its determinants," Working Papers CEB 06-018.RS, Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB). [Downloadable!]
    Other versions:
  4. Alexandre Almeida & Aurora A.C. Teixeira, 2007. "Does Patenting negatively impact on R&D investment?An international panel data assessment," FEP Working Papers 255, Universidade do Porto, Faculdade de Economia do Porto. [Downloadable!]
  5. David A. Miller, 2005. "Invention under uncertainty and the threat of ex post entry," Industrial Organization 0510001, EconWPA. [Downloadable!]
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  6. Cugno Franco & Ottoz Elisabetta, 2007. "Patent-secret mix in complex product firms," Department of Economics Working Papers 200707, University of Turin. [Downloadable!]
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  7. Sebastian von Engelhardt & Sushmita Swaminathan, 2008. "Open Source Software, Closed Source Software or Both: Impacts on Industry Growth and the Role of Intellectual Property Rights," Discussion Papers of DIW Berlin 799, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  8. Antonelli Cristiano, 2003. "The governance of technological knowledge: strategies, processes and public policies," Dipartimento di Economia "S. Cognetti de Martiis" LEI & BRICK - Laboratorio di economia dell'innovazione "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio Carlo 200306, University of Turin. [Downloadable!]
  9. Harhoff, Dietmar & von Graevenitz, Georg & Wagner, Stefan, 2008. "Incidence and Growth of Patent Thickets - The Impact of Technological Opportunities and Complexity," CEPR Discussion Papers 6900, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  10. Yann Ménière & Sarah Parlane, 2004. "A Dynamic Model of Cross Licensing," Working Papers 200424, School Of Economics, University College Dublin. [Downloadable!]
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