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Strategic patenting and software innovation

By Michael D. Noel and Mark Schankerman

Abstract

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

Topics: T Technology (General), K Law (General)
Publisher: Centre for Economic Policy Research
Year: 2006
OAI identifier: oai:eprints.lse.ac.uk:5078
Provided by: LSE Research Online
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