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Sleeping patents and compulsory licensing: an options analysis

By Helen Weeds


Why should a firm wish to create a new technology that it will leave unexploited for some time? Sleeping patents have long been perceived as anticompetitive devices, used by dominant firms to block entry into their market. In a real options framework with both economic and technological uncertainty, we show that a sleeping patent may arise as the result of optimal forward-looking behavior, in the absence of any anticompetitive motive. We also consider the effect of possible measures to enforce the development of sleeping patents and find that these are likely to harm incentives for firms to engage in research

Topics: HD, K1
Publisher: University of Warwick, Department of Economics
OAI identifier: oai:wrap.warwick.ac.uk:1601

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