A study of patent thickets

Report analysing whether entry of UK enterprises into patenting in a technology area is affected by patent thickets in the technology area

Are Universities Patent Trolls?

Hold-up is a primary component of patent litigation and patent licensing today. Universities are engaged in an unprecedented surge in patenting. At the confluence of these seemingly unrelated developments is a growing frustration on the part of industry with the role of universities as patent owners. Time and again, when I talk to people in a variety of industries, their view is that universities are the new patent trolls. In this article, I argue that universities should take a broader view of their role in technology transfer. University technology transfer ought to have as its goal maximizing the social impact of technology, not merely maximizing the university’s licensing revenue. Sometimes those goals will coincide with the university’s short-term financial interests. Sometimes universities will maximize the impact of an invention on society by granting exclusive licenses for substantial revenue to a company that will take the invention and commercialize it. Sometimes, but not always. At other times a non-exclusive license, particularly on a basic enabling technology, will ultimately maximize the invention’s impact on society by allowing a large number of people to commercialize in different areas, to try out different things and see if they work, and the like. University policies might be made more nuanced than simply a choice between exclusive and non-exclusive licenses. For example, they might grant fieldspecific exclusivity, or exclusivity only for a limited term, or exclusivity only for commercial sales while exempting research, and they might condition continued exclusivity on achievement of certain dissemination goals. Particularly in the software context, there are many circumstances in which the social impact of technology transfer is maximized either by the university not patenting at all or by granting licenses to those patents on a royalty-free basis to all comers. Finally, I think we can learn something about the raging debate over who is a patent troll and what to do about trolls by looking at university patents. Universities are non-practicing entities. They share some characteristics with trolls, at least if the term is broadly defined, but they are not trolls. Asking what distinguishes universities from trolls can actually help us figure out what concerns us about trolls. What we ought to do is abandon the search for a group of individual companies to define as bad actors. In my view, troll is as troll does. Universities will sometimes be bad actors. So will non-manufacturing patent owners. So will manufacturing patent owners. Instead of singling out bad actors, we should focus on the bad acts and the laws that make them possible

Patent Portfolio Races in Concentrated Markets for Technology

Patent application numbers grow exponentially in many industries, a phenomenon that has been linked to high fragmentation of patent ownership. Contradicting these findings and theoretical arguments, we show that such fragmentation is not a precondition for sudden and strong increases in patenting. We describe and analyze a patent portfolio race in an industry with highly concentrated patent ownership, namely the newspaper printing machines oligopoly. Triangulating data from patent analysis, interviews, and document research, we find that patent strategy change by one player triggered a patent portfolio race with its main competitor. Implications for managers are that increasing patent output may yield temporary advantages but, as in a price war, implies the risk of a prisoner’s dilemma-type outcome with potentially severe implications for effectiveness and efficiency of the innovation process.Patent Strategy; Motives to Patent; Intellectual Property; Patent Thickets

Introducing Inventiveness into the Patent System: Submission to the Review of the National Innovation System

Because of the potential impact of the patent system on innovation diffusion, particularly on continuous and/or incremental innovation, patent policy should be of central importance to the review of the national innovation system. Substantial empirical evidence shows that most industrial innovations are not induced by the patent system. Even in very large markets, such as the USA, only a minority of patents are likely to be induced by the patent system. To the extent that patents do induce innovations, it is the inventiveness of the innovation which gives rise to possible social benefits (externalities, mainly in the form of knowledge spillovers) which may offset the costs of a patent system and thus give rise to a net economic benefit. On the basis of this evidence about the inducement effect of the patent system, and evidence on the current very low inventiveness standard for patent grant, policy proposals are put forward to re-introduce inventiveness into the patent system, thus making it potentially welfare-enhancing. These proposed changes would also have a major impact in ameliorating the negative impact of the patent system on continuous/incremental innovation

Innovation and venture capital exit performance

Venture capital is a potent source of R&D financing which contributes significantly to technological innovation output in the form of patented inventions. Scholars have argued that tighter protection of intellectual property rights reduces expropriation risks and encourages venture capitalists to invest in technology firms. Prior studies have showed that early stage technology investors give much weight to investment selection criteria related to innovation e.g. protection of intellectual property, platform and uniqueness. However, VC investors generally receive little on their investments until a liquidation event occurs – IPO and M&A (trade sale) exits define venture capital performance. A review of the literature indicates that few empirical studies have examined the influence of patented innovation on the exit performance of VC-backed technology firms. This paper seeks to address this specific knowledge gap in venture capital research and practice. It builds on resource-based view (RBV) theory which argues that technological innovation is an important strategic resource of the entrepreneurial firm that can attract VC investment, provide competitive advantage and produce superior performance. This study is based on matched data compiled from VentureXpertTM, DelphionTM and NBER/USPTO databases. The resulting unique and proprietary dataset consists of 1504 U.S. VC-backed exits across 7 technology sectors in the 20 years from 1980-2000, 961 IPOs and 543 M&As. The influence of technological innovation on the exit performance of VC-backed technology firms is examined. As predicted by RBV theory, technology firms engaged in patenting activity were found more likely to be associated with the more profitable IPO exit route, higher VC investment and exit value

Intellectual Property Rights and Market Dynamics

Two opposite models are currently operating in the modern economy, the strong intellectual property rights (IPR) model, and the open source/open science model. They have traditionally been applied to alternative institutional contexts. The strong IPR model has been associated to the business environment, while the open science model has been associated to the academic or research system. More recently, a strengthening of the IPR system has occurred in the public research system, and open science models have been adopted in private sectors like the open source software. This paper discusses these different models and their implications on the innovative activity of firms and economies, and the market dynamics. One of the main benefits deriving from a strong IPR system is that it encourages the entry of new technology-based firms and the commercialisation of technologies in markets for technologies. At the same time, an increased patent protection is also associated to potential costs, such as those arising from a excessive fragmentation of property rights, an abuse of patent protection for strategic reasons (sleeping and blocking patents), and an increase in litigation costs.Intellectual Property Rights, Patents, Patent Policy, Open Science, Open Source Software, Technology Commercialisation and Diffusion