The existing literature identifies patent thickets indirectly. In this paper we propose a novel measure based on patent citations which allows us to measure the density of patent thickets directly. We discuss the algorithm which generates the measure and present descriptive results validating it. Moreover, we identify technology areas which are particularly impacted by patent thickets.patenting; patent thickets; patent portfolio races; complexity

Graevenitz, Georg von

Harhoff, Dietmar

Wagner, Stefan

English

Research Papers in Economics

How to measure patent thickets { A novel approach
Georg von Graevenitz, Stefan Wagner and Dietmar Harho
Discussion paper 2009-9
July 2009
Munich School of Management
University of Munich
Fakult at f ur Betriebswirtschaft
Ludwig-Maximilians-Universit at M unchen
Online at http://epub.ub.uni-muenchen.de/
1How to measure patent thickets – a novel 
approach 
 
 
Georg von Graevenitz
1, Stefan Wagner
2, Dietmar Harhoff
3 
 
 
 
Abstract 
The  existing  literature  identifies  patent  thickets  indirectly.  In  this  paper  we  propose  a  novel 
measure based on patent citations which allows us to measure the density of patent thickets 
directly. We discuss the algorithm which generates the measure and present descriptive results 
validating it. Moreover, we identify technology areas which are particularly impacted by patent 
thickets. 
 
 
JEL: L13, L20, O34.  
 
Keywords: patenting, patent thickets, patent portfolio races, complexity. 
   
                                                           
1 Georg von Graevenitz, Ludwig Maximilians University, INNO-tec, Kaulbachstrasse 45, 80539 Munich, Germany 
graevenitz@lmu.de. 
2 Stefan Wagner, Ludwig Maximilians University, INNO-tec, Kaulbachstrasse 45, 80539 Munich, Germany, 
swagner@bwl.lmu.de, Phone +49 89 2180 2877, Fax +49 89 2180 6284.  
3 Dietmar Harhoff, Ludwig Maximilians University, INNO-tec, Kaulbachstrasse 45, 80539 Munich, Germany, 
harhoff@lmu.de. 1. Introduction  
In the United States the establishment of the CAFC in 1982 led to a strengthening of patent rights 
(Jaffe, 2000). Subsequently, there was an explosion of patent applications at the USPTO (Hall, 
2005;  Hall  and  Ziedonis,  2001;  Kortum  and  Lerner,  1999),  and  a  similar  increase  has  been 
observable at the European Patent Office (EPO) since 1995 (von Graevenitz et al., 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). 
Cohen  et  al.  (2000)  identify  complex  technologies  by  bisecting  the  standard  industry 
classification. Kortum and Lerner (1999), Hall (2005) and von Graevenitz et al. (2007) find that 
patenting increased particularly in complex technologies. Hall and Ziedonis (2001) and Ziedonis 
(2004)  conduct  interviews  which  establish  that  semiconductor  firms  are  affected  by  patent 
thickets. All these papers provide evidence that patent thickets matter but do not provide a direct 
measure of their existence and extent. 
We  propose  a  novel  measure  of  the  density  of  patent  thickets  and  describe  an  algorithm  to 
generate  this  measure  from  patent  data.  The  measure  derives  directly  from  information  on 
blocking of one patent by another. Blocking patents can hold up whole technologies. Prominent 
examples  include  early  disputes  between  Texas  Instruments  and  a  number  of  Japanese 
semiconductor firms over the “Kilby” patent or the dispute between Intel and Intergraph over the 
Clipper patents (Shapiro, 2003). 
The growth of patent thickets has given rise to several enquiries
4 and legislative initiatives in the 
United  States  and  Europe.  In  the  United  States  there  have  been  repeated,  yet  hitherto 
unsuccessful attempts to change patent law, witness the Patent Reform Acts of 2005 (H.R. 2795), 
2007(H.R.  1908,  S.1145)  and  2009  (S.  515/S.  610/H.R.  1260).  Both  the  US  Patent  and 
Trademark Office and the European Patent Office recently overhauled their fee structures and 
rules in order to discourage excessive patent filings. A measure that makes the evolution of patent 
thickets transparent provides an important contribution to the policy debate. 
This  paper  is  structured  as  follows:  in  Section  2  we  motivate  the  measure  and  set  out  the 
algorithm which generates it. Section 3 presents descriptive results validating the measure. A 
short summary and outlook on future uses of our measure concludes the paper in Section 4. 
   
                                                           
4 National Research Council (2004), F.T.C. (2003) and Bessen and Meurer (2008) focus on the US patent system. 
Von Graevenitz et al. (2007) analyze primarily the patent system governed by the European Patent Office (EPO). 2. The Algorithm 
Our  measure  of  patent  thicket  density  exploits  the  classification  of  references  in  the  search 
reports issued by the EPO. Search reports describe the state of prior art regarded as relevant for 
the patentability of an invention application and contain a list of references to prior patents and/or 
non-patent  sources.  Often,  existing  prior  art  limits  the  patentability  of  an  invention  and  the 
references pointing to such critical documents are then classified as X or Y references (Harhoff et 
al., 2006).
5 
We propose a measure that identifies constellations in which three firms each own patents that 
block patent applications of the other two firms. If three firms block each other in this way we 
call this a triple. Figure 1 illustrates blocking, mutual blocking and blocking in a triple. The 
likelihood of resolving a mutual blocking relationship between any two firms in a triple depends 
on the actions of the third party. Therefore, the bargaining problem cannot be resolved through 
independent bilateral bargaining by each firm pair in the triple, and the resolution of blocking 
relationships  is  more  difficult  than  in  a  bilateral  relationship.  This  raises  bargaining  costs 
substantially. By identifying and counting the number of triples within a given technology we can 
measure the density of patent thickets. 
Our algorithm involves the following steps:  
1.  We partition the set of all patents into subsets corresponding to technology areas using the 
OST-INPI/FhG-ISI technology nomenclature (OECD 1994). 
For each technology area, we 
2.   then identify all firms whose patents are referenced as X or Y references by a given firm; 
3.  compile a directed list of all firm pairs in which the first firm blocks one or more patents 
owned by the second; 
4.  identify all pairs in which each party can block at least one patent belonging to the other; 
5.  identify all groups of three firms which consist of mutually blocking firm pairs from the 
subset of firms that block each other mutually. 
Our measure is a count of the number of triples arising in a technology area in a given time 
period. 
 
 
 
 
                                                           
5 Type X references refer to prior art documents which taken by themselves call novelty or inventive step of a claim 
into question. Type Y references do so in conjunction with other documents. Figure 1: Schematic presentation of the structure of unilateral and bilateral blocking relationships 
between patent holders. 
In practice we have limited the number of blocking 
2 of the algorithm to the ten most important firms blocking that firm's patents. This reduces the 
computational burden and helps us to focus on the mo
 
3. Descriptive Validation 
To demonstrate that the triples measure of patent thicket density is capable of identifying patent 
thickets we provide three descriptive results
to  patent  filings  at  the  EPO  bet
database (”EPO Worldwide Patent Statistical Database”) as of September 2006.
 
 
Schematic presentation of the structure of unilateral and bilateral blocking relationships 
In practice we have limited the number of blocking firms considered for each blocked firm at step 
2 of the algorithm to the ten most important firms blocking that firm's patents. This reduces the 
computational burden and helps us to focus on the most important blocking relations.
3. Descriptive Validation  
To demonstrate that the triples measure of patent thicket density is capable of identifying patent 
thickets we provide three descriptive results. These have been obtained by applying our algorithm 
to  patent  filings  at  the  EPO  between  1980  and  2003.  Data  were  taken  from
database (”EPO Worldwide Patent Statistical Database”) as of September 2006.
Schematic presentation of the structure of unilateral and bilateral blocking relationships 
firms considered for each blocked firm at step 
2 of the algorithm to the ten most important firms blocking that firm's patents. This reduces the 
st important blocking relations. 
To demonstrate that the triples measure of patent thicket density is capable of identifying patent 
. These have been obtained by applying our algorithm 
1980  and  2003.  Data  were  taken  from  the  PATSTAT 
database (”EPO Worldwide Patent Statistical Database”) as of September 2006.  
Figure 2: Average number of triples identified in complex and discrete areas. 
First, we bisect the technology areas in our data according to the definition of complex and 
discrete technologies suggested by Cohen et al. (2000) and compute the aggregate number of 
triples for complex and discrete technology areas by year. Figure 2 shows that the density of 
patent  thickets  in  complex  technology  areas  has  been  rising  steadily  since  the  early  1980's 
whereas the density of patent thickets has been constant in discrete technology. The decrease in 
the number of triples in 2004 is the consequence of grant lags at the EPO (Harhoff et al., 2006). 
  
Figure 3: Average number of triples identified relative to 1000 patent applications in complex 
and discrete areas. 
Second, Figure 3 provides information on the number of triples relative to patent applications in 
complex and discrete technologies and shows that the difference between discrete and complex 
areas is not a function of the number of patent applications. 
Finally, Table 1 sets out the number of triples by technology area. This table shows that very 
dense patent thickets exist in all technology areas related to information technology. This finding 
accords well with the results of Hall (2005). 
 
      Patent   Triples             
Technology area     Applications   Mean   Median   Min.   Max.   Classification 
               
Electrical machinery, Electrical energy     3790  18.79  19  0  42  Complex 
Audiovisual technology     2377  93.68  116  0  148  Complex 
Telecommunications     4979  78.01  88  0  166  Complex 
Information technology     3047  47.53  55  0  73  Complex 
Semiconductors     1740  52.72  57  1  91  Complex 
Optics     2684  46.57  47  0  77  Complex 
Analysis, Measurement, Control     3662  5.45  3  0  21  Complex 
Medical technology     1666  3.15  3  0  8  Complex 
Nuclear engineering     281  0.8  1  0  4  Complex Organic fine chemistry     4816  5.51  3  0  19  Discrete 
Macromolecular chemistry, Polymers     3167  16.92  15  1  38  Discrete 
Pharmaceuticals, Cosmetics     2979  2.78  3  0  8  Discrete 
Biotechnology     1902  0  0  0  0  Discrete 
Agriculture, Food chemistry     451  0.06  0  0  1  Discrete 
Chemical and Petrol industry     2245  10.89  10  0  22  Discrete 
Chemical engineering     1317  1.06  1  0  3  Discrete 
Surface technology, Coating     1529  2.67  2  0  9  Discrete 
Materials, Metallurgy     1869  1.95  1  0  6  Discrete 
Materials processing, Textiles, Paper     2150  3.28  3  0  9  Discrete 
Handling, Printing     2088  15.9  9  0  50  Discrete 
Agricultural and Food processing,     303  0.33  0  0  2  Discrete 
Environmental technology     477  3  0  0  15  Complex 
Machine tools     942  1.55  1  0  5  Complex 
Engines, Pumps and Turbines     1559  18.53  13  0  69  Complex 
Thermal processes and apparatus     587  0.29  0  0  2  Complex 
Mechanical elements     1583  1.77  1  0  7  Complex 
Transport     2114  12.89  12  0  50  Complex 
Space technology, Weapons     199  0  0  0  0  Complex 
Consumer goods     1171  0.58  0  0  4  Complex 
Civil engineering, Building, Mining      688  0  0  0  0  Complex  
Table 1: Patent applications and the distribution of triples between 1980 and 2003. 
Table 1 identifies additional technology areas - previously not identified as being affected by 
patent  thickets  –  characterized  by  patent  thickets  of  lower  intensity.  These  include  Optics; 
Handling and Printing or Machines, Pumps and Turbines. 
 
4. Summary 
We provide a measure of the density of patent thickets based on triples of firms that can mutually 
block some of each others' patents. The number of triples measures the density of patent thickets 
in a technology area.  
 
The number of triples is high for technology areas classified in previous studies as complex 
whereas it is much lower in areas classified as discrete. We also find that patent thickets are 
particularly  dense  in  technology  areas  previously  identified  in  qualitative  assessments  as 
harboring patent thickets.  
The advantage of the triples measure proposed here is that it provides a simple way of computing 
the density of patent thickets across technologies and at any given point in time. In this way the 
measure enables researchers to analyze the effect of the threat of hold up in different technology 
areas on firms’ patenting strategies. In a related study, von Graevenitz et al. (2008) use the triples measure  to  demonstrate  that  growing density of  patent thickets  is  associated  with  increasing 
number of patent applications. 
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How to measure patent thickets – a novel approach

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How to measure patent thickets – a novel approach

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