Changes

===Papers with reviews in progress===

@article{clarkson2004objective,

year={2004},

abstract={When organizations in technology industries attempt to advance their innovative activities, they almost always must be cognizant of the intellectual property rights of others. When further innovation is thwarted, however, the situation can be described as a patent thicket. Although the term “patent thicket” seems to have originated in litigation in the 1970s regarding Xerox’s dominance of a portion of the photocopier industry,1 economist Carl Shapiro reintroduced the term in academic discourse in 2000. Shapiro defines a patent thicket more broadly to encompass the intellectual property portfolios of several companies that form “a dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology,” and he points out that “with cumulative innovation and multiple blocking patents, … patent rights can have the perverse effect of stifling, not encouraging, innovation” (2000, pg. 120). Despite all that has been written about patent thickets,2 an objective methodology for verifying the existence of a patent thicket has never been developed. Throughout the last 150 years, however, organizations have stumbled into a number of patent thickets and have occasionally responded by constructing patent pools, which this paper defines as organizational structures where multiple firms collectively aggregate patent rights into a package for licensing, either among themselves or to any potential licensees irrespective of membership in the pool. Such collaboration among technologically competing firms, however, has often encountered difficulty from an antitrust standpoint, even if the formation of the pool is pro-competitive. While the existence of a patent thicket is a necessary but insufficient condition for demonstrating that a given collection of patents is a pro-competitive solution to a particular patent thicket problem, the antitrust regime has never had an objective method of verifying the existence of a patent thicket in a given section of patent space. In response to the lack of such a methodology, this paper proposes a tool to facilitate objectively demonstrating the existence of patent thickets.},

research_type={Measures},

thicket_def_extract={Although the term “patent thicket” seems to have originated in litigation in the 1970s regarding Xerox’s dominance of a portion of the photocopier industry,1 economist Carl Shapiro reintroduced the term in academic discourse in 2000. Shapiro defines a patent thicket more broadly to encompass the intellectual property portfolios of several companies that form “a dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology,” and he points out that “with cumulative innovation and multiple blocking patents, … patent rights can have the perverse effect of stifling, not encouraging, innovation”... While the existence of a patent thicket is a necessary but insufficient condition for demonstrating that a given collection of patents is a pro-competitive solution to a particular patent thicket problem, the antitrust regime has never had an objective method of verifying the existence of a patent thicket in a given section of patent space... Patent thickets are not a new phenomenon, and when the total number of owners of the conflicting intellectual property rights is small, the response to the patent thicket problem has often been to cross-license (Grindley & Teece 1997; Teece 1998; Teece 2000). When more than two parties are involved, however, the transaction costs of cross-licensing between all of the parties can be prohibitive, and additional economic barriers exist such as hold-ups and double marginalization... Particularly in the biopharmaceutical industry, patent thickets threaten the process of cumulative innovation because they act “as barriers to entry [that prevent new entrants] from using the technologies protected by such patent thickets”... The standard taxonomy categorizes the economic relationship between individual patents as blocking, complementary, independent, or substitute (Andewelt 1984; Newberg 2000), or “BCIS.” The elimination of substitutes is also a necessary but insufficient condition for a pro-competitive pooling solution to a patent thicket... Given that Shapiro defines a patent thicket as “a dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology” (2000, pg. 120), measuring density is a logical direction of inquiry. Building upon his premise that a patent pool is a natural market-clearing mechanism that forms within a patent thicket, it should be possible to verify that the density of patents within known pools is higher than the surrounding patent space. If the density measures of established pools are significantly higher than the density of their surrounding patent space, that finding will contribute a new dimension to the definition of patent thickets},

filename={[[Clarkson (2004) - Objective Identification Of Patent Thickets A Network Analytic Approach]].pdf}

}

year={2005},

abstract={When organizations in technology industries attempt to advance their innovative activities, they may encounter patent thickets, or dense webs of overlapping intellectual property rights owned by different companies that must be hacked through in order to commercialize new technology. Throughout the last 150 years, however, organizations have stumbled into a number of patent thickets and have occasionally responded by constructing patent pools or organizational structures where multiple firms collectively aggregate patent rights into a package for licensing, either among themselves or to any potential licensees irrespective of membership in the pool. Such collaboration among technologically competing firms, however, has often encountered difficulty from an antitrust standpoint, even if the formation of the pool is pro-competitive. Despite all that has been written lamenting the problem of patent thickets, the antitrust regime has never had an objective method of verifying the existence of a patent thicket in a given section of patent space. In response to the lack of such a methodology, this paper proposes a tool to facilitate objectively demonstrating the existence of patent thickets. This paper proposes a thicket identification methodology that uses a network analytic technique to determine if a patent pool is coincident with a patent thicket by comparing the density of the patent pool to the density of the surrounding patent space. This paper then applies the new methodology to two existing patent pools and verifies the existence of underlying patent thickets.... Patent thickets are not a new phenomenon, and when the total number of owners of the conflicting intellectual property rights is small, the response to the patent thicket problem has often been to cross-license (Grindley & Teece 1997; Teece 1998; Teece 2000). When more than two parties are involved, however, the transaction costs of cross-licensing between all of the parties can be prohibitive, and additional economic barriers exist such as hold-ups and double marginalization (Viscusi et al. 2000).},

research_type={Measures},

thicket_def_extract={When organizations in technology industries attempt to advance their innovative activities, they may encounter patent thickets, or dense webs of overlapping intellectual property rights owned by different companies that must be hacked through in order to commercialize new technology... Using Shapiro’s definition of a patent thicket as the starting point, two conditions must be satisfied in order for a collection of patents to be a patent thicket: the collection of patents must be both “dense” and “overlapping”(2000, pg. 120).},

filename={[[Clarkson (2005) - Patent Informatics For Patent Thicket Detection]].pdf}

}

research_type={Discussion},

industry={Nanotech},

thicket_def_extract={...for the formation of patent thickets. These dense webs of overlapping intellectual property rights owned by different companies (Shapiro 2000) can present a significant barrier that must be hacked through in order to commercialize new technology. In other industries characterized by cumulative innovations and multiple blocking patents, the existence of such densely concentrated patent rights can have the perverse effect of stifling innovation rather than encouraging it. Such patent thickets are already problematic in other convergent technology areas such as biotechnology (Heller and Eisenberg 1998; Clark et al. 2000; Horn 2003) and information technology (Clarkson 2004)... When multiple organizations each own individual patents that are collectively necessary for a particular technology, however, their competing intellectual property rights form a “patent thicket”},

filename={[[Clarkson DeKorte (2006) - The Problem Of Patent Thickets In Convergent Technologies]].pdf}

}

title={Entry and Patenting in the Software Industry},

discipline={Mgmt},

research_type={Empirical},

industry={Software},

}

research_type={Empirical},

industry={Software},

thicket_def_extract={With more than 100,000 software patents issued in the US since 1990, and ever-greater complexity and scale of software products, industry participants face an increasingly forbidding “thicket” of IP. With even quite modest products containing millions of lines of code and thousands or tens of thousand of inter-related component modules, any of which could potentially infringe one or more patents, the cost of “clearing” new products for potential infringement can be very large. Allegedly poor standards of patent examination in this area in the past may also have generated large numbers of patents with inadequate disclosure, and excessively broad claims, raising the costs of determining the scope of existing IP, and increasing uncertainty about possible future litigation from competitors and non-competitors alike... a patent “thicket”—i.e. a “a dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology”... Following Hall and Ziedonis (2003) and Ziedonis (2005), we hypothesize that start-up companies with patents will be able to use them in cross-licensing negotiations to defend themselves against litigation. These patents may then act to reduce the transaction costs associated with operating in a “thicketed” market... However, it may not be just the absolute number of patents in an area that can deter entry, but also the extent to which those patents form a “thicket” in the sense of generating transactions costs above and beyond simple blocking power. As Shapiro (2001) puts it, “a patent thicket is a dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology. With cumulative innovation and multiple blocking patents, stronger patent rights can thus have the perverse effect of stifling, not encouraging, innovation.”14 Ziedonis (2004) and Noel and Schankerman (2006) argue that a key factor driving transactions costs may be the degree to which ownership of patent rights is fragmented. Suppose a prospective entrant were to obtain licenses from holders of blocking patents.},

filename={[[Cockburn MacGarvie (2009) - Patents Thickets And The Financing Of Early Stage Firms]].pdf}

}

year={2010},

abstract={We examine the relationship between fragmented intellectual property (IP) rights and the innovative performance of firms, taking into consideration the role played by in-licensing of IP. We find that firms facing more fragmented IP landscapes have a higher probability of in-licensing. We observe a negative relationship between IP fragmentation and innovative performance, but only for firms that engage in in-licensing. In contrast, greater IP fragmentation is associated with higher innovative performance for firms that do not in-license. Furthermore, the effects of fragmentation on innovation also appear to depend on the size of a firm’s patent portfolio. These results suggest that the effects of fragmentation of upstream IP rights are not uniform, and instead vary according to the characteristics of the downstream firm.},

research_type={Empirical},

thicket_def={Overlapping Patents, Cummulative Invention, Diversely-Held, Transaction Costs, Unspecified Blocking Mechanism},

filename={[[Cockburn MacGarvie Muller (2010) - Patent Thickets Licensing And Innovative Performance]].pdf}

}

discipline={Mgmt},

research_type={Empirical},

thicket_def_extract={I study how the fragmentation of the ownership of complementary patents impacts the market value of the firm. This fragmentation builds a patent thicket, which contains a set of overlapping patents.3 The patent thicket requires obtaining permission from several right holders to commercialize a product. Firms that face a fragmented technology market have to pay higher transaction costs and royalty payments to license external patents, because they are confronted with larger number of entities in the thicket. They are more prone to opportunistic behaviour by external entities, since the likelihood of infringing other firms’ patents is high. They are also more exposed to the risk of being litigated against by other patent holders. The patent thickets hold several costs for the firms with cumulative innovations. They cause the “complement problem” which was first formally examined by Cournot (1838).12 Shapiro (2001) extends the Cournot idea into the context of intellectual property. He indicates right holders in the thicket make the prices of invented products much larger than their marginal costs by imposing the licensing fees. The result is lower consumer welfare and joint profit of right holders. Heller and Eisenberg (1998) also show that the licensing fees in the thicket lead to underinvestment in innovation or the “tragedy of anti-commons.” Furthermore, Shapiro (2001) shows that the dense thickets increase the transaction costs of firms, because identifying complementary patents is harder and more costly. Innovators usually find about all of the patents after bearing sunk costs. This means the innovator is faced with a hold-up problem.},

filename={[[Entezarkheir (2010) - Patent Thickets And Market Value An Empirical Analysis]].pdf}

}

research_type={Discussion},

industry={Software},

thicket_def_extract={The theoretical economics literature argues that when innovations are sequential and cumulative, patents may impose more than the typical exclusion-period costs.113 For instance, a patent for an invention early in the innovative process could impose a toll on each sequential innovation that relies on it. Subsequent inventors, therefore, face higher transaction costs––they must pay licensing fees before they can further refine a technology. As the tolls build during the technology’s development path, later research could be discouraged altogether. Alluding to the famous argument for property rights, over-patenting has been dubbed the “tragedy of the anticommons,” as too many people with exclusionary rights can cause underutilization of resources.114 Shapiro uses another metaphor: the patent thicket... Based on the theoretical literature, software patent opponents claim that patent thickets will develop in the software industry. Thus, they assert that patents allow a company or individual to prevent the type of incremental innovation that is so important in the software industry. When small pieces of software that are adaptable to a multitude of applications can be and are patented, it becomes increasingly likely that each complex program will infringe someone’s patent. Therefore, opponents argue that developers have incentives to “over-patent” for strategic or defensive reasons in order to gain leverage in cross-licensing negotiations.119 Strategic patenting results in a patent thicket, an impenetrable barrier to further innovation.},

filename={[[Evans LayneFarrar (2004) - Software Patents And Open Source]].pdf}

}

research_type={Discussion},

industry={General},

thicket_def={Complementary Inputs, Diversely-Held},

filename={[[Farrell (2009) - Intellectual Property As A Bargaining Environment]].pdf}

}

discipline={Econ},

}

discipline={Econ},

research_type={Empirical},

filename={[[Galasso Schankerman (2010) - Patent Thickets Courts And The Market For Innovation]].pdf}

}

discipline={Law},

research_type={Discussion},

thicket_def={Overlapping Patents, Complementary Inputs, Diversely-Held, Transaction Costs},

filename={[[George (2006) - What Is Hiding In The Bushes Ebays Effect On Holdout Behavior In Patent Thickets]].pdf}

}

discipline={Econ},

research_type={Empirical},

thicket_def_extract={One of the earliest applications of the cumulative and sequential innovation theory was aimed at biotechnology research... In 2001, Shapiro pronounced the existence of a “patent thicket” in “several key industries”... Nonetheless, Shapiro does not present any evidence on licensing difficulties or holdup within the semiconductor or telecom industries... One of the key distinctions for the anti-commons theory as applied to standard setting lies in the timing of licensing negotiations. For those technologies that are easy to invent around, “the patented technology contributes little if anything to the final product, and any ‘reasonable’ royalty would be modest at best.”38 But Shapiro and others argue that after the technology is included in a standard or after potential licensees have started manufacturing, the patent holder “can credibly seek far greater royalties, very likely backed up with the threat of shutting down the manufacturer…” Shapiro sees little relief for this ex post hold-up aspect of patent thickets short of reforming patent law... Based on patent thicket and anti-commons theory, along with insights from transaction cost theory, Ziedonis predicted that firms would patent more aggressively than expected when the rights to the technology are highly fragmented},

filename={[[Geradin (2007) - Royalty Stacking In High Tech Industries Separating Myth From Reality]].pdf}

}

year={2008},

abstract={Royalty stacking, the most recent incarnation of the complements problem identified in the early 1800s by French engineer Augustine Cournot, has received considerable attention. The potential for royalty stacking within standard setting efforts arises from the fact that downstream manufacturing companies can face multiple upstream gatekeepers, each of whom must grant a license to their “essential” patents before the downstream firms can legally commercialize the standard. Some authors have claimed that in high-tech industries—which are frequently characterized by cumulative innovation, dispersed ownership of patents, and cooperative standard setting efforts—the cost of obtaining all necessary licenses is too high, such that innovation has been thwarted and consumers have been harmed. In this paper, we assess the case for royalty stacking within standards and find the evidentiary support weak at best. We note that the relevant question is not whether royalty stacking is possible, as the theoretical arguments behind it have withstood the test of time, but whether it is common enough and costly enough in actuality to warrant policy changes. The available evidence suggests not, implying that any policy changes aimed at solving royalty stacking are likely to cause more (unintended) harm than they cure.},

research_type={Discussion},

thicket_def_extract={Relying on this logic, some authors have claimed that in high-tech industries—which are frequently characterized by cumulative innovation and dispersed ownership of patents—the cost of obtaining all necessary licenses is too high, such that innovation has been thwarted and consumers have been harmed.6... In an article evaluating the National Institute of Health’s (NIH) proposal to patent products resulting from sequencing the human genome, Kiley (1992) argued “[b]ecause every step along the way draws another patent application, the path toward public possession of real benefit is increasingly obscured by dense thickets of intersecting, overlapping, and cross-blocking patents . . . The cumulation of royalty obligations threatens to have [a stunting] effect in biotechnology.”... Shapiro (2001) applies the concern expressed by Kiley over “dense thickets of intersecting, overlapping, and cross-blocking patents” to high technology industries more frequently involved in standard setting.28 In particular, Shapiro argues that “[t]he need to navigate the patent thicket and holdup is especially pronounced in industries such as telecommunications and computing in which formal standard setting is a core part of bringing new technologies to market.”29... Referring to “Cournot’s lessons”, Shapiro presents a number of “unattractive consequences” resulting from “multiple patent burdens.”31 Namely, he argues that a complements problem would not only reduce consumer welfare, it also would lower the profits of patent holders, as compared to a coordinated licensing approach; it can result in market collapse if production is subject to economies of scale; and it “necessarily reduces the return to new product design and development, and thus can easily be a drag on innovation and commercialization of new technologies.”},

filename={[[Geradin LayneFarrar PadillaBlanco (2008) - The Complements Problem Within Standard Setting]].pdf}

}

discipline={Econ},

}

year={2012},

abstract={},

research_type={Empirical},

thicket_def_extract={A patent thicket is “a dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology” (Shapiro, 2000). Patent thickets consist of patents that protect components of a modular and complex technology. Here modular means that different sets of components can be assembled to yield a variety of technological products. Complex means that products consist of tens or hundreds of such modular components. Each component may end up being used in several products. Often there are partial or complete overlaps in the functionality of components and then the patents protecting the components may also overlap. If overlapping patents belong to different firms, then a patent thicket exists. Although technology areas with large number of patents often lead to patent thickets, this is not necessarily the case. In principle, an active technology area could have a large number of patents, each clearly delineating the invention concerned and none with overlapping claims or claims with uncertain breadth or scope. Thus it is important not to use numbers of patents as an indicator of patent thickets. Nevertheless, it is undoubtedly the case that one of implications of the presence of patent thickets is active patenting in the sector, so the two phenomena are correlated. Later in this report, we propose a measure of thickets in a technology area that incorporates an indicator of complexity and the possibility of overlapping claims, and controls for the overall level of patenting in the area.},

filename={[[Hall (2012) - A Study Of Patent Thickets]].pdf}

}

@article{hargreaves2011digital,

author={Hargreaves, I.},

year={2011},

research_type={Discussion},

filename={[[Hargreaves (2011) - Digital Opportunity]].pdf}

}

discipline={Econ},

research_type={Empirical},

filename={[[Harhoff (2008) - Incidence And Growth Of Patent Thickets]].pdf}

}

}

discipline={Econ},

research_type={Empirical},

thicket_def_extract={These lower-quality patents can be valuable to patentholders seeking to accumulate a thicket of patents for “defensive” purposes and/or to improve their bargaining position in patent cross-licensing negotiations (Shapiro 2001). Additionally, according to Lemley and Moore (2004), inventors may use the continuations procedure to increase uncertainty for rivals’ research and development (R&D) investment decisions, or to acquire so-called “submarine patents"... A patenting strategy that is consistent with the use of continuations to acquire a large number of less significant patents has been analyzed by Hall and Ziedonis (2001) in the semiconductor industry. For capital-intensive manufacturing firms, whose multibillion-dollar production facilities are at risk of shutdowns from patent-infringement injunctions, large patent portfolios can be useful in cross-licensing negotiations that reduce the risk of patent litigation.},

filename={[[Hegde Mowery Graham (2009) - Pioneering Inventors Or Thicket Builders]].pdf}

}

discipline={Law},

research_type={Theory},

thicket_def_extract={Building on Heller’s theory of anticommons property (3), this article identifies an unintended and paradoxical consequence of biomedical privatization: A proliferation of intellectual property rights upstream may be stifling life-saving innovations further downstream in the course of research and product development... Anticommons property can best be understood as the mirror image of commons property (3, 8). A resource is prone to overuse in a tragedy of the commons when too many owners each have a privilege to use a given resource and no one has a right to exclude another (9). By contrast, a resource is prone to underuse in a “tragedy of the anticommons” when multiple owners each have a right to exclude others from a scarce resource and no one has an effective privilege of use. In theory, in a world of costless transactions, people could always avoid commons or anticommons tragedies by trading their rights (10). In practice, however, avoiding tragedy requires overcoming transaction costs, strategic behaviors, and cognitive biases of participants (11), with success more likely within close-knit communities than among hostile strangers (12– 14).... The tragedy of the anticommons refers to the more complex obstacles that arise when a user needs access to multiple patented inputs to create a single useful product. Each upstream patent allows its owner to set up another tollbooth on the road to product development, adding to the cost and slowing the pace of downstream biomedical innovation. Current examples in biomedical research demonstrate two mechanisms by which a government might inadvertently create an anticommons: either by creating too many concurrent fragments of intellectual property rights in potential future products or by permitting too many upstream patent owners to stack licenses on top of the future discoveries of downstream users.... Stacking licenses. The use of reachthrough license agreements (RTLAs) on patented research tools illustrates another path by which an anticommons may emerge. As we use the term, an RTLA gives the owner of a patented invention, used in upstream stages of research, rights in subsequent downstream discoveries. Such rights may take the form of a royalty on sales that result from use of the upstream research tool, an exclusive or nonexclusive license on future discoveries, or an option to acquire such a license... Transaction costs of bundling rights. High transaction costs may be an enduring impediment to efficient bundling of intellectual property rights in biomedical research.},

filename={[[Heller Eisenberg (1998) - Can Patents Deter Innovation The Anticommons In Biomedical Research]].pdf}

}

year={2009},

abstract={Knowledge-based firms seeking competitive advantage often draw on the public knowledge stream (ideas embedded in public commons institutions) as the foundation for private knowledge (ideas firms protect through private intellectual property [IP] institutions). However, understanding of the converse relationship—the impact of private knowledge strategies on public knowledge production—is limited. We examine this question in human genetics, where policy makers debate expanding IP ownership over the human genome. Our difference-in-differences estimates show that gene patents decrease public genetic knowledge, with broader patent scope, private sector ownership, patent thickets, fragmented patent ownership, and a gene’s commercial relevance exacerbating their effect.},

research_type={Empirical},

thicket_def_extract={In testing whether this effect shapes contributions to public knowledge, we relied on two characteristics that define the patent landscape: “thickets” and “fragmentation.” A patent thicket is “an overlapping set of patent rights requiring those seeking to commercialize new technology to obtain licenses from multiple patentees” (Shapiro 2001:1). We measured thickets as the number of patents claiming the same set of (gene) knowledge inputs.... Although patent thickets may be salient to follow- on researchers, the fragmentation of these multiple competing patent rights across many owners is potentially more problematic. Heller and Eisenberg outlined the following rationale... },

filename={[[Huang Murray (2009) - Does Patent Strategy Shape The Long Run Supply Of Public Knowledge]].pdf}

}

year={2004},

abstract={This paper is the first part of a wide-ranging study of the role of intellectual property in the software industry. The project focuses on the software industry because of the importance of that industry to the modern economy, because of the importance of innovation to that industry, and because of the well-known difficulties of accommodating traditional intellectual-property regimes (patent, copyright, and trade secret) to innovation in the industry. This paper focuses on innovation in the hundreds of small venture-backed firms that form the bulk of the population of the industry. After a brief description of the history of the industry in Part II, Part III discusses the evidence on which the paper relies: a set of about 50 interviews of industry executives – diversified geographically, by size of company, and by role in the industry (software developers, venture capitalists, lenders, etc.). Relying on those interviews, the paper provides a detailed explication of the role that intellectual property plays in the industry. Parts IV through VI of the paper organize the information from the interviews and situate it in the extensive literatures on venture capital investing, the economics of innovation, and patents. The first substantive topic of the paper (Part IV) is the features of startup firms that attract investment by venture capitalists – generally something about the startup that suggests a “sustainable differentiation” of the firm from its competitors. The differentiation could come from any number of advantages the firm has – a first-mover advantage, special skill of its employees, a unique approach to solving a difficult problem, or, in some cases, intellectualproperty protection.The second substantive part of the paper (Part V) discusses the role of copyright. The major point of this part is that copyright protection is of little value to startup firms. Copyright protection is designed to protect expression, and not functionality. Thus, it provides little of the protection for which venture investors are looking. The basic problem is that it does not offend copyright law if a competitor observes a software product and designs a new product that includes precisely the same functionality, so long as the competitor uses none of the “expression” from the first product. Because the competitor’s customers are for the most part interested in the functionality, not the expression, this is not an important constraint. On the other hand, copyright protection does provide important protections in other areas, most obviously in protecting the later-stage firm’s products from piracy. Generally, this part of the paper tells a story of unsuccessful efforts to stretch the copyright regime to do something it never was intended to do. The final substantive part of the paper (Part VI) discusses the role of patents. Because patents do protect functionality, they have at least the theoretical potential to provide the sustainable differentiation for which investors are looking. The problem, however, is that in many sectors of the software industry innovation is not of a character that a typical patent can protect a firm from competitors: often competitors would be able to design a competing product that works around a firm’s patent. Thus, despite significant increases in patenting in the industry, about 80% of venture-backed software firms do not obtain patents during the early years of their existence. The question, then, is what benefits patents do provide to those firms. This part explores several benefits, including the classic benefit of excluding competitors. In this industry at least, that benefit accrues primarily to small firms, protecting them from the competitive depredations of incumbents. Incumbents, by contrast, rarely use patents to exclude smaller firms from the industry. The part also discusses a series of less conventional benefits small firms gain from software patents: as barter in cross-licensing arrangements, in signaling their technical competence to third parties, in converting tacit knowledge into a verifiable and transferable form, and in making the firm attractive to potential acquirers. The paper closes by discussing the implications of the patent analysis for recent debates about the value of patents in the software industry. The paper starts with a discussion of theoretical literature suggesting that free availability of patented technology is important because of the software industry’s reliance on cumulative patterns of innovation. It then presents evidence about existing practices in the industry suggests that technology in fact is readily available, rebutting the prominent claims of a patent “thicket” that is supposedly stifling innovation in the industry. On the contrary, I argue, to the extent patents have an important effect in the industry, it is an effect that inures primarily to the benefit of the smaller firms trying to find a foothold from which they can compete.},

industry={Software},

thicket_def_extract={The broadest form of the criticism – associated with Carl Shapiro and Larry Lessig – argues that the rapid proliferation of software patents has created a “patent thicket” that deters innovation, particularly by small firms that are not well placed to compete against the portfolios of their larger and better-heeled competitors... Larry Lessig presents it forcefully as a matter of truth that the proliferation of software patents has created a patent “thicket” (Shapiro’s term)256 or an “anticommons” (a term Lessig draws from Michael Heller’s work with Becky Eisenberg257). This concern also pervades James Bessen’s work (by himself and with other co-authors).258 Specifically, the idea is that there are so many overlapping patents in the industry that potential innovators cannot readily obtain the approvals necessary to conduct their research... On the contrary, a patent thicket would exist only if industry licensing practices were such that firms in the industry commonly were unable to agree on terms for licenses and thus retreated from the field of innovation. That is not a plausible portrait of the commercial software industry as it now exists.},

filename={[[Mann (2004) - The Myth Of The Software Patent Thicket]].pdf}

}

research_type={Discussion},

}

research_type={Discussion},

industry={Sewing},

thicket_def_extract={A ?patent thicket? exists when too many patents covering individual elements of a commercial product are separately owned by different entities.7 This concept is not unique to patent law; it is based on Professor Michael Heller‘s theory of the anticommons in real property, which arises when there is excessive fragmentation of ownership interests in a single parcel of land.8 According to economic theory, the problem of such excessive fragmentation of ownership interests is straightforward: it increases transaction costs, accentuates hold-out problems, and precipitates costly litigation, which prevents commercial development of the affected property.9 Additionally, a patent thicket can block new research into follow-on inventions,10 preventing the ?Progress of . . . the useful Arts.?},

filename={[[Mossoff (2011) - Rise And Fall Of The First American Patent Thicket]].pdf}

}

discipline={Mgmt},

research_type={Empirical},

filename={[[Nagaoka Nishimura (2006) - An Empirical Assessment Of The Effects Of Patent Thickets]].pdf}

}

research_type={Empirical},

industry={Software},

thicket_def_extract={The argument is that strategic patenting activity creates patent thickets that constrain ?rms?freedom of action in R&D and thus raise the costs of innovation... In such industries, it is a widely held view that patenting activity creates a ?thicket?of fragmented property rights that impedes R&D activity by constrain- ing the ability of ?rms to operate without extensive licensing of complementary technologies. This position was ?rst enunciated by Heller and Eisenberg (1998), who labelled it the ?problem of the anti-commons.?1 By increasing the transaction costs of R&D, patent thickets provide an incentive for ?rms to patent defensively. In e¤ect, this argument implies that patenting creates a negative externality on other ?rms: by increasing the ?rm?s bargaining power in the form of more ?chits to trade?in patent disputes, patenting by one ?rm raises the cost to other ?rms of protecting or appropriating the rents from their innovations. Some authors have claimed that this creates a pris- oner?s dilemma which can lead to excessive patenting in complex technology industries, including semiconductors and software (Bessen and Maskin, 2000).},

filename={[[Noel Schankerman (2006) - Strategic Patenting And Software Innovation]].pdf}

}

year={2011},

abstract={},

research_type={Discussion},

thicket_def_extract={The terms “thicket” has been used somewhat indiscriminately in competition law circles to describe various types of concentration of IPRs3. In this report, we use the term in a much more specific and precise sense. Following Shapiro’s definition, patent thickets are “an overlapping set of patent rights requiring that those seeking to commercialise new... technology obtain licenses from multiple partners”.4 Two conditions must then be fulfilled for a thicket to arise. Firstly, the production and sale of a given product involves the use of a large number of patent rights. Secondly, the ownership of those rights is dispersed... It is also important to understand the nature of “overlap” of patent rights that helps define a thicket. Such “overlap” has two main sources. Firstly, different patent rights might cover different aspects of the technology required to produce a new product. In other words, several patents might be technologically essential for the commercialisation of a given product. The second source of overlap comes from the nature of patent rights. These rights can be mutually blocking and are moreover uncertain. In practice this means that a firm with a valid patent covering a given aspect X of a new product might still fear that it might infringe another firm’s patent that relates to the same aspect or at least to a similar underlying innovation. In such a situation, access to the other firm’s patent is not technologically necessary but it is required if the firm wants to proceed under conditions of legal certainty... One might therefore settle on the following modification of Shapiro’s definition: patent thickets arise when the IP rights necessary to market a product and do so without significant risk of infringement are held by a large number of different parties.},

filename={[[Regibeau Rockett (2011) - Assessment Of Potential Anticompetitive Conduct]].pdf}

}

thicket_stance={Weak Pro},

thicket_stance_extract={We further argued that the increasing technology monitoring efforts for victims of trolls, namely large manufacturing R&D intensive firms, due to ballooning numbers of patent applications, probably led to the increase of sharks’ relevance for innovators. It facilitates 'trapping’ manufacturers by ‘hiding’ patented technologies in confusing patent thickets—a second necessary condition for sharks to operate. oreover, the strengthening of patent holder’s rights in certain jurisdictions (e.g. the US) most likely enabled sharks to operate more profitably, too.},

thicket_def_extract={Multivariate analysis of the data suggests that in selected discrete technologies, patent ‘fences’ may serve to exclude competitors whereas in complex technologies, ‘thickets’ represent exchange forums for complementary technology.... yielding thickets of complementary patents held by different owners.... Patent thickets owned by various patent holders should prevail in complex technologies such as semiconductors, forcing players to use patents as ‘bargaining chips’.4 Here, from the patentee’s standpoint, exchanging technology should be the first-best use for a patent leading to the highest possible profits as exclusion is virtually infeasible.... As both articles show, the “strategic use” of patents (the two most important types being blocking and cross-licensing with patent ‘thickets’ playing a major role for the latter), has classically been discussed from the perspective of those patent holders who either engage in the production of their own technological goods or consider themselves professional intellectual property suppliers who repeatedly interact with manufacturers.},

}

@incollection{shapiro2001navigating,

title={Navigating the patent thicket: Cross licenses, patent pools, and standard setting},

discipline={Econ},

research_type={Discussion, Theory},

thicket_def_extract={See Review},

filename={[[Shapiro (2001) - Navigating The Patent Thicket]].pdf}

}

discipline={Econ},

research_type={Theory, Empirical},

thicket_def_extract={Complex high technology industries are increasingly affected by patent thickets in which firms’ patents mutually block the use of important technologies. Firms facing patent thickets patent intensively to acquire bargaining chips and use licensing to ensure freedom to operate. Such licensing allows rivals to either avoid or resolve hold-up from blocking patents... The complexity and modularity of technology combined with strong increases in the number of patent applications have given rise to patent thickets (Shapiro, 2001; Hall and Ziedonis, 2001). A patent thicket consists of complementary patents related to one technology. The patents in a patent thicket belong to many rival firms. In the absence of cross-licensing agreements, or patent pools, use of the technology is blocked. Avoiding exposure to rivals’ blocking patents is difficult because firms are often not aware of the precise technological trajectory pursued by their rivals (Grindley and Teece, 1997). Additionally, the complexity of high technology products gives rise to connections between patents that are not anticipated. Compounding these problems, the limits of patent rights are always open to interpretation which can lead to unanticipated overlap of patents. Finally, patent offices have limited resources and may overlook prior art or patent overlap (Lemley, 2001).2 In order to contain the threat of hold-up, firms build up large patent portfolios which provide “freedom to operate”... },

filename={[[Siebert VonGraevenitz (2010) - Jostling For Advantage Or Not]].pdf}

}

discipline={Econ},

research_type={Measures,Empirical},

thicket_def_extract={It therefore seems that the latter company aims to protect its intellectual property by means of a company-specific patent thicket. There are some central patents, some highly cited, and a number of patent families clustered around, citing one or even more central patent families... },

filename={[[Sternitzke Bartkowski Schramm (2008) - Visualizing Patent Statistics By Means Of Social Network Analysis Tools]].pdf}

}

pages={1617},

year={2006},

research_type={Discussion, Measures},

thicket_def={Complementary Inputs, Diversely-Held, Transaction Costs, Hold-up, Cummulative Invention},

filename={[[Strandburg (2006) - Law And The Science Of Networks]].pdf}

}

discipline={Policy Report},

research_type={Discussion},

thicket_def_extract={The phrase “patent thicket” is a descriptive term which highlights issues that new entrants to a market may face when attempting to innovate within, or enter into, a technology space having existing intellectual property rights. The most generally used definition of a thicket is that coined by Shapiro: “a dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology”. Equal weighting is given to fragmented technological areas (areas where there are large numbers of small patent holdings), or areas where there are small numbers of large players with large patent holdings, each of which creates a thicket that any entrants into the area will have to negotiate in order to be able to operate. There is no clear consensus on terms used to describe patent thickets and the entities involved with them. If these terms were applied consistently, further debate on any issues could be conducted on a level playing field. Any change in policy associated with patent thickets should be carefully considered for its potential impact across different technology landscapes... However, it was interesting to note that some indicators potentially give more useful insight into the type of thicket present... However, despite Shapiro’s comments, on reviewing the general literature in this area, it seems that no concrete definition of a thicket has yet been agreed by researchers, as a number of different interpretations have been created. These definitions tend to fall into a number of forms. Fragmented property rights: • When multiple organisations each own individual patents that are collectively necessary for a particular technology their competing intellectual property rights form a patent thicket10 • Patent thickets are sets of overlapping property rights that occur in fragmented technology Markets11 • A patent thicket exists when too many patents covering individual elements of a commercial product are separately owned by different entities.12 Blocking patents: • “The combination of complex technology and high volume patenting creates patent thickets which can be defined as dense webs of overlapping patent rights... The measure derives directly from information on blocking of one patent by another”13 • “A dense and overlapping set of complementary patent rights…of which at least one patent right is blocking the production of an innovation.” Alternative terms such as “patent floods”15 and “patent clusters”16,17 can also be used. For consistency the term patent thicket has been used throughout the current document. These differing definitions of what exactly a thicket may be, does not aid the reader in comprehending the scope of the issue. Indeed, the idea that patents should not be granted for the same invention, in theory, should not occur as was noted earlier in Section 2 where the scope of claims was discussed.},

filename={[[UKIPO (2011) - Patent Thickets An Overview]].pdf}

}

discipline={Econ},

research_type={Measures},

thicket_def_extract={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)... 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.},

filename={[[VonGraevenitz Wagner Harhoff (2011) - How To Measure Patent Thickets A Novel Approach]].pdf}

}

}

discipline={Econ},

research_type={Measures, Empirical},

filename={[[Ziedonis (2004) - Dont Fence Me In]].pdf}

}

@techreport{clarkson2003sharper,

tags={},

filename={Ziedonis (2003) - Patent Litigation In The Us Semiconductor Industry.pdf}

}