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Untangling the Economics of Patent Thickets (view source)
Revision as of 16:04, 20 June 2017
, 16:04, 20 June 2017→Modern Terms
====Modern Terms====
E) '''Transaction Costs:''' All patent-based interactions, from application to licensing to litigation, are subject to transaction and search costs. Patent applications are subject to transaction costs in the form of prosecution costs and renewal (‘maintenance’) fees. These costs and fees are supposed to de-incentivize low value patents. However, they may also de-incentivize invention by small firms and individuals. (p.13)
F) '''Probabilistic Patents:''' Lemley and Shapiro (2005, 2006) emphasize that patents are ‘probabilistic’. They suggest that “there is no way to determine with certainty whether the patent is valid and infringed without litigating to judgment." Enforcement of patent rights - observing and redressing infringement of patent claims - is therefore both costly and uncertainty. (p.11)
G) '''Unspecified/Extended Use:''' Kiley (1992) claims that applying for a patent based on an inventive step that does not have a clearly articulated stand-alone commercial value creates economic inefficiencies. But often it can be difficult to foresee which particular use of an invention will be profitable and which won’t. (p.8)
H) '''Search Costs:''' Searching for relevant patents may impose material costs. Wang (2010) argues that this may be particularly burdensome for new entrants who need to develop suitable search capabilities. (p.13)
I) '''(Patent) Hold-up:''' The Federal Trade Commission (2011) provides the following definition of patent hold-up: “‘Hold-up’ describe[s] a patentee’s ability to extract a higher license fee after an accused infringer has sunk costs into implementing the patented technology than the patentee could have obtained at the time of [the accused infringer’s] design decisions.” However, some recent papers have stressed the obvious diametrically opposite problem. Langus et al. (2013), for example, point out that
''“the licensee may often engage in a reverse hold up”. Reverse patent hold-up, loosely put, is where the accused infringer extracts zero (via infringing) license fee after the patent owner has sunk costs in developing the patented technology and alleged infringement has taken place. Again, this occurs as patents are not self-enforcing. Implementers can simply use the invention covered by a patent and wait to get sued, using as many diversionary tactics in the courts as is possible, knowing that it is hard, time-consuming, and expensive for a patentee to get an injunction. The judicial system is far from perfect; the patentee has few remedies absent a courts intervention.'' (p.11-12)
j) '''Strategic Patents:''' Strategic patenting is sometimes defined as accumulating patents merely to achieve design freedom. These patents can be used as bargaining chips, rather than for their intrinsic value, and as such are largely welfare neutral, except in conjunction with transaction costs and cross- licensing agreements (discussed shortly). Much of the discussion of strategic patents takes place in the context of the patent thicket literature.
''“To obtain the rights to infringe patents held by external parties and to improve their leverage in negotiations with other patent owners, these firms amass larger patent portfolios of their own with which to trade.” – Hall and Ziedonis (2001)''
===Relative Definition Quotes===
