Changes

The literature that defines NPEs (Non-practicing entities) is, perhaps unsurprisingly, mostly derogatory. Gregory (2006) provides a typical description. Tokic (2012) suggests that trolls hold invalid patents, as does Myers (2006). Likewise , Harkins (2007) discusses "paper patents" which "are directed to prophetic ideas that had issued as patents without the so-called inventors actually building an operable device or proving the device worked for its intended purpose." He then associates them with patent trolls. Lemley (2007) is more balanced, and considers whether universities also meet the definition of patent trolls. He ends by advocating that they should consider social welfare more carefully.

According the more economic literature, NPEs may be a good thing, as they may increase competition, innovation, lower downstream prices and enhance consumer choice, as Geradin et al. (2012) claim. However, most authors are somewhat neutral. A small literature has explored the role of NPEs in creating a market for intellectual property (IP). This includes Hagiu and Yoffie (2011), Wang (2010), Pohlmann and Opitz (2010), and Merges (2009), as well as more descriptive contributions from McDonough III (2006) and Abril and Plant (2007). The market for ideas papers explore questions like "What accounts for the relative differences between these different patent intermediation models? ", "Can patent intermediaries make the market more liquid, or will the inefficiencies persist? ", and "What are the efficiency implications of the emergence of these intermediaries for the patent market and society at large? ", as in Hagiu and Yoffie (2011), who conclude that patent intermediaries have so far failed to achieve meaningful scale, but that there are reasons to worry about inefficiencies for small firms, large operating companies and end-consumers. Wang (2010) distinguishes between offensive and defensive aggregators, and claims the former will be first to fall to directed legislation, while the second latter will evolve in standard-setting and licensing bodies. Pohlmann and Opitz (2010) reviews just five cases to find that while patent trolls are an efficient way to enforce IPR, their enforcement leads to excessive royalty fees. And Merges (2009) says "All the evidence points to a major incidence of rentseeking, mixed in with the emergence of a perhaps valuable market for independent ideas and inventions.". In work related to the market for ideas, Lu (2011a) claims that NPEs may deliberately assemble portfolios of complements. As such NPEs may act to reduce the anti-commons problem associated with patent thickets. And Beron and Kinsella (2011) suggests that problem of litigation costs for startups might be mitigated by 3rd party litigation.

One important question is how the patents and the enforcement of patent rights vary between NPEs and regular firms. In empirical work Shrestha (2010) finds that "NPEs in fact hold high value patents and do not engage in frivolous litigation as has been alleged by their critics". Similar findings are reported in Miller (2011) who says, "I am surprised to find as much evidence as I have supporting those who argue that NPEs serve a useful role in the patent system and generally do not assert weaker patents then those asserted by other litigation claimants. The evidence suggests NPEs may in fact assist foreigners and individuals in collecting the rewards they are entitled to by current patent law." Though Miller (2011) also warns that NPEs seem to litigate patents with broad claims, business method patents, and patents on emerging technologies more frequently than their practicing counterparts. Risch (2011) is even more supportive of NPEs, saying "There is no uniform story about NPE patents or where they come from. While some are business methods patents, most are not. While some litigated patents come from failed start-ups, most did not. While some patents were initially assigned to licensing NPEs, most were not. Indeed, some extremely large companies - and even the federal government - have turned to the very same NPEs to enforce some patents. Some patents enforced by NPEs are invalid, while most are not. NPEs litigate patents with objective indicia that are similar to other litigated patents and appear to be invalidated about as often as other litigated patents, so long as they are not repeatedly asserted." He concludes by saying "There is one marked difference, however. Individuals may face a significant disadvantage in high-stakes patent litigation unless they allow NPEs to enforce their patents. This means that NPE litigation may be the best way for garage inventors to capitalize on their patents if infringers refuse to license." Fischer and Henkel (2009) suggest that NPE patents are actually of high quality and have a high likelihood of being held up in court. They hint at the endogenous selection of patents into an NPE’s portfolio, but are more concerned with potential inefficiencies that might arise by separating the market for patents from the market for technologies.  On the issue of settlements and royalties, Layne-Farrar and Schmidt (2009) claim that "there is no justification for the presumption that non-integrated patent holders always charge higher royalties than vertically integrated companies. Moreover, even when non-integrated patent holders charge ’higher’ royalties than their vertically integrated counterparts, it does not imply that the rates are ’excessive’ or that the firm is exhibiting troll-like behavior. Rather, non-integrated patent holders naturally require higher royalty earnings because they earn no profits downstream and receive no payments in kind in the form of cross-licenses." Likewise, Mazzeo et al. (2011) provides evidence that settlement to patent trolls might not be excessive. Using a sample of settlements that are not related to trolls (or at trolls aren’t identified), they report that "... it does not appear that a systematic or pervasive problem of excessive patent damage awards exists." They also note that "[o]ver 75 percent of the variation in observed patent award levels can be explained by the assembled information about the cases, litigants, and patents-at-issue. As a result, infringement awards can be said to be highly predictable. Large awards are not excessive outliers with respect to the empirical analysis in this study." Reitzig et al. (2006, 2007) use a more theoretical approach to argue that troll settlements are excessive.  Love (2011) finds that NPEs litigate at a much later point in a patent’s term than practicing entities, and suggests that shortening patent terms might be beneficial. Related papers include Allison et al. (2010) who consider litigation frequency (NPEs are frequently involved in litigation), and Lu (2011b) who consider royalty rates (NPEs charge royalty rates that are not different from practicing companies). Liang (2010) consider whether NPEs forum shop and finds evidence that they do.

The law literature has focused mainly on judicial reform and whether NPE infrigement cases should fall under the property rule or the liability rule. Farrand et al. (2011) and Helm and Lee (2008) tackle judicial reform in the patent system related to NPEs and Jones (2006) considers NPEs head on. Likewise there is a large sub-literature that considers the impact of the eBay/Merx decision from the Superb Court, which effective prevents NPEs, as well as many other inventors, from seeking injunctive relief. Typical papers include Eddings (2005),Golden (2006),Mersino (2007) and Maughan (2012). Helm (2006) explains that Pharmaceutical firms supported the NPE position because the injunctive relief differentially affects different industries ability to innovate, and Casagrande (2006) suggests that true problem at issue was business method patents, and the Supreme Court’s decision missed the mark. Other judicial reform papers include Chan and Fawcett (2005), who considers the 2005 Patent Reform Act; Reitzig et al. (2006) who argues that courts make unrealistic trade-offs in cases involving NPEs (and should be stricter); and Ferrill (2004) who suggests the creation of Patent Investment Trusts. On whether the property rule or the liability rule is appropriate, and whether the liability rule can be contracted around, Sichelman (2011) and Lemley (2011) provide seminal comments. Finally, Hricik (2010) who considers the ethics of representing each side (and suggests the ethical quandary is in representing the infringer, not the NPE).

*Abril, P.S. Plant, R. 2007. The patent holder’s dilemma: buy, sell, or troll? Communications of the ACM, vol. 50 50 (1), pp. 36-44.[http://www.edegan.com/pdfs/Abril%20Plant%20(2007)%20-%20The%20patent%20holders%20dilemma.pdf pdf]*Allison, Lemley Walker2010allisonpatent Allison, J.R., Lemley, M.A., Walker, J. 2010. Patent quality and risk aversion among repeat patent litigants.[http://www.edegan.com/pdfs/Allison%20Lemley%20Walker%20(2010)%20-%20Patent%20Quality%20and%20Risk%20Aversion%20Among%20Repeat%20Patent%20Litigants.pdf pdf]*Beron, B.L. Kinsella, J.E. 2011. David vs. goliath patent cases: A search for the most practical mechanism of third party litigation financing for small plaintiffs. N. Ky. L. Rev., vol. 3838, pp. 605-687.*Casagrande, T.L. 2006. The reach of ebay inc. v. mercexchange, llc: Not just for trolls and patents. Hous. Law., vol. 4444, pp. 10-11.[http://www.edegan.com/pdfs/Casagrande%20(2006)%20-%20The%20Reach%20of%20eBay%20Inc%20v%20MercExchange%20LLC.pdf pdf]*Chan, J. Fawcett, M. 2005. Footsteps of the patent troll. Intell. Prop. L. Bull., vol. 1010, p. 11. [http://www.edegan.com/pdfs/Chan%20Fawcett%20(2005)%20-%20Footsteps%20of%20the%20Patent%20Troll.pdf pdf]*Chien, C.V. 2008. Of trolls, davids, goliaths, and kings: Narratives and evidence in the litigation of high-tech patents. NCL Rev., vol. 8787, p. 1571.[http://www.edegan.com/pdfs/Chien%20(2008)%20-%20Of%20Trolls%20Davids%20Goliaths%20and%20Kings.pdf pdf]*Chien, C.V. 2010. From arms race to marketplace: The new complex patent ecosystem. Hastings Law Journal, vol. 6262. [http://www.edegan.com/pdfs/Chien%20(2010)%20-%20From%20Arms%20Race%20to%20Marketplace.pdf pdf]*Cooper FeldmanChuang, RA. Ewing, T2006. Fixing the failures of software patent protection: Deterring patent trolling by applying industry-specific patentability standards. S. Cal. 2011Interdisc. The giants among usLJ, vol.*Eddings 16, Rp. 2005215. Trolls and titans take fight to top court[http://www. Loyedegan. Consumer L. Rev., vol. 18, p. 503com/pdfs/Chuang%20(2006)%20-%20Fixing%20the%20Failures%20of%20Software%20Patent%20Protection.pdf pdf]*FarrandCooper Feldman, J.R. Ewing, Shapiro, VT.C2011., Abbott, PThe giants among us.A[http://www., Stothers, Cedegan.Mcom/pdfs/CooperFeldman%20Ewing%20(2011)%20-%20The%20Giants%20Among%20Us.pdf pdf]*Eddings, Weisberg, SR. 2005. Trolls and titans take fight to top court. Loy. Consumer L.DRev., Killworthvol. 18, Rp.A503. 2011[http://www. Judicial reform of patent litigation in the usaedegan. Journal of Intellectual Property Law & Practice, vol. 6 com/pdfs/Eddings%20(62005), pp. 381%20-395%20Trolls%20and%20Titans%20Take%20Fight%20to%20Top%20Court.pdf pdf]*FerrillCotropia, EC.DA. 20042009. Patent investment trusts: Let’s build a pit to catch The individual inventor motif in the age of the patent trollstroll. NCJL Yale JL & Tech., vol. 6 12, p. 367 52.*Fischer, T[http://www. Henkel, Jedegan. com/pdfs/Cotropia%20(2009. Patent trolls on markets for technology)%20-an empirical analysis of trolls’ patent acquisitions%20The%20individual%20inventor%20motif%20in%20the%20age%20of%20the%20patent%20troll.pdf pdf]*GeradinDiessel, DB., Layne-Farrar, AH., Padilla, A2007.J. 2012. Elves or Trolling for trolls? : The pitfalls of the role of nonemerging market competition requirement for permanent injunctions in patent cases post-practicing patent owners in the innovation economyebay. Mich. L. Rev. Industrial and Corporate Change, vol. 21 106, p. 305. [http://www.edegan.com/pdfs/Diessel%20(12007), pp. 73%20-94%20Trolling%20for%20Trolls.pdf pdf]*Goldend’Incelli, JG.M2008. 2006. Patent trolls Has ebay spelled the end of patent troll abuses-paying the toll: The rise (and fall) of the patent remediestroll. U. TexMiami Bus. L. Rev., vol. 85 17, p. 2111343.*Gregory, J[http://www.Kedegan. 2006. Troll next door, thecom/pdfs/dIncelli%20(2008)%20-%20Has%20Ebay%20Spelled%20the%20End%20of%20Patent%20Troll%20Abuses. Jpdf pdf][http://www. Marshall Revedegan. Intellcom/pdfs/Filelist. Proptxt pdf]*Farrand, J. LR., vol. 6Shapiro, pV. iC.*Hagiu, Abbott, P.A. Yoffie, DStothers, C. 2011M. Intermediaries for the ip market.*Harkins, CWeisberg, S.AD., Killworth, R. 2007. Fending off paper patents and patent trolls: A novel cold fusion defense because changing times demand it. Alb2011. LJ SciJudicial reform of patent litigation in the usa. Journal of Intellectual Property Law & Tech.Practice, vol. 176 (6), ppp. 407381-395.*Helm, J[http://www.Sedegan. 2006. Why pharmaceutical firms support patent trolls: The disparate impact of ebay vcom/pdfs/Farrand%20(2011)%20-%20Judicial%20reform%20of%20patent%20litigation%20in%20the%20USA. mercexchange on innovationpdf pdf]*Ferrill, E. MichD. Telecomm2004. & TechPatent investment trusts: Let’s build a pit to catch the patent trolls. L. RevNCJL & Tech., vol. 136, p. 331367.*Helm, K[http://www.Aedegan. Leecom/pdfs/Ferrill%20(2004)%20-%20Patent%20Investment%20Trusts.pdf pdf]*Fischer, GT.W Henkel, J. 20082009. Call it a comeback: A sweeping change in the law Patent trolls on declaratory judgment actions against markets for technology-an empirical analysis of trolls’ patent ownersacquisitions. NYU Ann[http://www. Survedegan. Am. Lcom/pdfs/Fischer%20Henkel%20(2009)%20-%20Patent%20Trolls%20on%20Markets%20for%20Technology.pdf pdf]*Geradin, volD. 64, pLayne-Farrar, A. 231, Padilla, A.*Hricik, DJ. 20102012. Legal ethics and Elves or trolls? the role of non-practicing entities: Being on patent owners in the receiving end matters tooinnovation economy. Santa Clara Computer & High Tech. LJIndustrial and Corporate Change, vol. 2721 (1), pp. 79373-79394.[http://www.edegan.com/pdfs/Geradin%20LayneFarrar%20Padilla%20(2012)%20-%20Elves%20or%20Trolls.pdf pdf]*JonesGolden, J.M. 2006. Permanent injunctionPatent trolls and patent remedies. Tex. L. Rev., a remedy by any other name is patently not the same: How ebay vvol. mercexchange affects the patent right of non-practicing entities85, p. Geo2111. Mason L[http://www. Revedegan.com/pdfs/Golden%20(2006)%20-%20Patent%20Trolls%20and%20Patent%20Remedies.pdf pdf]*Gregory, volJ. 14, pK. 10352006.*Layne-FarrarTroll next door, Athe. 2012J. The brothers grimm book of business models: A survey of literature and developments in patent acquisition and litigationMarshall Rev.*Lemley, MIntell. 2011Prop. Contracting around liability rulesL.*Lemley, Mvol. 6, p.Ai. 2007[http://www. Are universities patent trollsedegan. Fordham Intellcom/pdfs/Gregory%20(2006)%20-%20The%20Troll%20Next%20Door. Proppdf pdf]*Hagiu, A. Media & Ent. LJ Yoffie, volD. 18, p2011. 611Intermediaries for the ip market.*Liang, M[http://www. 2010edegan. 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Seton Hall Law ReviewThe economics and controversies of nonpracticing entities (npes): How npes and defensive patent aggregators will change license market.*ShresthaLu, SJ. 20102011b. Trolls or market-makers? an empirical analysis of Have non-practicing entities.(npe’s) been overcompensated? *SichelmanLuman III, TJ.F. 2011 Dodson, C. Purging patent law of ‘private law’ remediesL. 2006.*TokicNo longer a myth, the emergence of the patent troll: Stifling innovation, increasing litigation, Sand extorting billions. Intell. 2012Prop. The role of consumers in deterring settlement agreements based on invalid patents: The case of non-practicing entitiesTech. StanLJ, vol. Tech 18, pp. L1-1. Rev[http://www., voledegan. 2012, pp. 2-3.*Wang, A.W. 2010. Rise of the patent intermediaries. Berkeley Tech. LJ, vol. 25com/pdfs/Luman%20Dodson%20(2006)%20-%20No%20longer%20a%20myth%20the%20emergence%20of%20the%20patent%20troll.pdf pdf]*Magliocca, G.N. 2006. Blackberries and barnyards: Patent trolls and the perils of innovation. Notre Dame L. Rev., vol. 82, p. 1809. [http://www.edegan.com/pdfs/Magliocca%20(2006)%20-%20Blackberries%20and%20barnyards.pdf pdf]*Maughan, E. 2012. Protecting the rights of inventors: How natural rights theory should influence the injunction analysis in patent infringement cases. Geo. JL & Pub. Pol’y, vol. 10, pp. 215-321. *Mazzeo, M., Hillel, J., Zyontz, S. 2011. Excessive or unpredictable? an empirical analysis of patent infringement awards. [http://www.edegan.com/pdfs/Mazzeo%20Hillel%20Zyontz%20(2011)%20-%20Excessive%20or%20Unpredictable.pdf pdf]*McDonough III, J.F. 2006. Myth of the patent troll: An alternative view of the function of patent dealers in an idea economy, the. Emory LJ, vol. 56, p. 189. [http://www.edegan.com/pdfs/McDonough%20(2006)%20-%20Myth%20of%20the%20Patent%20Troll.pdf pdf]*Merges, R.P. 2009. The trouble with trolls: Innovation, rent-seeking, and patent law reform. Berkeley Tech. 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Research Policy, vol. 36 (1), pp. 134-154. [http://www.edegan.com/pdfs/Reitzig%20Henkel%20Heath%20(2007)%20-%20On%20sharks%20trolls%20and%20their%20patent%20prey.pdf pdf]*Risch, M. 2011. Patent troll myths. Seton Hall Law Review. [http://www.edegan.com/pdfs/Risch%20(2011)%20-%20Patent%20Troll%20Myths.pdf pdf]*Shrestha, S. 2010. Trolls or market-makers? an empirical analysis of non-practicing entities. [http://www.edegan.com/pdfs/Shrestha%20(2010)%20-%20Trolls%20or%20Market%20makers.pdf pdf]*Sichelman, T. 2011. Purging patent law of ‘private law’ remedies. [http://www.edegan.com/pdfs/Sichelman%20(2011)%20-%20Purging%20Patent%20Law%20of%20Private%20Law%20Remedies.pdf pdf]*Tokic, S. 2012. The role of consumers in deterring settlement agreements based on invalid patents: The case of non-practicing entities. Stan. Tech. L. Rev., vol. 2012, pp. 2-3. [http://www.edegan.com/pdfs/Tokic%20(2012)%20-%20The%20Role%20of%20Consumers%20in%20Deterring%20Settlement%20Agreements%20Based%20on%20Invalid%20Patents.pdf pdf]*Wang, A.W. 2010. Rise of the patent intermediaries. Berkeley Tech. LJ, vol. 25, pp. 159-1955. [http://www.edegan.com/pdfs/Wang%20(2010)%20-%20Rise%20of%20the%20patent%20intermediaries.pdf pdf] ==Underlying Economics== Below are the most cited economic papers included in the references of the NPE papers in this review. I have grouped them into three groups. In the first group is the literature that outlines markets for technologies, the existence and characteristics of patent thickets, the suggests that patents are 'probabilistic' (perhaps arising from failures at the patent office). Also included in this group is Josh Lerner's "Trolls on State Street" paper, which was very heavily referenced, and provides the seminal reference for the economic concept of a troll (as far as I can see). I will review Josh's paper shortly. In the second group, are the broader references that back up the first group. The same themes are present, but generally less developed. Also included in this group is some key papers from the patent pools literature and the litigation of patents literature (the economic branch of it anyway). These two literatures are complementary to the NPE literature but distinct from it. They also build off the papers in the first group. And in the third group is the 'classics'. These are universally referenced and fundamental building blocks. I estimate that the five most cited papers in the literature (all included in the first group) are:*Arora et al. (2001)*Gans and Stern (2010)*Lemley and Shapiro (2005)*Lemley and Shapiro (2007)*Lerner (2006)  ===Market for Technologies, Patent Thickets, and Probabilistic Patents=== *Arora, A., Fosfuri, A., Gambardella, A., 2001. Markets for Technology: The Economics of Innovation and Corporate Strategy. MIT Press, Cambridge, MA.*Arora, A. and M. Ceccagnoli (2006), ‘Patent protection, complementary assets, and firm’s incentives for technology licensing,’ Management Science, 52(2), 293-308.*Farrell, J. and C. Shapiro (2008). "How Strong Are Weak Patents?" American Economic Review, 98:4, pp. 1347-1369.*Gilbert, R., Shapiro, C., 1990. Optimal patent length and breadth. RAND Journal of Economics 21, 106-112.*Gans, J.S. and S. Stern (2010) "Is there A Market for Ideas?" Industrial and Corporate Change, 19(3), pp. 805-837.*Hall, B. and R. Ziedonis (2001), ‘The patent paradox revisited: an empirical study of patenting in the U.S. semiconductor industry, 1979-1995,’ RAND Journal of Economics, 32(1), 101-128.*Lemley, M., 2000. Rational Ignorance at the Patent Office, Berkeley Program in Law and Economics Working Paper Series, 19.*Lemley, M.A. and C. Shapiro (2005) "Probabilistic Patents," Journal of Economic Perspectives, Vol. 19(2), pp. 75-98.*Lemley, M., & C. Shapiro. 2007. Patent Holdup and Royalty Stacking. 85 Tex. L. Rev. 1991.*Lerner, J. (2006): Trolls on State Street? The Litigation of Financial Patents, Working Paper p.1976-2005.*Merges, R. (2005), ‘A transactional view of property rights,’ Berkeley Technology Law Journal, 20(4), 1477-1520.*Shapiro, C. (2001) "Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting," in A. Jaffe, J. Lerner, and S. Stern, eds., Innovation Policy and the Economy, Vol. 1, (Cambridge, MA: MIT Press), 119-150.*Shapiro, C. (2006), ‘Injunctions, Hold-Up, and Patent Royalties,’ Working paper, http:// faculty.haas.berkeley.edu/shapiro/royalties.pdf (last accessed August 2010).*Ziedonis, R., 2004. Don’t fence me in: fragmented markets for technology and the patent acquisition strategies of firms. Management Science 50, 804-820. ===Innovation, Industry Structure, and Patent Scope, Licensing, and Pools=== *Farrell, J., H. Monroe and G. Saloner (1998), ‘The vertical structure of industry: systems competition versus component competition,’ Journal of Economics and Management Strategy, 7(2), 143-182.*Jaffe, A. B. (2000), ‘The U.S. patent system in transition: policy innovation and the innovation process,’ Research Policy, 29(4), 531-557.*Jaffe, A. B. and J. Lerner (2004) Innovation and Its Discontents: How Our Broken Patent System is Endangering Innovation and Progress, and What to Do About It, Princeton, N.J.: Princeton University Press.*Kortum, S., Lerner, J., 1999. What is behind the recent surge in patenting? Research Policy 28 (1), 1-22.*Lamoreaux, N.R. and Sokoloff, K. L., 1999. Inventive activity and the market for technology in the United States, 1840-1920. NBER Working Paper 7107, National Bureau of Economics Research, Inc, Cambridge, MA.*Lanjouw, J.O., Lerner, J., 2001. Tilting the table? The predatory use of preliminary injunctions. The Journal of Law and Economics XLTV, 573-603.*Lanjouw, J., & M. Schankerman. 2001. Characteristics of Patent Litigation: A Window on Competition. The RAND Journal of Economics 32(1):129-151.*Lerner, J. and J. Tirole (2004), "Efficient Patent Pools," American Economic Review 94 (2004), 691-711.*Lerner, J., M. Strojwas and J. Tirole (2007) "The Design of Patent Pools: The Determinants of Licensing Rules," Rand Journal of Economics 38(3), pp. 610-625.*Lerner, Josh. "Patenting in the Shadow of Competitors." Journal of Law and Economics 38 (1995).*Lerner, J., 1994. The importance of patent scope: an empirical analysis. Rand Journal of Economics 25 (2), 319-333.*Lerner, J. (2002), ‘Where does state street lead? A first look at finance patents, 1971 to 2000,’ The Journal of Finance, 57(2), 901-930.*Lanjouw, J., Schankerman, M., 1997. Stylized Facts of Patent Litigation: Value, Scope and Ownership. NBER Working Paper No. 6297.*Merges, R.P., Nelson, R.R., 1990. On the complex economics of patent scope. Columbia Law Review 90, 839-916.*Macdonald, S., 2004. When means becomes ends: considering the impact of patent strategy on innovation. Information Economics and Policy 16, 135-158.*Shapiro, C. (2003) "Antitrust Limits to Patent Settlements," Rand Journal of Economics 34, 391- 411.*Schmidt, K. (2006), ‘Licensing Complementary Patents and Vertical Integration,’ Working paper, http://ssrn.com/abstract¼944169 (last accessed November 2006).*Schankerman, M., Scotchmer, S., 2001. Damages and injunctions in the protection of intellectual property. RAND Journal of Economics 32, 199-200. ===Classic Literature=== *Arrow, K.J., 1962. Economic welfare and the allocation of resources for invention. In: Nelson, R. (Ed.), The Rate and Direction of Inventive Activity. Princeton University Press, Princeton, NJ*Coase, R.H. (1932), The Nature of the Firm, JL Econ. \& Org. Vol. 4, 1988*Cohen, W.M., Nelson, R.R., Walsh J. P., 2000. Protecting Their Intellectual Assets: Appropriability Conditions and Why US Manufacturing Firms Patent (or Not), NBER Working Paper No. 7552, National Bureau of Economics Research, Inc, Cambridge, MA.*Levin, R.C., A.K. Klevorick, R.R. Nelson, and S.G. Winter. 1987. Appropriating the Returns from Industrial Research and Development. Brookings Papers on Economic Activity 3:783-820.*Teece, D.J., 1986. Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy. Research Policy 15, 285-305.*Williamson, Oliver (1979), "Transaction-Cost Economics: The Governance of Contractual Relations", Journal of Law and Economics, Vol. 22, No. 2. (Oct.), pp. 159233-1955.261