A Theory of Patent Portfolios
- (pp. 315-51)
AbstractThis paper develops a theory of patent portfolios in which firms accumulate an enormous amount of related patents, which makes it impractical to develop new products that avoid inadvertent infringement. We show that patent peace arises if product market competition is weak and patent portfolios are either sufficiently weak or sufficiently strong with comparable size. An increase in one firm's patent portfolio reduces the innovation incentives of its rivals but does not necessarily increase its own. Firms with larger patent portfolios have stronger incentives to acquire additional patents, while consumers may be better off if firms with weaker portfolios acquire them.
CitationChoi, Jay Pil, and Heiko Gerlach. 2017. "A Theory of Patent Portfolios." American Economic Journal: Microeconomics, 9 (1): 315-51. DOI: 10.1257/mic.20150003
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- K11 Property Law
- L13 Oligopoly and Other Imperfect Markets
- O34 Intellectual Property and Intellectual Capital