Elves or Trolls? The Role of Non-Practicing Patent Owners in the Innovation Economy
Tilburg Law & Economics Center (TILEC); University College London - Faculty of Laws
Charles River Associates; Northwestern University
TILEC Discussion Paper No. 2008-018
Firm structure and the degree of vertical integration lie at the core of a key intellectual property concern currently under debate: "patent trolls." While court opinions and competition agency decisions have focused on "non-practicing" patent holders as the source of anticompetitive exclusion and hold up problems, this view of upstream specialists is far too narrow. In fact, patents in the hands of non-practicing entities can increase competition, lower downstream prices, and enhance consumer choice. We explain why and argue for more business-model-neutral policy when it comes to patent licensing. Clearly, patents are a complex subject that cannot be portrayed as either all good or all bad; tradeoffs will always be involved. Without a better understanding of the many complicated effects of patents in high technology markets, we run the very real risk of misguided policy decisions.
Number of Pages in PDF File: 25
Date posted: May 23, 2008
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