Strategic Patenting and Software Innovation
Michael D. Noel
University of California, San Diego
Mark A. Schankerman
London School of Economics and Political Science; Centre for Economic Policy Research (CEPR)
LSE STICERD Research Paper No. EI43
Strategic patenting is widely believed to raise the costs of innovating, especially in industries characterised by cumulative innovation. This paper studies the effects of strategic patenting on R&D, patenting and market value in the computer software industry. We focus on two key aspects: patent portfolio size which affects bargaining power in patent disputes, and the fragmentation of patent rights (.patent thickets.) which increases the transaction costs of enforcement. We develop a model that incorporates both effects, together with R&D spillovers. Using panel data for the period 1980- 99, we find evidence that both strategic patenting and R&D spillovers strongly affect innovation and market value of software firms.
Number of Pages in PDF File: 48
JEL Classification: L43, L86, O31, O32, O33, O34, O38working papers series
Date posted: July 11, 2008
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