Abstract

http://ssrn.com/abstract=1703557
 
 

Citations (1)



 


 



From Arms Race to Marketplace: The New Complex Patent Ecosystem and Its Implications for the Patent System


Colleen V. Chien


Santa Clara University - School of Law

November 5, 2010

Hastings Law Journal, Vol. 62, p. 297, December 2010

Abstract:     
For years, high-tech companies have amassed patents in order to deter patent litigation. Recently, a secondary market for patents has flourished, making it more likely that patents obtained for defensive purposes will end up in the courtroom. This article explores the current patent ecosystem, which includes both “arms race” and “marketplace” paradigms, in depth. I distinguish “patent assertion entities,” entities that use patents primarily to obtain license fees rather than to support the development or transfer of technology, from other types of non-practicing entities. I contrast the patent arms race, whose goal is to provide entities with the freedom to operate, with the marketplace, through which entities have leveraged their freedom to litigate. I detail the participation of product companies as well as non-practicing companies and their intermediaries in the marketplace, and trace the diverse “pathways” traveled by patents, for example from companies like Micron and other large product companies, to entities like Round Rock and Intellectual Ventures.

Several implications follow. First, the failure of the patent arms race to deter lawsuits from both non-practicing and practicing entities means that defensive strategies must be reconceptualized to include new tactics - including prevention, disruption, and coordination - for securing freedom to operate. In addition, if stockpiles of unused patents patent continue to fall into the hands of patent-assertion entities, there is a real potential that, defensive patenting will inadvertantly increase, rather than decrease, litigation risk. Second, conventional notions of patent value need to be revised. The same patent has a much greater “exclusion value” - which I define as the value likely to be extracted from the patent – when held by a patent assertion entity rather than a company vulnerable to countersuit. A better understanding of what drives the exclusion value rather than the intrinsic value of a patent might help companies predict and potentially avoid technical areas where patent assertion is most likely. Finally, recent history suggests trying to change the system by changing patentee behavior directly, rather than only through legal changes. Specifically, by encouraging quality patenting, improving coordination between patent defendants, and creating a non-profit organization to accept patent donations in order to encourage companies to make their unused patents available to the public, rather than to patent-assertion entities.

Number of Pages in PDF File: 60

Keywords: patents, empirical, arms race, patent strategy, IT

Accepted Paper Series


Download This Paper

Date posted: November 7, 2010 ; Last revised: March 24, 2011

Suggested Citation

Chien, Colleen V., From Arms Race to Marketplace: The New Complex Patent Ecosystem and Its Implications for the Patent System (November 5, 2010). Hastings Law Journal, Vol. 62, p. 297, December 2010. Available at SSRN: http://ssrn.com/abstract=1703557

Contact Information

Colleen V. Chien (Contact Author)
Santa Clara University - School of Law ( email )
500 El Camino Real
Santa Clara, CA 95053
United States
408-554-4534 (Phone)
408-554-4426 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 3,075
Downloads: 605
Download Rank: 23,142
Citations:  1
Paper comments
No comments have been made on this paper

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo4 in 0.312 seconds