Patent Thickets, Trolls and Unproductive Entrepreneurship
John L. Turner
University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics
May 1, 2013
I introduce and analyze an equilibrium model of discovery, innovation, patenting and infringement. Profitable use of innovations requires adaptation to complementary technologies. With patents, a thicket of conflicting rights emerges and costly infringements occur. This taxes innovation and lowers welfare. When it is possible to be a "troll" --- patent without innovating --- the rate of innovation falls further. Intuitively, some trolls would innovate if it were impossible to be a troll. More technology is patented with trolls, so the thicket grows and welfare falls. Optimal policy specifies a Pigouvian patent fee and a rate of patent enforcement that makes trolling unprofitable.
Number of Pages in PDF File: 31
Keywords: litigation, patents, thickets, trolls, discovery
JEL Classification: K2, L2, O3working papers series
Date posted: August 25, 2011 ; Last revised: July 2, 2013
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