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Elves or Trolls? The Role of Non-Practicing Patent Owners in the Innovation Economy

Damien Geradin

Tilburg Law & Economics Center (TILEC); University College London - Faculty of Laws

Anne Layne-Farrar

Charles River Associates; Northwestern University

Jorge Padilla

Compass Lexecon

May 2008

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

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Date posted: May 23, 2008  

Suggested Citation

Geradin, Damien and Layne-Farrar, Anne and Padilla, Jorge, Elves or Trolls? The Role of Non-Practicing Patent Owners in the Innovation Economy (May 2008). TILEC Discussion Paper No. 2008-018. Available at SSRN: https://ssrn.com/abstract=1136086

Contact Information

Damien Geradin (Contact Author)
Tilburg Law & Economics Center (TILEC)
Tilburg, 5000 LE

University College London - Faculty of Laws ( email )
Gower St
London WC1E OEG, WC1E 6BT
United Kingdom
Anne Layne-Farrar
Charles River Associates ( email )
1 South Wacker Drive
Suite 3400
Chicago, IL 60606
United States
312-377-9238 (Phone)
HOME PAGE: http://www.crai.com
Northwestern University ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
Jorge Padilla
Compass Lexecon ( email )
Paseo de la Castellana 7
Madrid, 28046
Feedback to SSRN

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