Strategic Patenting and Software Innovation

48 Pages Posted: 11 Jul 2008

See all articles by Michael D. Noel

Michael D. Noel

Texas Tech University

Mark A. Schankerman

London School of Economics and Political Science; Centre for Economic Policy Research (CEPR)

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Date Written: June 2006

Abstract

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.

JEL Classification: L43, L86, O31, O32, O33, O34, O38

Suggested Citation

Noel, Michael D. and Schankerman, Mark A., Strategic Patenting and Software Innovation (June 2006). LSE STICERD Research Paper No. EI43, Available at SSRN: https://ssrn.com/abstract=1158320

Michael D. Noel (Contact Author)

Texas Tech University ( email )

237 Holden Hall
Box 41014
Lubbock, TX 79407
United States

Mark A. Schankerman

London School of Economics and Political Science ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 20 7955 7518 (Phone)
+44 20 7831 1840 (Fax)

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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