Patents and Small Participants in the Smartphone Industry
WIPO Working Paper, IP and Competition Division, 2014
55 Pages Posted: 16 Oct 2015
Date Written: 2014
For intellectual property law and policy, the impact that patent rights may have on the ability of small companies to compete in the smartphone market is a critically important issue for continued robust innovation. Open and competitive markets provide vitality for the development of smartphone technologies. Nevertheless, the impact of patent rights on the smartphone industry is an unexplored area of empirical research. Thus, this Article seeks to show how patent rights affect the ability of small participants to enter, compete, and exit smartphone markets. The study collected and used comprehensive empirical data on patent grants, venture funding, mergers and acquisitions, initial public offerings, patent litigation, and marketing research data. This Article shows empirically that small participants succeed in the market when they have a low and specific critical mass of patents and that this success exceeds the general norms in the startup world. Surprisingly, the analysis demonstrates that the level of financing and market success do not increase with larger patent portfolios. Lastly, despite the controversies over patent trolls, this Article demonstrates that patent litigation, whether from operating companies or NPEs, does not appear to be a significant concern for small players and does not appear to pose barriers to entry. The Article concludes by arguing that patent rights are providing incentives for innovation among small industry players and that contrary to some expectations, patent rights support competitiveness in the smartphone industry for small market players.
Keywords: patent, smartphone, small players, empirical, competition, intellectual property, development
Suggested Citation: Suggested Citation