On Sharks, Trolls, and Other Patent Animals - 'Being Infringed' as a Normatively Induced Innovation Exploitation Strategy

33 Pages Posted: 28 Feb 2006  

Markus G. Reitzig

University of Vienna

Joachim Henkel

TUM School of Management - Technische Universität München (TUM); Centre for Economic Policy Research (CEPR)

Christopher Heath

European Patent Office

Abstract

Patent trolls (or sharks) are small patent holding individuals or firms who trap R&D intense manufacturers in patent infringement situations in order to receive damage awards for the illegitimate use of their technology. While of great concern to management, their existence and impact for both corporate decision makers and policy makers remains to be fully analyzed from an academic standpoint. In this paper we show why patent sharks can operate profitably, why they are of growing concern, how manufacturers can forearm themselves against them, and which issues policy makers need to address. To do so, we map international indemnification rules with strategic rationales of small patent-holding firms within a game-theoretical model. Our central finding is that the courts' unrealistic consideration of the trade-offs faced by inadvertent infringers is a central condition for sharks to operate profitably.

Keywords: Patent, patent shark, patent troll, damage award, infringement

JEL Classification: M00, M11, M21, K00, K11, K33

Suggested Citation

Reitzig, Markus G. and Henkel, Joachim and Heath, Christopher, On Sharks, Trolls, and Other Patent Animals - 'Being Infringed' as a Normatively Induced Innovation Exploitation Strategy. Available at SSRN: https://ssrn.com/abstract=885914 or http://dx.doi.org/10.2139/ssrn.885914

Markus G. Reitzig (Contact Author)

University of Vienna ( email )

Bruenner Strasse 72
Vienna, Vienna 1090
Austria

Joachim Henkel

TUM School of Management - Technische Universität München (TUM) ( email )

Arcisstr. 21
Munich, D-80333
Germany

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Christopher Heath

European Patent Office ( email )

Munich
Germany
+498923993130 (Phone)

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