DP5701 Strategic Patenting and Software Innovation
|Author(s):||Michael D. Noel, Mark Schankerman|
|Publication Date:||May 2006|
|Keyword(s):||anti-commons, market value, patent thickets, patents, R&D spillovers|
|JEL(s):||L43, L86, O31, O33, O34, O38|
|Programme Areas:||International Trade and Regional Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=5701|
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.