Strategic patenting and software innovation

Michael Noel and Mark Schankerman

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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, as well as knowledge spill overs. Using panel data for 121 firms covering the period 1980–99, we show that strategic patenting and spill overs affect innovation and market value of software firms, that there is a patent premium accounting for 20 per cent of the returns to R&D, and that software firms do not appear to be trapped in a prisoners' dilemma of ‘excessive patenting.

JEL-codes: N0 (search for similar items in EconPapers)
Date: 2013-09
New Economics Papers: this item is included in nep-com, nep-cse, nep-ino, nep-ipr, nep-pr~ and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (50)

Published in Journal of Industrial Economics, September, 2013, 61(3), pp. 481-520. ISSN: 0022-1821

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http://eprints.lse.ac.uk/57372/ Open access version. (application/pdf)

Related works:
Journal Article: Strategic Patenting and Software Innovation (2013)
Working Paper: Strategic Patenting and Software Innovation (2006)
Working Paper: Strategic Patenting and Software Innovation (2006)
Working Paper: Strategic Patenting and Software Innovation (2006)
Working Paper: Strategic patenting and software innovation (2006)
Working Paper: Strategic patenting and software innovation (2006)
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