A study of Patent Thickets (1.31Mb) - UK Intellectual Property Office

14 A Study of Patent Thickets
1.4 Brief Review of Findings
This report answers two questions:
1. Are there patent thickets and if so what are their effects on patenting, R&D investments
and competition
2. Is there a measurable effect on entry into patenting at the European Patent Office (EPO)
by UK firms
The first question is answered in Section 2 on the basis of a thorough review of the literature on
patent thickets, which is now around 15 years old. 6
The second question is answered in Section 4 on the basis of an empirical analysis that provides
the first evidence on the effects of patent thickets on entry into patenting in Europe.
Question 1
A review of the recent economics and management literature shows that there are two strands
of empirical research pertinent to the first question set out above: The first is the literature on the
entry and growth of SMEs, the second the literature on patent thickets. There is almost no
research to date at the intersection of these strands of literature.
The literature on the survival and growth of firms and especially SMEs shows that start-up firms
are the source of much employment creation and destruction. Importantly, start-up firms that
survive beyond the first five years are an important source of job growth (Haltiwanger et al.,
2010). These authors argue further that research into regulatory or market failures that have
systematic effects on the survival of SMEs is lacking.
The literature on the growth of patenting, the sources of this growth, and the possible presence
of patent thickets identifies patent portfolio races in response to litigation threats as a major
source of growth of patenting during the 1980s and 1990s. During the 2000s, this growth has
been augmented by the force of globalization, with firms taking out patents in increased numbers
of jurisdictions, reflecting the need to protect themselves against competitors from a larger
number of countries and increased opportunities for licensing. Accompanying this growth of
patenting have been growing patent office workloads and an increased cost of prior art search,
leading to more overlapping patents and more patents on minor inventions being granted.
The literature has found that reforms to the courts dealing with patents in the United States
increased incentives to patent and also improved the efficiency of the court system there.
Otherwise the literature on patent thickets identifies only social costs of increased patenting,
such as hold-up and associated increases in litigation, increased pendency of patents and
growing uncertainty about validity of pending and granted patents. These changes taken
together are considered to be consequences of the existence of patent thickets in some
6 The first paper identifying patent strategies that have given rise to patent thickets in the modern era is by Grindley
and Teece (1997). A number of important seminal papers on the topic followed in 2000 and 2001.