Navigating the patent thicket: Cross licenses, patents pools, and standard setting

In several key industries, including semiconductors, biotechnology, computer software, and the Internet, our patent system is creating a patent thicket: an overlapping set of patent rights requiring that those seeking to commercialize new technology obtain licenses from multiple patentees. The patent thicket is especially thorny when combined with the risk of holdup, namely the danger
that new products will inadvertently infringe on patents issued after these products were designed. The need to navigate the patent thicket and holdup is especially pronounced in industries such as telecommunications and computing in which formal standard setting is a core part of bringing new technologies to market. Cross licenses and patent pools are two natural and effective meth- ods used by market participants to cut through the patent thicket, but each in- volves some transaction costs. Antitrust law and enforcement, with its historical hostility to cooperation among horizontal rivals, can easily add to these transaction costs. Yet a few relatively simple principles, such as the desir- ability package licensing for complementary patents but not for substitute pat- ents, can go a long way toward insuring that antitrust will help solve the problems caused by the patent thicket and by holdup rather than exacerbating them.


URL (National Bureau of Economic Research)


Cross licenses, Innovation programme, Patent, Standard-setting , Standard-setting

Additional information:

AuthorsShapiro, Carl (University of California at Berkeley)
Publisher:MIT Press
Keywords:Cross licenses, Innovation programme, Patent, Standard-setting , Standard-setting