https://ipo.blog.gov.uk/2013/08/22/to-hack-or-not-to-hack-a-new-report-on-patent-thickets/

To hack or not to hack – a new report on Patent Thickets

WIPO reported that in 2011 global patent applications broke the two million mark. This journey is one of almost constant growth spanning more than two decades. Could such an increase herald a bright new future of global technological brilliance? Or does this fuel a growing concern of an overcrowding that is choking the patent landscape?

Consider the patent landscape to be a fertile, but uncultivated ground, upon which for each new patent a tree is planted. The increase in patent applications has lead to many trees being planted. Some are in new, unexplored areas, others on more familiar, populated ground. It is on such populated ground that the problem of patent thickets has grown.

Photo of the inside of a rain forest
Image licensed by Ingram Image

A patent thicket is a large number of patents that overlap in scope that a company must navigate in order to launch a new technology. Often those launching the new technology are unaware of the thicket until they reach the market, at which point they are ensnared. In recent years, these have come to the fore because of the regular legal battles in the telecommunications industry, where the briar patch of legal action has many thorns that seem to grow in number by the day.

In a thicket, smaller plants find it harder to thrive as the larger plants block the light. This is also a concern for patent thickets. The Hargreaves Review of Intellectual Property and Growth suggested that the government should investigate ways of limiting adverse consequences of patent thickets. The Intellectual Property Office (IPO) began this investigation with Patent Thickets – an overview, which provided a clear basis for discussion and posed the key questions in need of answering to determine the effects of patent thickets.

A second, recently published report commissioned by the IPO entitled A study of Patent Thickets aims to answer some of these questions. The aim of this research was to:

  • understand whether thickets deter new competitors, especially small and medium sized enterprises, from entering a technology area
  • understand what effects pending patents, a patent that has been applied for but not yet granted, have as a barrier to enter a technology area and their relationship with patent thickets

This aim is met by considering what stops the young plants from getting light, the density of the existing trees, extent to which the branches of the existing trees overlap or some combination of the two. This answers the question, how are firms affected by both the number of patents and the degree of overlap of patents?

It finds that patent thickets do exist in specific technologies, and there is little difference in patenting behaviour and entry between large and small firms. However, there are a few areas of complex technologies (such as telecommunications, audio visual and computer technology) where the probability of small firms entering into patenting is reduced. What is of note is that within such markets, UK firms have a limited presence.

This suggests that at least for now, UK firms do not seem negatively affected by patent thickets. So a nice orderly forest is thicket free no matter how dense the trees. Do you feel this is the case? Do you have examples to confirm or to the contrary? Do patent thickets actually exist? We’d welcome your views and comments.

If you have questions or feedback, do comment on this blogpost and we’ll do our best to respond.

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3 comments

  1. Peter

    Thanks for the comments Keith.

    It's worth highlighting that this blog is intended as a means of explaining and discussing IPO research in a more accessible manner than is possible from a detailed economics paper.

    Essentially the points I have covered are what I believe to be the key findings from the report, others may have a different opinion. And this is the aim of the IPO facto blog, to provide a platform where people can engage whether they have only read the blog, or if they have taken time to digest the more thorough report.

    Your comments are an excellent example of this engagement. Thank you for referencing your papers, this is useful for those interested in this subject to find research different to that of this study.

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  2. Keith Mallinson

    This blog draws the correct conclusion that UK firms are not negatively affected by so-called “patent thickets”, and that the “forest” is, in fact, “thicket-free”. However, the IPO’s report and the blogger’s other comments about it are not so benign; even though the report’s specific conclusions on the UK and SMEs are rather unclear, buried, lacking in the use of plain English and couched in economist-speak caveats. I wonder if the IPO might be trying to distance itself from its own report’s dubious findings through this blog?

    I analysed an October 2012 version of this and related issues in my February 2013 contribution to the IP Finance blog (http://ipfinance.blogspot.co.uk/2013/02/smes-ssos-and-patent-thickets.html). In this, I remarked that the report lends convoluted and qualified support to the notion of patent thickets and theories of resulting harm. Its inconclusive 2011 report on the same matter also examined whether patent thickets are a “barrier to entry into patenting for UK enterprises, in particular [SMEs].”

    SMEs can, and in many cases actually do, fare pretty well for themselves in this emotively-described ICT domain where there are many complementary patents. SSOs enable SMEs and others to create standards, license SEPs on FRAND terms and develop products. UK companies and UK SMEs in particular have a lower propensity than their US or large company counterparts to patent anything. Patent thickets are not the reason for that.

    Comment on this topic is rich in (questionable) analogies, but weak in facts-based analysis. For example, evidence of problems and harm with patent thickets, using a single example from outside ICT by Bessen and Maskin (2009) that was cited by Professor Hargreaves (2011), is weak and inapplicable, as discussed in another of my IP Finance articles (http://ipfinance.blogspot.co.uk/2012/09/are-there-too-many-patents.html).

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  3. Jagdish

    Really good article!
    Thickets do exist, even some tech giants purposely creates in their own territory to keep clear sky for future growth and prevent young plants.

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