BIE november 2013, p. 332-339, Meltem Bayramli: "The problems associated with fragmented and overlapping property rights accompanied by the risk of patent litigation are inherent in complex product industries due to the cumulative and complementary nature of innovation. The aim of this article is to investigate how such innovation dynamics interacts with the patent system and how to tailor policy to solve the market inefficiencies in these industries. The economic analysis presented has shown under certain conditions, policies that induce patents to be drafted broadly or increase firms’ strength in patent enforcement can reduce the extent of strategic behaviour by encouraging private bargaining between parties. This is important because cooperation has a positive effect on R&D incentives. Moreover, the evidence suggests that competition rules that limit firms in drafting their licensing terms in vertical cross-licensing agreements has the potential to negatively affect the innovation incentives in sectors that rely on them.
The commercial and R&D expenditure growth in these industries indicate a lack of significant market failure in high-technology sectors. Therefore, policies ignoring market solutions and only focusing on static gains in certain aspects of the market runs the risk of mitigating the dynamic efficiency gains as induced by the patent system. For that reason, we believe the remaining concerns associated with strategic patenting would best be addressed via improving the quality of the patent prosecution system through reducing the impact of problems without generating other potential costs in the market...
The commercial and R&D expenditure growth in these industries indicate a lack of significant market failure in high-technology sectors. Therefore, policies ignoring market solutions and only focusing on static gains in certain aspects of the market runs the risk of mitigating the dynamic efficiency gains as induced by the patent system. For that reason, we believe the remaining concerns associated with strategic patenting would best be addressed via improving the quality of the patent prosecution system through reducing the impact of problems without generating other potential costs in the market...