https://orcid.org/0000-0002-9601-8648
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ABSTRACT
Clear and well-defined patent rights can incentivize innovation by granting monopoly rights to the inventor for a limited period of time in exchange for public disclosure of the invention. However, with cumulative innovation, when a product draws from intellectual property held across multiple firms (including fragmented intellectual property or patent thickets), contracting failures may lead to suboptimal economic outcomes. However, an alternative theory, developed by a variety of scholars, contends that patent thickets have a more ambiguous effect. Researchers have developed several measures to gauge the extent and impact of cumulative innovation and the various channels of patent thickets. This paper contends that mis-measurement may contribute to the incoherence and overall lack of consensus within the patent thickets literature. Specifically, the literature is missing a precise measure of vertically overlapping claims. We propose a new measure of vertically overlapping claims that incorporates invention similarity to more precisely identify inventive overlap. The measure defined in this paper will enable more accurate measurement, and allow for novel economic research on cumulative innovation, fragmentation in intellectual property, and patent thickets within and across all patent jurisdictions.
Acknowledgments
The authors would like to thank Andrew Toole, Amanda Myers, Samantha Zyontz, Daniel Spulber, Ralph Siebert, Diego de Morales Silva, Frank Van Rijnsoever, Juan Pablo Rud, Maris Goldmanis, three anonymous referees, participants at the Searle Center Sixth Annual Roundtable on Standard Setting Organizations and Patents, and others at the DRUID18 Conference in Copenhagen for their helpful feedback. An earlier version of this paper appeared in Nicholas A. Pairolero's doctoral dissertation (Pairolero Citation2016). The views expressed are those of the individual authors and do not necessarily reflect official positions of the United States Government, the United States Patent and Trademark Office (USPTO), or the Office of the Chief Economist at the USPTO.
Disclosure statement
No potential conflict of interest was reported by the authors.
ORCID
Jesse P. Frumkin http://orcid.org/0000-0002-9601-8648
Nicholas A. Pairolero http://orcid.org/0000-0003-0628-0536
Notes
1 We follow von Graevenitz, Wagner, and Harhoff (Citation2011) and define a blocking patent as a patent used in a rejection at the patent office.
2 Complex technologies are characterized by a high degree of cumulative innovation and technological interoperability, and therefore we expect a larger degree of technical overlap (or specifically, overlapping claims) across inventions in complex technologies relative to discrete technologies (Hall et al. Citation2013).
3 As defined by the USPTO, ‘An Office action is a document written by a patent examiner in the course of examination of a patent application. The Office action may cite prior art and gives reasons why the examiner has allowed (approved) the applicant's claims, and/or rejected the claims. A first Office action on the merits (FAOM) is typically the first substantive examination of the application’ (https://www.uspto.gov/learning-and-resources/statistics/first-office-action-estimator).
4 35 USC § 314a
6 To the best of our knowledge, the measure used in Gaessler, Harhoff, and Sorg (Citation2017) was first proposed by Dietmar Harhoff in a presentation at the IP Statistics for Decision Makers Conference (https://www.oecd.org/site/stipatents/1_2_Harhoff.pdf), but a working paper for the measure is not yet available.
8 The condition necessary for the complements problem requires licensing across firms.
9 See the USPTO's MPEP 1302.
10 A formal definition of TF-IDF cosine similarity is in the appendix.
11 There may exist simultaneity in these simple models. For example, an examiner receives more time to examine an application in a more technologically complex field, giving the examiner additional time to perform a more thorough search and cite additional relevant literature. Therefore, all else equal, the increase in examination time could lead to an increase in the overlapping claims measure.
12 A blocking patent is the basis for a prior art rejection. For example, if patent application 1 is rejected under 35 USC § 102 (novelty) based on patent 2, then patent 2 is the blocking patent.
13 102 rejections are given for lack of novelty and 103 rejections are given for obviousness.
14 35 USC § 114a
16 Values for application type include continuation, continuation-in-part, divisional, foreign priority, national stage entry, provisional or new application.
17 For example, the PTAB API; https://developer.uspto.gov/api-catalog/ptab-api.
18 The aggregate of all weighted triads in the technology.
19 Recall from earlier that complex technologies are characterized by a high degree of cumulative innovation and technological interoperability, and therefore we expect a larger degree of technical overlap (or specifically, overlapping claims) across inventions in complex technologies relative to discrete technologies (Hall et al. Citation2013).
20 Validity for IPRs are only based on patentability requirements set forth in 35 USC § 102 and 35 USC § 103.