Patents

Question 1

Patents

Answer 1

A patent is a government authority or license conferring a right or title for a set period of time. They are 20 year monopolies for innovations and must be:
- Novel (new inventive step)
- Non-obvious
- Be able to be applied in industry
There is a fee to use this patent and this is justified as it rewards innovation, encourages disclosure and can be used as a tradeable asset.

Question 2

Value of patent to entrepreneurs and businesses

Answer 2

• Patents may be evidence of sustainable competitive advantages for entrepreneurs
• Firms can base their business models on future selling/licensing of products

Question 3

Patenting before publishing

Answer 3

Tuley tubes - experimented with growing sapling trees in tubes and published their results before patenting. This resulted in a number of companies entering the market and copying this idea with their own variations of the tubes.

Question 4

Patent trolls

Bessen et al, 2011 - private and social costs of patents

Answer 4

A company patents an innovation, doesn’t develop it and possibly does not license it. This threatens companies for copyright infringement.
Patent trolls are companies obtain the rights to one or more patents in order to profit by means of licensing/litigating the patent rather than actually producing their own goods or services

Question 5

Patent thickets

Answer 5

A patent thicket carries negative connotations and is best described as a dense web of intellectual property rights that overlap with one another. Companies must hack their way through these in order to commercialise new technologies.
It is used to dissuade new entrants from markets.

Question 6

Submarine patents

Answer 6

A submarine patent is one whose issuance and publication are delayed intentionally by the applicant for a long time. They “stay under water” until they emerge and surprise the relevant markets

Question 7

Criticisms of patents

Answer 7

• Patents favour large firms, small firms do not have the resources to defend their intellectual property
• Patents can inhibit innovation - thickets deter investment, small firms find it hard to compete
• There is often uncertainty as to how valuable a patent will actually be
• Emergence of patent pools - sharing of patents simplifies the markets but may distort the market