Patent Thickets Reduce Innovation

In a report for the UK Intellectual Property Office, Bronwyn Hall et al., find that patent thickets exist in a number of technological fields and that thickets reduce innovation.

We find overwhelming evidence in the literature that patent thickets arise in
specific technology areas….

Our main contribution in this study consists of an empirical analysis of the
effects of patent thickets at the European Patent Office on entry into patenting by
UK firms….Our results suggest a substantial and statistically significant negative association between the density
of thickets and the propensity to patent for the first time in a given technology

As we find thickets to affect entry negatively, there is a strong indication that
thickets represent some kind of barrier to entry in those technology areas in
which they are present. However, we must emphasize that the simple finding of a
barrier to entry created by patent thickets is not proof positive that reducing that
barrier and increasing entry would lead to welfare improvements in the
innovation/competition space. Rather it is the existence of evidence that the
presence of thickets reduces entry combined with the large literature we have
reviewed that shows that currently patent systems do not work as well as they
should. This literature documents quality issues with patents in technology areas
affected by patent thickets, a large decline in the relationship between R&D
spending and patenting in some sectors and a substantial increase in resources
devoted to patent litigation leading to the partial or complete revocation of
patents in areas identified as prone to thickets.

I like their understated conclusion:

All of this may lead one to the conclusion that the operation of the patent system could use some improvement.

In other words, see the Tabarrok Curve.


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