Patent Litigation in the U.S. Semiconductor Industry

Intellectual Property and Patents

Article Snapshot

Author(s)

Rosemarie Ziedonis

Source

W.A. Cohen and S.A. Merrill (eds.), Patents in the Knowledge-Based Economy, pp. 180-216, The National Academies Press, 2004

Summary

This chapter traces patterns of patent litigation for 137 U.S. semiconductor firms from 1973 through 2001.

Policy Relevance

The study sheds light on the operation of the U.S. patent system. It is part of a larger body of work commissioned by the Board on Science, Technology, and Economic Policy of the National Academies on the effects of the U.S. patent system on innovation and economic activity.

Main Points

  • This chapter traces patterns of patent litigation for 137 U.S. semiconductor firms during 1973-2001. Three main findings emerge from the analysis:

     

    • First, the empirical patterns show that the incidence of patent litigation has increased markedly in this industry since the 1970s -- in line with trends reported in earlier studies.
       
    • Second, and more surprising, the study documents that small firms within the industry are particularly active enforcers of patents. The high propensity of small firms to be involved in patent-related lawsuits stems less from the bargaining disadvantages they face due to small patent portfolios (as interpreted in prior research) and more from the fact that they tend to be "technology specialists" for whom exclusionary control over proprietary technologies is particularly important. Consistent with this view, the study shows that specialized "fabless" firms enforce on average 4 out of every 100 patents they own -- a high litigation rate that resembles rates reported for specialized firms in the biotechnology industry.
       
    • Third, the analysis reveals an active "market for patents” prior to legal enforcement. In at least 30 percent of the cases identified, legal title to a litigated patent had been previously reassigned from the original inventor (or assignee) to one of the litigating parties -- typically the plaintiff in a patent infringement suit.
       

 

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