Intellectual Property Regimes and Firm Strategy: Putting Hall and Ziedonis (2001) in Perspective

Innovation and Economic Growth, Intellectual Property and Patents

Article Snapshot


Rosemarie Ziedonis


J. Nickerson and B. Silverman (ed.), Economic Institutions of Strategy, Advances in Strategic Management, Vol. 26, pp. 313-340, Emerald Group Publishing Limited, 2009


This paper looks back at a 2001 article by Ziedonis and Hall on how patents have affected the semiconductor industry.

Policy Relevance

The “pro-patent” policy shift in the 1980s has costs as well as benefits, resulting in broad interest today in patent reform.

Main Points

  • The Economic Institutions of Strategy, edited by Jackson Nickerson (Wash U, St. Louis) and Brian Silverman (Toronto), reviews advances in research on the study of complex economic organization. “The Patent Paradox Revisited: An Empirical Study of Patenting in the U.S. Semiconductor Industry, 1979-1995,” (Rand Journal of Economics, 2001) by Rosemarie Ziedonis and Bronwyn Hall is reprinted in the book.
  • The ‘patent paradox’ study examined the strategic response of semiconductor firms to a “pro-patent” shift in the institutional environment, the creation of the Federal Circuit Court of Appeals.
  • As a result of an early patent lawsuit, Polaroid was able to shut down one of Kodak’s manufacturing facilities. After this, firms began to acquire larger and larger patent portfolios.
  • Everyone might be better off if the firms did not expend resources acquiring patents, but each individual firm feels that it is necessary to acquire the patents, in part to defend themselves against potential lawsuits.
  • Today, information technology firms are very interested in policy proposals that address large patent portfolios, litigation, and the problem of “hold-up.”
  • One positive result of the “pro-patent” shift has been that technology firms seem to make it easier for firms that specialize in technology to enter markets by acquiring capital.
  • Unanswered questions include the possibility that if patents were harder to obtain, the patent regime might not spur a race between firms to acquire large patent portfolios, and whether and when firms can solve problems with hold-ups by methods other than by acquiring large portfolios.
  • Technology firms today are very interested in the question of patent reform that might reduce the costs that the patent system imposes on litigation.


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