Do Shorter Product Cycles Induce Patent Thickets?

Patrick Beschorner, Centre for European Economic Research (ZEW)

12/15/2008
(Original Publish Date: 12/5/2008)

The traditional argument that shorter product cycles favor trade secret over patenting is reviewed. A game theoretic model provides an argument that shorter product cycles can induce firms to file more patent applications. The firms may be trapped in a prisoners' dilemma where all firms would jointly prefer to patent less and to not have a patent thicket. If firms start applying for patents on technologies which are not yet mature in order to cover ideas that may eventually turn successful, this may create a patent thicket. The transition into a situation where firms start patenting many ideas instead of single mature technologies is initiated and accelerated when network effects are present or patents exhibit a blocking property.