"Untangling the Thicket: Ownership Fragmentation, Technological Diversity and Patent Litigation"

Abstract

The shift from discrete innovation processes to processes that increasingly rely on the recombination of knowledge across technological boundaries, has resulted in the emergence of complex technologies based on a large number of patents. As a consequence, the patent system is experiencing significant increases in the fragmentation of ownership rights and the presence of unclear property boundaries – the patent “thicket”. In this paper we develop a theoretical framework which articulates the relationships of ownership fragmentation and knowledge diversity to patent litigation hazard. We test the theory using a unique, highly complete dataset which contains information on all patent lawsuits and all public firms in the US between 2000 and 2005. We find that both the fragmentation of ownership rights and the presence of unclear property boundaries associated with technological diversity increases the likelihood of litigation. We also find that the effect of ownership fragmentation is greater for small firms....