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Patent Aggregating Companies : Motives, Activities and a Classification

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abstract As part of a changing innovation paradigm from close innovation to open innovation, companies increasingly sell and buy patents. For the observer, corporate buyers which produce goods and services and therefore hold patents to protect them are intuitive players in the market for patents, but a new phenomenon is observable. In recent years, companies which seem to have none of the traditional buying motives have emerged as new significant players in the market for patents. Even though these companies do not produce goods and therefore do not need patents in their historical meaning, they acquire patents and aggregate large patent portfolios. We indicate them as patent aggregating companies. Extant literature on this new phenomenon is limited to anecdotic reports of single cases and often emotionally charged. A profound analysis of buying motives and the business models of patent aggregating companies is lacking. Based on an exploratory case study design, we investigate strategies, business models, and activities of 27 patent aggregating companies. Our findings confirm that patent aggregating companies are a young phenomenon. These companies are highly diverse regarding their motives to aggregate patents, their funding structure, their way of venture creation, and their focus on industry and patents they aggregate. We identify four main drivers that have enhanced the patent aggregating business: (1) corporate recognition of patents as asset; (2) financial pressure and risk diversification needs of producing companies; (3) an increasingly complex patent landscape; (4) the large financial opportunities for bold entrepreneurs. Based on our findings we derive eight types of patent aggregating companies. Four types acquire patents to generate revenues by exploiting the patents. Based on how these companies exploit the patents we distinguish between patent acquisition funds, patent enforcement funds, patent incubating funds, and patent trading funds. The other four types acquire patents to serve their members, their customers or the society (commercially or not). Patents are only a means and the exploitation of them follows more diverse objectives than sole revenue generation. We cluster this companies in defensive patent funds, non commercial patent funds, patent pools, and patent securitization funds.
   
type conference paper (English)
   
keywords Markets for technology, Open innovation, Technology transfer, Innovation financing, Patent enforcement, Patent aggregating companies
   
name of conference 6th European Conference on Innovation and Entrepreneurship ECIE (Aberdeen, Scotland)
date of conference 15-9-2011
title of proceedings Proceedings of ECIE 2011
page(s) 770-778
publisher Academic Publishing Limited (UK)
ISBN 978-1-908272-15-7
review blind review
   
citation Rüther, F., Ziegler, N., & Bader, M. A. (2011). Patent Aggregating Companies: Motives, Activities and a Classification. In Proceedings of ECIE 2011, pp.770-778. UK: Academic Publishing Limited. - ISBN 978-1-908272-15-7.