Access to Intellectual Property for Innovation : Evidence on Problems and Coping Strategies from German Firms

Transaction costs and contracting problems associated with proliferation of patents may have a negative impact on innovation. We present novel data on the frequency with which innovative German firms encounter problems with access to intellectual property (IP) for innovation. While only a small percentage of all firms report halting or not starting innovation projects because of IP issues, larger fractions report taking actions such as modifying projects or use of "coping mechanisms" such as acquisition or exchange of IPR in the market for technology. Much of this activity is concentrated in firms which are larger, more R&D intensive, and have more patents. Firms operating in technology areas in which IP ownership is more concentrated appear to be better able to prevent problems of access to IP from arising by using coping mechanisms, suggesting that transacting in the market for technology may be less costly where ownership of IP is less fragmented. Interestingly we find no evidence that problems of access to IP are more severe in the complex/cumulative industries where patent thickets are thought to present the most serious challenges