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- Title
PATENT MARKETS AND INNOVATION IN THE ERA OF BIG PLATFORM COMPANIES.
- Authors
Merges, Robert P.
- Abstract
In many industries, the arc of our contemporary economy bends towards bigness. The ubiquitous digital platform companies such as Amazon, Facebook, Netflix, Chinese companies like Baidu, Tencent, and Alibaba are the best-known examples. While some concerned onlookers propose structural remedies, 2 America's constrained antitrust law plus the logic of natural monopoly mean that increased concentration will likely continue for the foreseeable future. In this setting, it is important to preserve multiple sources of rivalrous innovation despite continuous growth in the Big Platforms. Preserving rivalry requires carving out and preserving a niche for innovative small and medium-sized companies. One way to do this is to promote and protect the secondary patent market. Sale of patents is one way small firms can remain viable in the shadow of Big Platforms. This Article argues that patent markets are superior in some cases to complete acquisition of a small firm by a Big Platform company because selling patents allows a small firm to survive as an independent entity. Recent patent system reforms support this pro-secondary market policy: the era of easy and extortionate patent litigation, traditionally associated with the secondary patent market, is coming to a close. Patent sales and licensing, at times backed by the threat of litigation, will promote small company innovation once these reforms gain traction. This is crucial; though Big Platforms are currently young and vigorous, history suggests that they will become less innovative in the long run. Preserving multiple small innovators--through the patent market and otherwise--is the best way to prepare for the future of Big Platforms.
- Subjects
PATENTS; DIGITAL media; META Platforms Inc.; SMALL business; SECONDARY markets
- Publication
Berkeley Technology Law Journal, 2020, Vol 35, Issue 1, p53
- ISSN
1086-3818
- Publication type
Article
- DOI
10.15779/Z38BZ6185G