Key Takeaways

  • A patent thicket is a dense web of overlapping patents that can stall innovation, increase litigation, and complicate licensing.
  • Common disadvantages include higher costs, weaker patents entering the system, and barriers for startups.
  • Contributing factors include rising global patent filings, strategic blocking behavior by large firms, and fragmented ownership across markets.
  • Patent thickets affect industries differently—telecom and pharmaceuticals are leading examples where innovation and competition are slowed.
  • Litigation costs often outweigh R&D in tech and pharma sectors, raising concerns about long-term economic efficiency.
  • Companies should weigh patent filings carefully, balancing IP protection with potential exposure to thickets.

A patent thicket example is a group of overlapping patents in a specific industry owned by many different companies. This creates a situation in which the firms prevent one another from innovating. The products in question require the use of hundreds of different patented innovations, often with unclear ownership and/or owned by competitors or small independent companies. The telecommunications industry is a prime example of a patent thicket.

Disadvantages of Patent Thickets

In addition to disrupting or delaying potential innovation, a patent thicket can:

  • Increase the frequency of patent litigation
  • Increase the complexity of license agreement negotiations
  • Encourage more businesses to patent weaker innovations
  • Increase the costs of patent transactions
  • Reduce profits to innovative companies
  • Limit the incentive for businesses to innovate

In fact, small companies may be completely discouraged from entering industries where patent thickets prevail, such as technology and telecom.

Patent Thickets Example in Key Industries

Patent thickets play out differently across industries, but some sectors are especially prone to them:

  • Telecommunications and Electronics: Smartphone makers like Apple, Samsung, and Motorola frequently operate in dense patent thickets. Each new device may incorporate hundreds of patented technologies, requiring complex cross-licensing deals to avoid infringement. This can lead to high litigation costs and delays in product launches.
  • Pharmaceuticals: Biologic drugs often rely on dozens of patents covering formulations, manufacturing processes, and delivery methods. For example, Humira, one of the world’s best-selling drugs, was shielded by a thicket of over 100 patents, delaying biosimilar competition in the U.S. for years.
  • Automotive and Emerging Tech: Electric vehicles and AI-driven systems also face increasing thicket risks as companies race to patent incremental innovations in batteries, autonomous navigation, and connected car technology.

These real-world patent thickets examples illustrate how innovation can be slowed, market entry restricted, and consumer prices kept high.

Factors That Contribute To Patent Thickets

Patent filings have been at an all-time high over the past two decades. In 2014, the United States Patent and Trademark Office (USPTO) received almost 580,000 applications, while China received almost 1 million applications in the same year. This would lead the casual observer to believe that innovation is also at its global peak.

The increase in patent applications has been concentrated in Internet-related and digital communication technologies. Although this does indicate an elevated level of technological progress, many experts are concerned about the efficacy of the patent system.

Some policymakers and economists see the dramatic increase in filings as a symptom of problems with the patent system, creating patent thickets that have the effect of discouraging innovation even in the industries that have seen such rapid growth.

Strategic Use of Patent Thickets

Large companies may deliberately build patent thickets to strengthen their competitive position. By filing numerous overlapping patents, they can:

  • Block market entry: Competitors may face insurmountable licensing costs or legal risks.
  • Extend exclusivity: Especially in pharmaceuticals, secondary patents (covering methods of use, dosing regimens, or minor modifications) can prolong a monopoly well beyond the original patent.
  • Increase negotiation leverage: Dense portfolios force rivals into cross-licensing deals, giving larger companies more bargaining power.

Critics argue this strategic use undermines the original purpose of patent law, which is to reward genuine innovation and promote competition.

The Economic Impact of Patent Litigation

The information technology arena is full of intellectual property (IP) disputes, perhaps none more noteworthy than Apple's recent victory in its long battle with Samsung. In economics, protecting your IP is seen as a reward for innovators that protects future innovators and ensures that the technology is priced fairly in the market. The rise of patent thickets, as well as patent trolls and other unscrupulous strategies, makes striking this delicate balance a challenge.

The New York Times noted in a research report that more than $20 billion was spent in the smartphone industry over the past two years on purchasing and defending patents. In fact, the spending by giants Google and Apple on patents exceeded their research and development spending for the first time ever last year. Others, however, note that the point of having a patent is the ability to enforce it and the increase in litigation doesn't necessarily represent an underlying problem with the patent system.

In the tech sector, companies like Apple and Samsung are codependent on one another if they are in a situation where they need to negotiate with competitors for the right to use patented technology. For example, to make a new smartphone, Samsung may rely on technology owned by both Motorola and Apple. This creates an incentive for these companies to develop their patent portfolios.

Managing Risks of Patent Thickets

Companies navigating industries with heavy patent thickets can adopt proactive risk-management strategies, such as:

  • Patent landscaping: Mapping existing patents to identify areas of overlap before committing to R&D.
  • Licensing pools: Joining industry consortia to reduce transaction costs for essential patents.
  • Defensive publishing: Publicly disclosing innovations that are not core to the business, preventing others from patenting them.
  • IP due diligence in partnerships: Ensuring that collaborations or acquisitions do not expose the company to hidden patent conflicts.

While these measures can’t eliminate the risks of a patent thicket, they can significantly reduce litigation exposure and keep product development on track.

Deciding Whether To File For Patent Protection

You may want to consider applying for a patent for your invention if:

  • You are working with a technology that is currently active.
  • Your industry competitors are well-known and well-established.
  • You expect revenue from the invention.
  • You plan to make an initial public offering (IPO) on the stock exchange, which can be challenging to do if you are in the midst of patent litigation.

In fact, companies should begin developing a strategy to protect their intellectual property at least 18 months before launching the IPO. This will ease some of the negotiating pressure. You can also reduce the threat of litigation by leaning on consultants and experts who can help you obtain or license the tech you need to grow. Investors will also be more likely to fund your company if you have a patent pending on your primary idea with little risk of litigation.

Start-ups entering areas that are rife with patent thickets should plan to have extra cash on hand to navigate potential challenges. Examine the industry and the patent activity in the open market to assess your level of risk in obtaining a patent.

Frequently Asked Questions

  1. What is an example of a patent thicket?
    A common example is the smartphone industry, where hundreds of overlapping patents cover core technologies like touchscreens, wireless communication, and processors.
  2. Why are patent thickets common in pharmaceuticals?
    Drugmakers file multiple patents on manufacturing methods, formulations, and delivery systems. This extends exclusivity and delays generic or biosimilar competition.
  3. How do patent thickets affect innovation?
    They increase costs, delay product launches, and discourage smaller companies from entering patent-dense industries.
  4. Can patent thickets benefit companies?
    Yes. Large firms may use them strategically to block competition, secure licensing leverage, or maintain market share, though this raises policy concerns.
  5. How can businesses reduce the risks of patent thickets?
    They can use patent landscaping, cross-licensing, defensive publishing, and careful IP due diligence to manage risks before investing heavily in R&D.

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