It has been proposed that when multiple, independently-owned and ‘over-lapping’ patents must be licensed for legal technology development the difficulty of negotiating cross-licenses may lead entrepreneurs to hold-up or deter that development. Our literature review finds these features allegedly present in radio development, 1905-1920, with numerous allegations of an impasse in bargaining the necessary patent rights for legal development. This paper seeks to determine with new precision how entrepreneurs and managers actually managed patent rights in this scenario. Accordingly, this paper re-examines the legal trajectories and entrepreneurial exploitation of these patents with a focus on vacuum tube technology where Fleming’s diode patent ‘overlapped’ with earlier prior art and, dependent on court decisions, with later commercial implementations of De Forest’s triode patents. We show, by means of the relevant historical record, patent claims, litigation records and other relevant law, how the ‘overlapping’ patent rights were resolved by the courts and by the immunity of suppliers to the Government from patent infringement liability. We trace the cross-licensing agreements between the different radio interests and find that licensing was always chosen over hold-up and so enabled robust, state-of-the-art radio development.
patent thicket; Radio; thicket; vacuum tube; RCA
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Seventh Annual Conference on Innovation Economics, Searle Center for Law, Regulation and Economic Growth, Northwestern University, 2014