SUBMARINES AND TECHNOLOGICAL INNOVATION: U.S. CONTINUATION PATENTING IN SOFTWARE AND BIOTECHNOLOGY TECHNOLOGIES IN THE 1980s AND 1990s

• Pages: 71-101
• Date: 27 April 2004
• Published date: 27 April 2004
• DOI: https://doi.org/10.1016/S1048-4736(04)01503-6
• Author: Stuart J.H Graham,David C Mowery

SUBMARINES AND TECHNOLOGICAL

INNOVATION: U.S. CONTINUATION

PATENTING IN SOFTWARE AND

BIOTECHNOLOGY TECHNOLOGIES

IN THE 1980s AND 1990s

Stuart J. H. Graham and David C. Mowery

ABSTRACT

This chapter examines the role of “continuations” (procedural revisions of

patent applications) within software patents and overall patenting in the

United States during 1987–1999. Our research represents the first effort of

which we are aware to analyse data on continuations in software or any

other patent class, and as such provides information on the effects of 1995

changes in the U.S. patent law intended to curb “submarine patenting.”

Our analysis of all U.S. patents issued 1987–1999 shows that the use of

continuations grew steadily in overall U.S. patenting through 1995, with

particularly rapid growth in continuations in software patenting. Sharp

reversals in these growth rates after 1995 suggest that changes in the

U.S. patent law were effective. Continuations were used more intensively

by packaged-software firms prior to the effective date of the 1995 changes

in patent law than by other patentees, and both software and non-software

patents subject to continuation tend to be more valuable.

Intellectual Property and Entrepreneurship

Advances in the Study of Entrepreneurship, Innovation and Economic Growth,

Volume15, 71–101

© 2004 Published by Elsevier Ltd.

ISSN: 1048-4736/doi:10.1016/S1048-4736(04)01503-6

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72 STUART J. H. GRAHAM AND DAVID C. MOWERY

1. INTRODUCTION

Research in “knowledge management” has grown significantly during the past few

years in the study of innovation. An important part of “knowledge management”

involves firms’ protection of knowledge assets, and firm strategies for the use of

patents accordingly have received increased attention. Nonetheless, this research

has devoted little attention to the ways in which the characteristics of national

patent systems and the characteristics of specific fields of technological innovation

interactinthedevelopmentand implementation of firms’ patent strategies. Another

important issue in knowledge management for managers and policymakers alike

concerns the operation of national patent systems in novel areas of technology

that have little well-defined “prior art” in patents or publications and are highly

cumulative, meaning that innovation in a given area is closely linked with other

areas and prior generations that may themselves be subject to increased patenting.

Since patent-based prior art is scarce in such areas, patent offices face serious

difficulties in evaluating the “novelty” and “non-obviousness” of patent applica-

tions. Inventors and entrepreneurs for their part are operating in an environment

of high uncertainty in which the artifacts on which they rely for their innovations

may prove to be patented, thus exposing them to litigation and the invalidation of

their patents.

ComputersoftwareandbiotechnologyarefieldsinwhichpatentingintheUnited

States has grown rapidly since 1980 (Audretsch, 2001; Graham & Mowery,2003).

As we note below,much of this increased patenting reflects changes in U.S. policy

toward software and biotechnology patents, increasing their economic value. A

portion of the growth in patenting in these new technology areas during the 1980s

and 1990s also may reflect increased “defensive patenting,” as firms patent in

order to retain “freedom to innovate” and to acquire a form of “currency” for

cross-licensing negotiations (see Hall & Ziedonis, 2001, for a discussion of this

phenomenon in the semiconductor industry).

This chapter builds on earlier work on software patenting (Graham & Mowery,

2003; Graham et al., 2002) that highlighted the dimensions of growth in such

patenting. By focusing on the role of “continuations” (revisions of patent appli-

cations) in biotechnology and software patenting during the 1980s and 1990s, we

hope to shed additional light on the strategic motives behind the growth of U.S.

patenting in these sectors. This research also represents the first effort of which

we are aware to analyze data on continuations in these or any other patent classes,

and as such provides some information on the effects of the 1995 changes in U.S.

patent law that sought to reduce the use by inventors of “submarine patents.

An inventor seeking a “submarine” patent submits an application, thereby

establishing a priority date for her application, and files numerous continuations