Patent protection causes defensive portfolios around inventions to foreclose competition from small markets---those skyrocket applications at the USPTO.

4. Strategic Reasons - Patents as Poker Chips & Ballistic Missiles

A shift in the paradigmatic value of patents has also increased the number of applications. Traditionally, the patent grant has been recognized as "an efficient method of enabling the benefits of research and development to be internalized, this promoting innovation and technological progress.""'9 However, patents are often sought for reasons far removed from recouping R&D investment costs and product commercialization. '7Applications are filed for a diverse number of strategic reasons. Patents are routinely treated as poker chips, facilitating the bargaining for technology necessitated by the interdependence of the Information Age. In addi-tion, firms increasingly seek to amass broad and overlapping patent rights as a means to threaten competitors when bargaining fails.

There has been a clear shift in the commercial value of information technology and, as a result, the value of patents.' Knowledge is to the 21" century what capital was to the 20' century.172 Fixed material assets are no longer essential to commercial success; access to technology drives progress. During the Industrial Age, one commercial product could easily be covered by one patent. But, in the Information Age, one commercial product may be covered by tens, hundreds, or thousands of patents owned by diverse entities.' Accessing such a degree of technology requires cooperation, often with competitors, to leverage outside knowledge-based resources.' Innovation is the product of interdependence.'' In many industries, patent licensing arrangements are essential.'" Thus, patent holders can derive value from the patent by licensing this exclusive right.'" Even companies who do not practice the patent can still extract financial value through licens-ng.1 In fact, most patentees are only able to realize the patent's value by collaborating with others.1'

In addition to recovering R&D costs and generating licensing revenue, patents are also valuable as an indicator of firm health and staff performance, a means to access capital investment, and as a means to protect market position.'" Patents, like poker chips, can be used as a status symbol, a necessary buy-in to a revenue stream, or simply cashed in for monetary value. Innovators need access to patented information. As a player's patent portfolio grows, its relative bargaining power at the table over others who need access to the information grows.

Therefore, patents serve an important part in commercial negotiations. There is a constant struggle to gain more chips; more information access. There comes a point where this constant struggle to maintain power over competitors tends to strain the poker chip analogy; when firms no longer seek to gain access but rather to restrict access. This is because patents serve an important blocking function for firms as well.' The contents of a patent can be of great value but the patent, by nature, restricts that access. For those who would bypass these restrictions and infringe the patent's claims, the threat of litigation is real and powerful. Firms amass patents to wield over competitors, assuring mutual mass destruction when bargaining fails and the litigation dust settles. In this regard, patents are more likened to ballistic missiles. Companies may seek broad patent protection, with no intention of practicing the patent, in order to deprive competitors from accessing certain technology? They may also seek to defend market position by acquiring broad patent rights around a technology which allows for further advancement in the field and to avoid potential infringement suits. These strategic decisions are further influenced by the ever-growing uncertainty of patent rights. Poor quality patents and the staggering amount and cost of patent litigation suits have forced companies to amass large defensive portfolios.' This amassing of diverse and potentially overlapping patent protection results in a sort of guaranteed mutual destruction amongst competitors if either were to attempt to enforce their rights, forcing them into what has been referred to as a patent "arms race."" In poker, even high stakes poker, at least one player wins. But this practice, whereby each company must maintain a stockpile of patents, ready at the launch, has deleterious results for all parties. It also drives application numbers at the USPTO.