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Rosemarie H. Ziedonis and Alberto Galasso

The past 50 years have witnessed remarkable improvements in the speed, size, and power of semiconductor devices, providing a vital underpinning for the modern information economy. This chapter describes empirical findings from studies that examine the relationship between patent rights and innovative activity in the U.S. semiconductor industry. Key questions include: how important are patent rights as a stimulus to innovation investment in this sector? What strategies do firms use to navigate the patent landscape and access technologies? To what extent, if at all, do patent rights deter follow-on innovations? The evidence suggests that, even within a single industry, patent rights play multi-faceted roles that alter the innovative activities of firms.