What is a Patent Fence?

A patent fence is a series of patents issued with a view to block any innovators linked to an initial patent (usually a competitor) from further developing any innovation or applying for further follow-on patents around the initial one.

An easy example to use is that of a chair. 

If Company A comes up with the patent on a chair with these claims:

1. A back,
2. A seat
3. Four legs;

Company A's competitors may create a patent fence with patents that have claims like:

1. A back
2. A seat
3. Five legs

Or a chair with:

1. A back
2. A seat
3. Three legs
4. A cup holder.

If these patents are granted, these competitors would set up a fence of sorts around Company A's initial patent, so that any further innovation or IP would not be owned by them, forcing them to discuss licensing instead.