On limiting or encouraging rivalry in technical progress: The effect of patent scope decisions
ABSTRACT This essay is on the effects of the scope of a patent - e.g., how broad its allowed claims - on subsequent inventing in a field. It is argued that this depends on the topography of technical advance in a field, in particular on how inventions are linked to each other and in the extent to which rapid technical advance requires a diversity of actors and minds, as contrasted with being facilitated by express coordination of inventive activity. Technical advance is examined in several different fields, with a focus on how patents influenced the pace and quality of development. The authors conclude that allowing and enforcing broad patent claims tends to hinder technical progress.
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ABSTRACT: This paper uses latest advances in economic research for examining recent changes in patent regimes aimed at strengthening patent protection, and beyond that, for rethinking the rationale of the patent system. Considering that economic theory does not regard patents as a natural right that should be systematically granted to inventors, but as a policy instrument aimed at fostering innovation and diffusion, three major implications can be drawn from economic theory regarding current policy debates. First, patents may not be the most effective means of protection for inventors to recover R&D investments when imitation is costly and first mover advantages are important. Moreover, they may do more bad than good to innovation if innovation is cumulative and first generation inventions are essential to develop further inventions, especially when patent protection is strong. Patents should not be seen as the solution by default, notably as regards new areas of patentability such as software, business methods and genetic inventions. Second, patentability requirements, such as novelty or non-obviousness, should be sufficiently stringent to avoid the grant of patents for inventions with low social value that increase the social cost of the patent system. Third, rather than the statutory patent life, what matters is the effective life of patents: the broader is a patent the longer is its effective life. Policy instruments affecting patent breadth (e. g. extra fee for independent claims above a certain threshold) and length (e. g. renewal fees) could be used to provide long effective lives to inventions with high social value. Beyond these currently debated issues, economic theory pleads for an in-depth reshuffling of the patent system. If the system were to be radically changed, an optimal patent policy could be based on a multidimensional menu of different degrees of patent protection associated to different patent fees, where stronger protection would correspond to higher fees. Patents could be transformed into self-selection mechanisms whereby patentees reveal the economic characteristics of their inventions, compensate society for the protection they are granted and obtain sufficient incentives to innovate.07/2013;
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ABSTRACT: Basic innovations are often fundamental to the development of applications that may be developed by other innovators. In this setting, we investigate whether patent pools can rectify the lack of incentives for a developer to invest in applications. Following Green and Scotchmer, we wonder whether broad basic patents are necessary to provide enough incentives for basic innovators. We show that patent pools are more likely to be formed with patents of very different breadths, or patents of similarly wide breadths. Furthermore, although patent pools rectify the lack of developer incentives, they may reduce the incentive for doing basic research. (JEL K11, L4, O31)Economic Inquiry 09/2011; 49(4):1070 - 1082. · 0.98 Impact Factor
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ABSTRACT: Innovation serves as a foundation for sustainable competitive advantage. Therefore, it is no surprise that firms seek to build an innovation base—a reservoir of inventions, ideas, and discoveries that serve as a platform for their innovation efforts. One approach for building an innovation base is acquisitions, though extant research reveals an equivocal verdict on whether acquisitions influence post-acquisition inventions. In this research, the authors focus on type of acquisition, acquisition behavior over time, and invention characteristics to investigate how acquisition behavior influences post-acquisition inventions. Analysis of 352 firms across five industries and 17 years reveals that firms who make acquisitions produce a stronger innovation base than those who make no acquisitions. Moreover, comparing effects across vertical and horizontal acquisitions, results indicate that the acquiring firm’s knowledge breadth plays an important role in determining which type of acquisition behavior generates the strongest influence on a firm’s innovation base.Journal of the Academy of Marketing Science 11/2013; · 2.67 Impact Factor