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Patent Systems for Encouraging Innovation: Lessons from Economic Analysis

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Author Info
David Encaoua () (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
Dominique Guellec (OCDE - Organisation de Coopération et de Développement Economiques)
Catalina Martínez (CSIC - Consejo Superior de Investigaciones Cientificas)

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Abstract

Economic theory views patents as policy instruments aimed at fostering innovation and diffusion. Three major implications are drawn 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. 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, the trade-off between the patent policy instruments of length and breadth could be used to provide sufficient incentives to develop inventions with high social value. Beyond these three implications, economic theory also pleads for a mechanism design approach: an optimal patent system could be based on a menu of different degrees of patent protection where stronger protection would involve higher fees, allowing self-selection by inventors.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00177614_v1.

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Date of creation: Nov 2006
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Publication status: Published, Research Policy, 2006, 35, 9, 1423-1440
Handle: RePEc:hal:cesptp:halshs-00177614_v1

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Related research
Keywords: Patent subject matter; patentability requirements; sequential innovation; incentive mechanism; license fee;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. James Bessen & Robert M. Hunt, 2007. "An Empirical Look at Software Patents," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 16(1), pages 157-189, 03. [Downloadable!] (restricted)
    Other versions:
  2. Matthew Mitchell, 2000. "Rewarding Sequential Innovators: Patents Prizes and Buyouts," Econometric Society World Congress 2000 Contributed Papers 1650, Econometric Society. [Downloadable!]
  3. Kenneth Carow, 1999. "Evidence of Early-Mover Advantages in Underwriting Spreads," Journal of Financial Services Research, Springer, vol. 15(1), pages 37-55, February. [Downloadable!] (restricted)
  4. Nancy Gallini & Suzanne Scotchmer, 2002. "Intellectual Property: When Is It the Best Incentive System?," NBER Chapters, in: Innovation Policy and the Economy, Volume 2, pages 51-78 National Bureau of Economic Research, Inc. [Downloadable!]
    Other versions:
  5. Michele Boldrin & David Levine, 2002. "The Case Against Intellectual Property," American Economic Review, American Economic Association, vol. 92(2), pages 209-212, May. [Downloadable!]
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  6. Merges, Robert P. & Nelson, Richard R., 1994. "On limiting or encouraging rivalry in technical progress: The effect of patent scope decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 25(1), pages 1-24, September. [Downloadable!] (restricted)
  7. Suzanne Scotchmer, 1999. "On the Optimality of the Patent Renewal System," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 181-196, Summer. [Downloadable!] (restricted)
  8. James Bessen & Eric Maskin, 2006. "Sequential Innovation, Patents, and Imitation," Economics Working Papers 0025, Institute for Advanced Study, School of Social Science. [Downloadable!]
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  9. Ted O'Donoghue & Suzanne Scotchmer & Jacques-François Thisse, 1998. "Patent Breadth, Patent Life, and the Pace of Technological Progress," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 7(1), pages 1-32, 03. [Downloadable!] (restricted)
  10. Klemperer, Paul, 1990. "How Broad Should the Scope of Patent Protection Be?," CEPR Discussion Papers 392, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  11. Mazzoleni, Roberto & Nelson, Richard R., 1998. "The benefits and costs of strong patent protection: a contribution to the current debate," Research Policy, Elsevier, vol. 27(3), pages 273-284, July. [Downloadable!] (restricted)
  12. Ted O'Donoghue, 1998. "A Patentability Requirement for Sequential Innovation," RAND Journal of Economics, The RAND Corporation, vol. 29(4), pages 654-679, Winter. [Downloadable!] (restricted)
  13. Waterson, Michael, 1990. "The Economics of Product Patents," American Economic Review, American Economic Association, vol. 80(4), pages 860-69, September. [Downloadable!] (restricted)
  14. Aghion, Philippe & Harris, Christopher & Vickers, John, 1997. "Competition and growth with step-by-step innovation: An example," European Economic Review, Elsevier, vol. 41(3-5), pages 771-782, April. [Downloadable!] (restricted)
  15. Kortum, Samuel & Lerner, Josh, 1999. "What is behind the recent surge in patenting?1," Research Policy, Elsevier, vol. 28(1), pages 1-22, January. [Downloadable!] (restricted)
  16. Nancy T. Gallini, 2002. "The Economics of Patents: Lessons from Recent U.S. Patent Reform," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 131-154, Spring. [Downloadable!] (restricted)
  17. James J. Anton & Dennis A. Yao, 2004. "Little Patents and Big Secrets: Managing Intellectual Property," RAND Journal of Economics, The RAND Corporation, vol. 35(1), pages 1-22, Spring.
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Alexandre Almeida & Aurora A.C. Teixeira, 2007. "Does Patenting negatively impact on R&D investment?An international panel data assessment," FEP Working Papers 255, Universidade do Porto, Faculdade de Economia do Porto. [Downloadable!]
  2. Gaetan de Rassenfosse & Bruno van Pottelsberghe de la Potterie, 2008. "A Policy Insight into the R&D-Patent Relationship," ECARES Working Papers 2008_007, Université Libre de Bruxelles, Ecares. [Downloadable!]
    Other versions:
  3. Alexandre Almeida & Aurora A.C. Teixeira, 2008. "One size does not fit all… An economic development perspective on the asymmetric impact of Patents on R&D," FEP Working Papers 292, Universidade do Porto, Faculdade de Economia do Porto. [Downloadable!]
  4. Gaétan de Rassenfosse & Bruno van Pottelsberghe, 2008. "On the price elasticity of demand for patents," Working Papers CEB 08-031.RS, Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB). [Downloadable!]
    Other versions:
  5. Sofka, Wolfgang & Shehu, Edlira, 2009. "Host Country Contingencies on Knowledge Protection Strategies of Multinational Firms: Bring a Knife to a Gunfight?," ZEW Discussion Papers 09-002, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  6. Derek Clark & Christian Riis, 2007. "Contingent payments in selection contests," Review of Economic Design, Springer, vol. 11(2), pages 125-137, September. [Downloadable!] (restricted)
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