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Patents and Cumulative Innovation:Causal Evidence from the Courts

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  • Galasso, Alberto
  • Schankerman, Mark
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    Abstract

    Cumulative innovation is central to economic growth. Do patent rights facilitate or impede such follow-on innovation? This paper studies the causal effect of removing patent protection through court invalidation on subsequent research related to the focal patent, as measured by later citations. We exploit random allocation of judges at the U.S. Court of Appeal for the Federal Circuit to control for the endogeneity of patent invalidation. We find that patent invalidation leads to a 50 percent increase in subsequent citations to the focal patent, on average, but the impact is highly heterogeneous. Patent rights appear to block follow-on innovation only in the technology fields of computers, electronics and medical instruments. The effect is entirely driven by invalidation of patents owned by large patentees that triggers more follow-on innovation by small firms.

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    File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/25838/1/070iirWP13_16.pdf
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    Bibliographic Info

    Paper provided by Institute of Innovation Research, Hitotsubashi University in its series IIR Working Paper with number 13-16.

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    Length: 44, [17] p.
    Date of creation: Aug 2013
    Date of revision:
    Handle: RePEc:hit:iirwps:13-16

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    Cited by:
    1. Joy Buchanan & Bart Wilson, 2014. "An Experiment on Protecting Intellectual Property," Working Papers, George Mason University, Interdisciplinary Center for Economic Science 1044, George Mason University, Interdisciplinary Center for Economic Science.
    2. Guido Cozzi & Silvia Galli, 2014. "Sequential R&D and blocking patents in the dynamics of growth," Journal of Economic Growth, Springer, Springer, vol. 19(2), pages 183-219, June.
    3. Philippe Aghion & Stefan Bechtold & Lea Cassar & Holger Herz, 2014. "The Causal Effects of Competition on Innovation: Experimental Evidence," NBER Working Papers 19987, National Bureau of Economic Research, Inc.

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