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Business and Financial Method Patents, Innovation, and Policy

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  • Bronwyn H. Hall

Abstract

Two court decisions in the 1990s are widely viewed as having opened the door to a flood of business method and financial patents at the US Patent and Trademark Office, and to have also impacted other patent offices around the world. A number of scholars, both legal and economic, have critiqued both the quality of these patents and the decisions themselves. This paper reviews the history of business method and financial patents briefly and then explores what economists know about the relationship between the patent system and innovation, in order to draw some tentative conclusions about their likely impact. It concludes by finding some consensus in the literature about the problems associated with this particular expansion of patentable subject matter, highlighting the remaining areas of disagreement, and reviewing the various policy recommendations.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14868.

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Date of creation: Apr 2009
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Publication status: published as Bronwyn H. Hall, 2009. "Business And Financial Method Patents, Innovation, And Policy," Scottish Journal of Political Economy, Scottish Economic Society, vol. 56(s1), pages 443-473, 09.
Handle: RePEc:nbr:nberwo:14868

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  1. Bronwyn H. Hall & Megan MacGarvie, 2006. "The Private Value of Software Patents," NBER Working Papers 12195, National Bureau of Economic Research, Inc.
  2. Bronwyn H. Hall & Stuart J.H. Graham & Dietmar Harhoff, 2003. "Prospects for Improving U.S. Patent Quality via Post-grant Opposition," NBER Working Papers 9731, National Bureau of Economic Research, Inc.
  3. Carl Shapiro, 2004. "Navigating the Patent Thicket: Cross Licenses, Patent Pools and Standard Setting," Levine's Working Paper Archive 122247000000000539, David K. Levine.
  4. Robert M. Hunt, 2008. "Business method patents and U.S. financial services," Working Papers 08-10, Federal Reserve Bank of Philadelphia.
  5. Suzanne Scotchmer, 1991. "Standing on the Shoulders of Giants: Cumulative Research and the Patent Law," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 5(1), pages 29-41, Winter.
  6. Wagner, Stefan, 2006. "Business Method Patents in Europe and their Strategic Use - Evidence from Franking Device Manufacturers," Discussion Papers in Business Administration, University of Munich, Munich School of Management 1265, University of Munich, Munich School of Management.
  7. Farrell, Joseph & Shapiro, Carl, 2007. "How Strong Are Weak Patents?," Competition Policy Center, Working Paper Series, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley qt8vg425vj, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
  8. Graham, Stuart J. H. & Hall, Bronwyn H. & Harhoff, Dietmar & Mowery, David C., 2002. "Post-Issue Patent "Quality Control": A Comparative Study of US Patent Re-Examinations and European Patent Oppositions," Department of Economics, Working Paper Series, Department of Economics, Institute for Business and Economic Research, UC Berkeley qt2qt097bd, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  9. James Bessen & Eric Maskin, 2009. "Sequential innovation, patents, and imitation," RAND Journal of Economics, RAND Corporation, vol. 40(4), pages 611-635.
  10. Yi Qian, 2007. "Do National Patent Laws Stimulate Domestic Innovation in a Global Patenting Environment? A Cross-Country Analysis of Pharmaceutical Patent Protection, 1978-2002," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 436-453, August.
  11. Merges, Robert P, 2003. "The Uninvited Guest: Patents on Wall Street," Berkeley Olin Program in Law & Economics, Working Paper Series, Berkeley Olin Program in Law & Economics qt46g5m6z3, Berkeley Olin Program in Law & Economics.
  12. Bronwyn H. Hall, 2004. "Business Method Patents, Innovation, and Policy," Law and Economics, EconWPA 0401001, EconWPA.
  13. Green, J.R. & Scotchmer, S., 1993. "On the Division of Profit in Sequential Innovation," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1638, Harvard - Institute of Economic Research.
  14. Sunil Kanwar & Robert E Evanson, 2004. "Does Intellectual Property Protection Spur Technological Change?," Levine's Working Paper Archive 122247000000000455, David K. Levine.
  15. Arora, Ashish & Ceccagnoli, Marco & Cohen, Wesley M., 2008. "R&D and the patent premium," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 26(5), pages 1153-1179, September.
  16. Wesley M Cohen & Richard R Nelson & John P Walsh, 2003. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (Or Not)," Levine's Working Paper Archive 618897000000000624, David K. Levine.
  17. Kingston, William, 2001. "Innovation needs patents reform," Research Policy, Elsevier, Elsevier, vol. 30(3), pages 403-423, March.
  18. Bronwyn H. Hall & Lee Manfred, 2007. "Innovation in non-bank payment systems," Proceedings – Payments System Research Conferences, Federal Reserve Bank of Kansas City, Federal Reserve Bank of Kansas City.
  19. Suzanne Scotchmer, 1996. "Protecting Early Innovators: Should Second-Generation Products Be Patentable?," RAND Journal of Economics, The RAND Corporation, vol. 27(2), pages 322-331, Summer.
  20. Walter G. Park & Juan Carlos Ginarte, 1997. "Intellectual Property Rights And Economic Growth," Contemporary Economic Policy, Western Economic Association International, vol. 15(3), pages 51-61, 07.
  21. Tufano, Peter, 1989. "Financial innovation and first-mover advantages," Journal of Financial Economics, Elsevier, Elsevier, vol. 25(2), pages 213-240, December.
  22. Lanjouw, Jean O & Schankerman, Mark, 2001. "Characteristics of Patent Litigation: A Window on Competition," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 129-51, Spring.
  23. Petra Moser, 2003. "How Do Patent Laws Influence Innovation? Evidence from Nineteenth-Century World Fairs," NBER Working Papers 9909, National Bureau of Economic Research, Inc.
  24. Robert P. Merges, 2003. "The uninvited guest: patents on Wall Street," Economic Review, Federal Reserve Bank of Atlanta, Federal Reserve Bank of Atlanta, issue Q4, pages 1-14.
  25. Edwin Mansfield, 1986. "Patents and Innovation: An Empirical Study," Management Science, INFORMS, INFORMS, vol. 32(2), pages 173-181, February.
  26. Jonathan Levin & Richard Levin, . "Patent Oppositions," Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy Working Paper Series, Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy yale_lepp-1005, Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy.
  27. Hall, Bronwyn H & Ziedonis, Rosemarie Ham, 2001. "The Patent Paradox Revisited: An Empirical Study of Patenting in the U.S. Semiconductor Industry, 1979-1995," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 101-28, Spring.
  28. Praveen Kumar & Stuart M. Turnbull, 2008. "Optimal Patenting and Licensing of Financial Innovations," Management Science, INFORMS, INFORMS, vol. 54(12), pages 2012-2023, December.
  29. Lerner, Josh, 2006. "The new new financial thing: The origins of financial innovations," Journal of Financial Economics, Elsevier, Elsevier, vol. 79(2), pages 223-255, February.
  30. Bronwyn H. Hall & Grid Thoma & Salvatore Torrisi, 2009. "Financial Patenting in Europe," NBER Working Papers 14714, National Bureau of Economic Research, Inc.
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Cited by:
  1. repec:hal:wpaper:halshs-00575019 is not listed on IDEAS
  2. Cozzi, Guido & Galli, Silvia, 2013. "Sequential R&D and Blocking Patents in the Dynamics of Growth," Economics Working Paper Series 1305, University of St. Gallen, School of Economics and Political Science.
  3. Guido Cozzi & Silvia Galli, 2009. "Upstream Innovation Protection: Common Law Evolution and the Dynamics of Wage Inequality," Working Papers, Business School - Economics, University of Glasgow 2009_20, Business School - Economics, University of Glasgow.
  4. Desyllas, Panos & Sako, Mari, 2013. "Profiting from business model innovation: Evidence from Pay-As-You-Drive auto insurance," Research Policy, Elsevier, Elsevier, vol. 42(1), pages 101-116.

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