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Patent law and complementary innovations

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  • Ménière, Yann

Abstract

This paper explores which patent policy should be applied to complementary innovations that are aggregated into broader technologies. I compare a setting in which complementary innovations must be bundled prior to patenting, with a second setting in which they can be patented separately. The first setting can improve static efficiency by avoiding the costs resulting from the scattering of complementary patents. But it also limits the disclosure of small innovations, which may lead to inefficient R&D cost duplications. A model capturing these effects shows that patenting complementary innovations separately is not efficient when innovations can be developed rapidly. This result justifies the enforcement of a severe "inventive step" or "non-obviousness" requirement in sectors where complementary innovations are frequent.

Suggested Citation

  • Ménière, Yann, 2008. "Patent law and complementary innovations," European Economic Review, Elsevier, vol. 52(7), pages 1125-1139, October.
  • Handle: RePEc:eee:eecrev:v:52:y:2008:i:7:p:1125-1139
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    References listed on IDEAS

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    1. Josh Lerner & Jean Tirole, 2004. "Efficient Patent Pools," American Economic Review, American Economic Association, vol. 94(3), pages 691-711, June.
    2. Suzanne Scotchmer & Jerry Green, 1990. "Novelty and Disclosure in Patent Law," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 131-146, Spring.
    3. 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 qt2qt097bd, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    4. Ted O'Donoghue & Suzanne Scotchmer & Jacques-François Thisse, 1998. "Patent Breadth, Patent Life, and the Pace of Technological Progress," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 7(1), pages 1-32, March.
    5. Jaffe, Adam B., 2000. "The U.S. patent system in transition: policy innovation and the innovation process," Research Policy, Elsevier, vol. 29(4-5), pages 531-557, April.
    6. Suzanne Scotchmer, 1991. "Standing on the Shoulders of Giants: Cumulative Research and the Patent Law," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 29-41, Winter.
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    Cited by:

    1. Chen, Yijuan, 2012. "Innovation frequency of durable complementary goods," Journal of Mathematical Economics, Elsevier, vol. 48(6), pages 407-421.
    2. Massimo D'Antoni & Maria Alessandra Rossi, 2014. "Appropriability and Incentives with Complementary Innovations," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(1), pages 103-124, March.
    3. Annalisa Biagi & Vincenzo Denicolò, 2014. "Timing of Discovery and the Division of Profit With Complementary Innovations," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(1), pages 89-102, March.
    4. Denicolò, Vincenzo & Halmenschlager, Christine, 2012. "Optimal patentability requirements with complementary innovations," European Economic Review, Elsevier, vol. 56(2), pages 190-204.

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