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Optimal patentability requirements with complementary innovations

  • Denicolò, Vincenzo
  • Halmenschlager, Christine

We study optimal patent design, contrasting the case that two or more innovations are needed to operate a new technology with the traditional case that a single innovation is directly commercialisable. The major finding is that with complementary innovations the patentability requirements should be stronger than in the case of stand-alone innovation. This reduces the fragmentation of intellectual property, which is socially costly. However, to preserve the incentives to innovate, if a patent is granted the strength of protection should be generally higher than in the stand-alone case.

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Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 56 (2012)
Issue (Month): 2 ()
Pages: 190-204

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Handle: RePEc:eee:eecrev:v:56:y:2012:i:2:p:190-204
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  1. Vincenzo Denicolo, 2007. "Do patents over-compensate innovators?," Economic Policy, CEPR;CES;MSH, vol. 22, pages 679-729, October.
  2. repec:fth:harver:1473 is not listed on IDEAS
  3. Gilbert, Richard J. & Katz, Michael L., 2011. "Efficient division of profits from complementary innovations," International Journal of Industrial Organization, Elsevier, vol. 29(4), pages 443-454, July.
  4. James Bessen & Michael J. Meurer, 2008. "Introduction to Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk," Introductory Chapters, in: Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk Princeton University Press.
  5. Yann Ménière, 2008. "Patent law and complementary innovations," Post-Print hal-00842016, HAL.
  6. Carl Shapiro, 2003. "Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting," Law and Economics 0303005, EconWPA.
  7. 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.
  8. Carl Shapiro, 2010. "Injunctions, Hold-Up, and Patent Royalties-super-1," American Law and Economics Review, Oxford University Press, vol. 12(2), pages 509-557.
  9. Glenn C. Loury, 1979. "Market Structure and Innovation," The Quarterly Journal of Economics, Oxford University Press, vol. 93(3), pages 395-410.
  10. Griliches, Zvi, 1990. "Patent Statistics as Economic Indicators: A Survey," Journal of Economic Literature, American Economic Association, vol. 28(4), pages 1661-1707, December.
  11. M.A. La Manna, Manfredi, 1992. "Optimal patent life vs optimal patentability standards," International Journal of Industrial Organization, Elsevier, vol. 10(1), pages 81-89, March.
  12. Vincenzo Denicolò & Christine Halmenschlager, 2010. "Optimal Patentability Requirements with Fragmented Property Rights," Working Papers 2010.134, Fondazione Eni Enrico Mattei.
  13. Tom Lee & Louis L. Wilde, 1980. "Market Structure and Innovation: A Reformulation," The Quarterly Journal of Economics, Oxford University Press, vol. 94(2), pages 429-436.
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