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Business Method Patents, Innovation, and Policy

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Listed author(s):
  • Hall, Bronwyn H.

Abstract

The trickle of business method patents issued by the United States Patent Office became a flood after the State Street Bank decision in 1998. Many scholars, both legal and economic, have critiqued both the quality of these patents and the decision itself. This paper discusses the likely impact of these patents on innovation. It first reviews the facts about business method and internet patents briefly and then explores what economists know about the relationship between the patent system and innovation. It concludes by finding some consensus in the literature about the problems associated with this particular expansion of patentable subject matter, highlighting remaining areas of disagreement, and suggesting where there are major gaps in our understanding of the impact of these patents.

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Paper provided by Competition Policy Center, Institute for Business and Economic Research, UC Berkeley in its series Competition Policy Center, Working Paper Series with number qt66w6p7qz.

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Date of creation: 04 May 2003
Handle: RePEc:cdl:compol:qt66w6p7qz
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Keywords: intellectual property; State Street; software; internet; business methods; patents; innovation;

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Find related papers by JEL classification:
  • K3 - Law and Economics - - Other Substantive Areas of Law
  • L4 - Industrial Organization - - Antitrust Issues and Policies

References listed on IDEAS
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  1. Lanjouw, Jean O & Schankerman, Mark, 2001. "Enforcing Intellectual Property Rights," CEPR Discussion Papers 3093, C.E.P.R. Discussion Papers.
  2. Petra Moser, 2005. "How Do Patent Laws Influence Innovation? Evidence from Nineteenth-Century World's Fairs," American Economic Review, American Economic Association, vol. 95(4), pages 1214-1236, September.
  3. Jonathan Levin & Richard Levin, "undated". "Patent Oppositions," Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy Working Paper Series yale_lepp-1005, Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy.
  4. Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2000. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)," NBER Working Papers 7552, National Bureau of Economic Research, Inc.
  5. Baldwin, John R. & Hanel, Peter & Sabourin, David, 2000. "Determinants of Innovative Activity in Canadian Manufacturing Firms: The Role of Intellectual Property Rights," Analytical Studies Branch Research Paper Series 2000122e, Statistics Canada, Analytical Studies Branch.
  6. Bronwyn H. Hall & Stuart Graham & Dietmar Harhoff & David C. Mowery, 2004. "Prospects for Improving U.S. Patent Quality via Postgrant Opposition," NBER Chapters,in: Innovation Policy and the Economy, Volume 4, pages 115-144 National Bureau of Economic Research, Inc.
  7. Robert M. Hunt, 2001. "You can patent that? Are patents on computer programs and business methods good for the new economy?," Business Review, Federal Reserve Bank of Philadelphia, issue Q1, pages 5-15.
  8. 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.
  9. Lerner, Josh, 1995. "Patenting in the Shadow of Competitors," Journal of Law and Economics, University of Chicago Press, vol. 38(2), pages 463-495, October.
  10. Edwin Mansfield, 1986. "Patents and Innovation: An Empirical Study," Management Science, INFORMS, vol. 32(2), pages 173-181, February.
  11. Jean O. Lanjouw & Iain Cockburn, 2000. "Do Patents Matter?: Empirical Evidence after GATT," NBER Working Papers 7495, National Bureau of Economic Research, Inc.
  12. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1988. "Appropriating the Returns from Industrial R&D," Cowles Foundation Discussion Papers 862, Cowles Foundation for Research in Economics, Yale University.
  13. Diallo, Barrou, 2003. "Historical perspectives on IP protection for software in selected countries worldwide," World Patent Information, Elsevier, vol. 25(1), pages 19-25, March.
  14. 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.
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Cited by:

  1. Wagner, S. & Cockburn, I., 2010. "Patents and the survival of Internet-related IPOs," Research Policy, Elsevier, vol. 39(2), pages 214-228, March.
  2. Bronwyn H. Hall & Stuart Graham & Dietmar Harhoff & David C. Mowery, 2004. "Prospects for Improving U.S. Patent Quality via Postgrant Opposition," NBER Chapters,in: Innovation Policy and the Economy, Volume 4, pages 115-144 National Bureau of Economic Research, Inc.
  3. Stefan Wagner, 2008. "Business Method Patents In Europe And Their Strategic Use—Evidence From Franking Device Manufacturers," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 17(3), pages 173-194.
  4. Bronwyn H. Hall & Grid Thoma & Salvatore Torrisi, 2009. "Financial Patenting in Europe," NBER Working Papers 14714, National Bureau of Economic Research, Inc.
  5. Pollock, Rufus, 2006. "Innovation and Imitation with and without Intellectual Property Rights," MPRA Paper 5025, University Library of Munich, Germany, revised 17 Jul 2007.
  6. Oecd, 2004. "Patents and Innovation: Trends and Policy Challenges," Levine's Working Paper Archive 122247000000000502, David K. Levine.
  7. Johnson, Justin P., 2014. "Defensive publishing by a leading firm," Information Economics and Policy, Elsevier, vol. 28(C), pages 15-27.
  8. 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.
  9. Hall, Bronwyn H. & MacGarvie, Megan, 2010. "The private value of software patents," Research Policy, Elsevier, vol. 39(7), pages 994-1009, September.
  10. Martin A. Bader & Oliver Gassmann, 2011. "Patent Portfolio Management," Chapters,in: The Economic Valuation of Patents, chapter 8 Edward Elgar Publishing.
  11. Bronwyn H. Hall & Lee E. Manfred, 2007. "Innovation in non-bank payment systems," Proceedings – Payments System Research Conferences, Federal Reserve Bank of Kansas City.
  12. Shiyuan Pan & Heng-fu Zou & Tailong Li, 2010. "Patent Protection, Technological Change and Wage Inequality," CEMA Working Papers 437, China Economics and Management Academy, Central University of Finance and Economics.

This item is featured on the following reading lists or Wikipedia pages:

  1. Socio-Economics of Innovation

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