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Economics and the design of patent systems

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  • Robert M. Hunt

Abstract

The author uses intuition derived from several of his research papers to make three points. First, in the absence of a common law balancing test, application of uniform patentability criteria favors some industries over others. Policymakers must decide the optimal tradeoff across industries. Second, if patent rights are not closely related to the underlying inventions, more patenting may reduce R&D in industries that are both R&D and patent intensive. Third, for reasons largely unrelated to intellectual property, the U.S. private innovation system has become far more decentralized than it was a generation ago. It is reasonable to inquire whether a patent system that worked well in an era of more centralized innovation functions as well for the more decentralized environment of today.

Suggested Citation

  • Robert M. Hunt, 2007. "Economics and the design of patent systems," Working Papers 07-6, Federal Reserve Bank of Philadelphia.
  • Handle: RePEc:fip:fedpwp:07-6
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    File URL: http://www.philadelphiafed.org/research-and-data/publications/working-papers/2007/wp07-6.pdf
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    References listed on IDEAS

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    1. Robert M. Hunt, 2006. "When Do More Patents Reduce R&D?," American Economic Review, American Economic Association, vol. 96(2), pages 87-91, May.
    2. Robert M. Hunt, 2004. "Patentability, Industry Structure, and Innovation," Journal of Industrial Economics, Wiley Blackwell, vol. 52(3), pages 401-425, September.
    3. 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.
    4. GianCarlo Moschini & Oleg Yerokhin, 2008. "Patents, Research Exemption, and the Incentive for Sequential Innovation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(2), pages 379-412, June.
    5. Robert M. Hunt & James Bessen, 2004. "The software patent experiment," Business Review, Federal Reserve Bank of Philadelphia, issue Q3, pages 22-32.
    6. Joseph Farrell & Carl Shapiro, 2008. "How Strong Are Weak Patents?," American Economic Review, American Economic Association, vol. 98(4), pages 1347-1369, September.
    7. Jay Pil Choi, 2003. "Pools and Cross-Licensing in the Shadow of Patent Litigation," CESifo Working Paper Series 1070, CESifo Group Munich.
    8. F. M. Scherer, 2005. "Patents," Books, Edward Elgar Publishing, number 3903.
    9. Rosemarie Ham Ziedonis, 2004. "Don't Fence Me In: Fragmented Markets for Technology and the Patent Acquisition Strategies of Firms," Management Science, INFORMS, vol. 50(6), pages 804-820, June.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Robert M. Hunt, 2010. "Business Method Patents And U.S. Financial Services," Contemporary Economic Policy, Western Economic Association International, vol. 28(3), pages 322-352, July.

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