Choosing Intellectual Protection: Imitation, Patent Strength and Licensing
This paper investigates the choice of an intellectual protection regime for a process innovation. We set up a multi-stage model in which choosing between patent and trade secrecy is affected by three parameters : the patent strength defined as the probability that the right is upheld by the court, the cost of imitating a patented innovation relative to the cost of imitating a secret innovation, and the innovation size defined as the extent of the cost reduction. The choice of the protection regime is the result of two effects: the damage effect evaluated under the unjust enrichment doctrine and the effect of market competition that occurs under the shadow of infringement. We find that large innovations are likely to be kept secret whereas small innovations are always patented. Furthermore, medium innovations are patented only when patent strength is sufficiently high. Finally, we investigate a class of licensing agreements used to settle patent disputes between patent holders and their competitors.
|Date of creation:||May 2006|
|Date of revision:|
|Note:||View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00177619|
|Contact details of provider:|| Web page: http://hal.archives-ouvertes.fr/|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nancy T. Gallini, 1992. "Patent Policy and Costly Imitation," RAND Journal of Economics, The RAND Corporation, vol. 23(1), pages 52-63, Spring.
- Scherer, F. M., 1983. "The propensity to patent," International Journal of Industrial Organization, Elsevier, vol. 1(1), pages 107-128, March.
- F. M. Scherer, 2005. "Patents," Books, Edward Elgar, number 3903, 6.
- Crampes, Claude, 1986. "Les inconvénients d’un dépôt de brevet pour une entreprise innovatrice," L'Actualité Economique, Société Canadienne de Science Economique, vol. 62(4), pages 521-534, décembre.
- Lemley, Mark A. & Shapiro, Carl, 2004.
Competition Policy Center, Working Paper Series
qt9xf1488p, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
- James J. Anton & Dennis A. Yao, 2004. "Little Patents and Big Secrets: Managing Intellectual Property," RAND Journal of Economics, The RAND Corporation, vol. 35(1), pages 1-22, Spring.
- Horstmann, Ignatius & MacDonald, Glenn M & Slivinski, Alan, 1985. "Patents as Information Transfer Mechanisms: To Patent or (Maybe) Not to Patent," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 837-58, October.
- Encaoua, David & Guellec, Dominique & Martinez, Catalina, 2006.
"Patent systems for encouraging innovation: Lessons from economic analysis,"
Elsevier, vol. 35(9), pages 1423-1440, November.
- David Encaoua & Dominique Guellec & Catalina Martínez, 2006. "Patent Systems for Encouraging Innovation: Lessons from Economic Analysis," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00177614, HAL.
- David Encaoua & Abraham Hollander, 2002.
"Competition Policy and Innovation,"
Oxford Review of Economic Policy,
Oxford University Press, vol. 18(1), pages 63-79, Spring.
- David Encaoua & Abraham Hollander, 2002. "Competition Policy and Innovation," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00185360, HAL.
- James Anton & Hillary Greene & Dennis Yao, 2006. "Policy Implications of Weak Patent Rights," NBER Chapters, in: Innovation Policy and the Economy, Volume 6, pages 1-26 National Bureau of Economic Research, Inc.
- 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.
- James J. Anton & Dennis A. Yao, 2007. "Finding "Lost" Profits: An Equilibrium Analysis of Patent Infringement Damages," Journal of Law, Economics and Organization, Oxford University Press, vol. 23(1), pages 186-207, April.
When requesting a correction, please mention this item's handle: RePEc:hal:cesptp:halshs-00177619. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD)
If references are entirely missing, you can add them using this form.