nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2007‒12‒01
seven papers chosen by
Roland Kirstein
Otto von Guericke University Magdeburg

  1. Knowledge disclosure as intellectual property rights By Carlos J. Ponce
  2. Patents, Thickets, and the Financing of Early-Stage Firms: Evidence from the Software Industry By Iain M. Cockburn; Megan MacGarvie
  3. Competing on Standards? Entrepreneurship, Intellectual Property and the Platform Paradox By Timothy S. Simcoe; Stuart J.H. Graham; Maryann Feldman
  4. Do Multinationals' R&D Activities Stimulate Indigenous Entrepreneurship? Evidence from China's "Silicon Valley" By Hongbin Cai; Yasuyuki Todo; Li-An Zhou
  5. The Effect of Venture Capital on Innovation Strategies By Marco Da Rin; María Fabiana Penas
  6. Open-Access Losses and Delay in the Assignment of Property Rights By Gary D. Libecap
  7. Prolific inventors and their mobility: scale, impact and significance. What the literature tells us and some hypotheses By Christian Le Bas

  1. By: Carlos J. Ponce
    Abstract: We study a model in which an inventor discloses knowledge about its innovation and then a rival chooses the probability of attaining a competing invention. Disclosures, by creating prior art, diminish the probability that the rival has of receiving a patent for its invention (legal externality), but, by revealing knowledge, they decrease the marginal cost of R&D (knowledge externality). We stress the following result. If the knowledge externality is large compared to the legal externality, decreasing the patentability standards leads to fewer disclosures and may hinder R&D. We also determine the impact of changes in market payoffs on the equilibrium level of disclosures and R&D.
    Date: 2007–10
  2. By: Iain M. Cockburn; Megan MacGarvie
    Abstract: The impact of stronger intellectual property rights in the software industry is controversial. One means by which patents can affect technical change, industry dynamics, and ultimately welfare, is through their role in stimulating or stifling entry by new ventures. Patents can block entry, or raise entrants' costs in variety of ways, while at the same time they may stimulate entry by improving the bargaining position of entrants vis-à-vis incumbents, and supporting a "market for technology" which enables new ventures to license their way into the market, or realize value through trade in their intangible assets. One important impact of patents may be their influence on capital markets, and here we find evidence that the extraordinary growth in patenting of software during the 1990s is associated with significant effects on the financing of software companies. Start-up software companies operating in markets characterized by denser patent thickets see their initial acquisition of VC funding delayed relative to firms in markets less affected by patents. The relationship between patents and the probability of IPO or acquisition is more complex, but there is some evidence that firms without patents are less likely to go public if they operate in a market characterized by patent thickets.
    JEL: L1 O34
    Date: 2007–11
  3. By: Timothy S. Simcoe; Stuart J.H. Graham; Maryann Feldman
    Abstract: This paper studies the intellectual property strategy of firms that participate in the formal standards process. Specifically, we examine litigation rates in a sample of patents disclosed to thirteen voluntary Standard Setting Organizations (SSOs). We find that SSO patents have a relatively high litigation rate, and that SSO patents assigned to small firms are litigated more often than those of large publicly-traded firms. We also estimate a series of difference-in-differences models and find that small-firm litigation rates increase following a patent's disclosure to an SSO while those of large firms remain unchanged or decline. We interpret this result as evidence of a "platform paradox" -- while small entrepreneurial firms rely on open standards to lower the fixed cost of innovation, these firms are also more likely to pursue an aggressive IP strategy that may undermine the openness of a new standard.
    JEL: L0 L17 L26 O34
    Date: 2007–11
  4. By: Hongbin Cai; Yasuyuki Todo; Li-An Zhou
    Abstract: Using a unique firm-level dataset from China's "Silicon Valley," we investigate how multinational enterprises (MNEs) affect local entrepreneurship and R&D activities upon entry. We find that R&D activities of MNEs in an industry stimulate entry of domestic firms into the same industry and enhance R&D activities of newly entering domestic firms. By contrast, MNEs' production activities or domestic firms' R&D activities do not have such effect. Since MNEs are technologically more advanced than domestic firms, our findings suggest that diffusion of MNEs' advanced knowledge to potential indigenous entrepreneurs through MNEs' R&D stimulates entry of domestic firms.
    JEL: F23 L26 O33
    Date: 2007–11
  5. By: Marco Da Rin; María Fabiana Penas
    Abstract: We examine a unique dataset of Dutch companies, some of which have received venture financing. The data include detailed information on innovation activities and other company characteristics. We analyse the role of venture finance in influencing innovation strategies. We find that venture capitalists push portfolio companies towards building absorptive capacity and towards more permanent in-house R&D efforts. By contrast, we find that public funding relaxes financial constraints, but does not lead to a build-up of absorptive capacity. Our results thus highlight the special role of venture capital in shaping companies' innovation strategies.
    JEL: G24 O32 O38
    Date: 2007–11
  6. By: Gary D. Libecap
    Abstract: Even though formal property rights are the theoretical response to open access involving natural and environmental resources, they typically are adopted late after considerable waste has been endured. Instead, the usual response in local, national, and international settings is to rely upon uniform rules and standards as a means of constraining behavior. While providing some relief, these do not close the externality and excessive exploitation along unregulated margins continues. As external costs and resource values rise, there finally is a resort to property rights of some type. Transfers and other concessions to address distributional concerns affect the ability of the rights arrangement to mitigate open-access losses. This paper outlines the reasons why this pattern exists and presents three empirical examples of overfishing, over extraction from oil and gas reservoirs, and excessive air pollution to illustrate the main points.
    JEL: N4 N5 Q2 Q28 Q3 Q38 Q5
    Date: 2007–11
  7. By: Christian Le Bas (LEFI - Laboratoire d'Economie de la Firme et des Institutions - Université Lumière - Lyon II)
    Abstract: In this paper we survey the literature dealing with the category of prolific inventor. We set out some elements regarding nature, scale, significance and impact of the mobility of this population of prolific inventors. In particular the paper suggests an analysis that measures the effects on mobility on individual inventive productivity and the value of invention. We call “prolificness” the capacity to accumulate knowledge and experience through mobility (that is to say through their capital of contacts and interactions).
    Keywords: Prolific inventor ; patent ; mobility ; performance ; corporation ; research and development
    Date: 2007–11–01

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