nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2010‒01‒23
eight papers chosen by
Roland Kirstein
Otto von Guericke University Magdeburg

  1. The role of patents and licenses in securing external finance for innovation By Harhoff, Dietmar
  2. Pre-Emptive Patenting: Securing Market Exclusion and Freedom of Operation By Dominique Guellec; Catalina Martinez; Maria Pluvia Zuniga
  3. The Emerging Patent Marketplace By OECD
  4. The R&D-patent relationship: An industry perspective By Danguy, Jérôme; de Rassenfosse, Gaétan; van Pottelsberghe de la Potterie, Bruno
  5. Licensing a common value innovation when signaling strength may backfire By Cuihong Fan; Byoung Heon Jun; Elmar Wolfstetter
  6. Emergent and declining themes in the Economics and Management of Innovation scientific area over the past three decades By Aurora A.C. Teixeira; José Miguel Silva
  7. Auctioning Process Innovations when Losers’ Bids Determine Royalty Rates By Cuihong Fan; Byoung Heon Jun; Elmar Wolfstetter
  8. Outsourcing and Technological Change By Bartel, Ann P.; Lach, Saul; Sicherman, Nachum

  1. By: Harhoff, Dietmar (Ludwig-Maximilians-Universität Munich)
    Abstract: Financing constraints have been discussed as a major obstacle to innovation. Small and medium-sized enterprises and start-ups are particularly concerned by such impediments. Venture capital has emerged as a partial solution in some countries, but is only available for start-up firms with major growth potential. Recently, new intermediaries have attempted to provide external finance to innovative firms based on the firms’ patent portfolios. Patents have been used as collateral or as assets assembled in patent funds seeking to commercialize the patent rights. Patent auctions are indicative of a nascent market for patented technology. This paper presents an overview on the role of patents and licenses, both in the classical sense and as instruments for financing innovation. It also discusses implications of these developments for public policy and the design of patent systems.
    Keywords: entrepreneurship; intellectual property; equity; innovation; finance; venture capital; R&D; financing constraints; funding gaps
    JEL: G24 G32 L20 L26 O30 O32 O34 O38
    Date: 2009–12–23
  2. By: Dominique Guellec; Catalina Martinez; Maria Pluvia Zuniga
    Abstract: We investigate statistically the characteristics, functioning and incidence of pre-emptive patenting, defined as patent filings whose main effect is to hamper the grant of other patents. Patent applications can be used to prevent the grant of exclusive rights on markets and technologies to others in order to ensure freedom of operation to their holder or keep patent-less competitors out of the market. Combining data from examination outcomes and prior art at the European Patent Office (EPO), we develop a methodology to identify pre-emptive patent applications. We find evidence of pre-emption associated to patent applications cited as compromising patentability while being deemed non inventive. Furthermore, amongst them, those which are withdrawn by the applicant have the strongest pre-emptive power. The coincidence of low inventiveness and high pre-emptive impact supports the idea that some of these patents may be strategically designed by their applicants to block patenting by others.<BR>Nous analysons statistiquement les caractéristiques, le fonctionnement et les effets des brevets préemptifs, définis comme des (demandes de) brevets dont l’effet principal est d’empêcher la délivrance d’autres brevets. Les demandes de brevets peuvent être utilisées pour empêcher la délivrance de droits exclusifs à d’autres parties sur des marchés et des technologies en vue d’assurer la liberté de manœuvre à leur titulaire ou de maintenir des compétiteurs sans brevets à l’écart du marché. Combinant des données du résultat de l’examen et de l’art antérieur de l’Office Européen des Brevets (OEB), nous développons une méthodologie qui identifie les demandes préemptives de brevets. Nous trouvons des évidences de préemption pour des demandes de brevets citées comme compromettant la brevetabilité d’autres demandes alors qu’elles ne sont pas elles-mêmes jugés inventives. De plus parmi elles, celles qui sont abandonnées par le demandeur lui-même ont le pouvoir préemptif le plus fort. La coïncidence de faible inventivité et de pouvoir préemptif fort suggère que certaines de ces demandes de brevets sont stratégiquement conçues par leur titulaire en vue de bloquer la prise de brevet par d’autres.
    Keywords: blocking patents, citations, offensive and defensive patenting, patents, pre-emptive patenting
    JEL: C25 C51 K41 L00 L20
    Date: 2009–12–30
  3. By: OECD
    Abstract: Facilitating the mobilisation, sharing, or exchange of patents is increasingly important to promote innovation in this globalised and well-networked world, where the circulation of ideas and technologies is essential to innovation. In the context of open innovation, patents are expected to play a role as a means for transferring ideas and technologies from one entity to another, in addition to acting as a means for excluding others from using companies’ own ideas and technologies. In such a situation, a variety of new entities focusing on patent-related transactions are emerging. Some IP specialist firms seek to monetise patents by creating strategic patent portfolios and licensing them. Others provide websites to establish online marketplaces where patents and ideas could be traded. And still others establish a co-operative venture that buys and licenses patents to its members for defensive purpose. They also include IP investment banks that will lend against the value of IP, and firms that seek to create funds, similar to mutual funds, which allow investors to earn revenue from royalties. These new players now could significantly influence the circulation of patents. It would be important for governments to deepen their understanding of how these new players are performing in the patent transaction markets in order to support their development in the most socially beneficial directions. This may also be important for traditional technology-oriented companies, since the effective use of patent transaction markets will help them improve their innovation process and strengthen their competitiveness. Therefore, analysis of the functions, business models, and activities of IP specialist firms is the central topic of this research.<P>Le nouveau marché des brevets<BR>De plus en plus, il est important de faciliter la mobilisation, le partage ou l’échange de brevets pour promouvoir l’innovation dans ce monde globalisé et très interconnecté où la circulation des idées et des technologies est essentielle pour l’innovation. Dans l’optique de l’innovation ouverte, les brevets devraient jouer un rôle en tant que moyen de transfert d’idées et de technologies d’une entité à l’autre, tout en servant à empêcher que d’autres utilisent les idées et technologies appartenant aux entreprises. Dans ces conditions, il apparaît actuellement diverses entités nouvelles dont l’activité est axée sur les transactions relatives aux brevets. Certaines entreprises spécialisées en PI cherchent à monétiser des brevets en créant des portefeuilles de brevets stratégiques et en concédant les licences d’exploitation qui s’y rattachent. D’autres s’emploient à mettre en place sur des sites Web des marchés en ligne où les brevets et les idées pourraient faire l’objet d’échanges. D’autres encore constituent des coopératives qui achètent des brevets et cèdent les licences d’exploitation à leurs membres à des fins défensives. On voit aussi se créer des banques d’investissement spécialisées dans la PI, qui octroient des prêts en utilisant la valeur de la PI comme garantie, et des entreprises qui cherchent à créer des fonds, comparables à des fonds communs de placement, permettant aux investisseurs de tirer des revenus des redevances. Ces nouveaux acteurs pourraient exercer désormais une puissante influence sur la circulation des brevets. Il importe, pour les pouvoirs publics, de mieux connaître les comportements de ces nouveaux acteurs sur les marchés où s’opèrent les transactions sur les brevets afin de pouvoir favoriser un essor de ces marchés tendant vers ce qui sera optimal pour la collectivité. Il peut être important aussi pour les entreprises classiques à vocation technologique de bien appréhender ces évolutions, car l’utilisation des marchés des transactions concernant les brevets les aidera à améliorer leur processus d’innovation et à renforcer leur compétitivité. L’analyse des fonctions, des modèles économiques et des activités des entreprises spécialisées en PI constitue donc le thème central de cette recherche.
    Keywords: innovation, IP market, IP, patent licence, patents, technology market, brevets, innovation, licence de brevet, marché de la PI, marché des technologies, PI
    Date: 2009–12–22
  4. By: Danguy, Jérôme (Solvay Brussels School of Economics and Management); de Rassenfosse, Gaétan (Solvay Brussels School of Economics and Management); van Pottelsberghe de la Potterie, Bruno (Solvay Brussels School of Economics and Management)
    Abstract: This paper re-visits the empirical failure to establish a clear link between R&D efforts and patent counts at the industry level. It is claimed that the “propensity-to-patent” concept should be split into an “appropriability propensity” and a “strategic propensity”. The empirical contribution is based on a unique panel dataset composed of 18 industries in 19 countries over 19 years. The results confirm that the R&D-patent relationship is affected by research productivity, appropriability propensity and strategic propensity factors. The observed increase in the propensity to file for patents is much stronger for supranational (that is, triadic or regional) patents than for priority filings, suggesting that the current patent hype is essentially the result of a globalization phenomenon.
    Keywords: Propensity to patent; strategic propensity; appropriability; research productivity
    JEL: O34 O38 P14
    Date: 2010–01–13
  5. By: Cuihong Fan (Shanghai University of Finance and Economics); Byoung Heon Jun; Elmar Wolfstetter (Humboldt University at Berlin)
    Abstract: This paper reconsiders the licensing of a common value innovation to a downstream duopoly, assuming a dual licensing scheme that combines a first-price license auction with royalty contracts for losers. Prior to bidding firms observe imperfect signals of the expected cost reduction; after the auction the winning bid is made public. Bidders may signal strength to their rivals through aggressive bidding, which may however backfire and mislead the innovator to set an excessively high royalty rate. We provide sufficient conditions for existence of monotone bidding strategies and for the profitability of combining auctions and royalty contracts for losers.
    Keywords: Patents, licensing, auctions, royalty, innovation, R&D, mechanism design.
    JEL: D21 D43 D44 D45
    Date: 2010–01
  6. By: Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC Porto); José Miguel Silva (MIETE, Faculdade de Engenharia, Universidade do Porto)
    Abstract: A literature survey covers the state-of-the-art of a certain investigation field and is a critical evaluation that can help define new research and facilitate the understanding of the area by new researchers of that scientific field. Although there are already some excellent attempts to provide a survey in the Economics and Management of Innovation area, these are in general qualitative. Using bibliometric tools, which help to explore, organize and analyze large amounts of information, we characterize, in a quantitative way, the published literature in innovation area. Based on the 1047 abstracts of the articles published between 1974 and 2007 in the innovation area’s ‘seed journal’ we observed that the themes that have grown the most in recent years were “Open innovation, Copyrights, Intellectual Property Rights, Open Software”, “University-Industry Relations and Transfer of Technology and Knowledge”, and “Entrepreneurship, Incubation, Spin-offs and Entrepreneurial Universities”. In contrast, themes such as “Learning and Experimentation, Troubleshooting”, “Development of new Products, Processes, Markets, Organizational”, “Cooperation in R&D+I”, “Multinational/International trade in the process of innovation”, and “Management Policy of Science and Technology “, noted a marked decline.
    Keywords: Survey; Innovation; Bibliometrics
    Date: 2010–01
  7. By: Cuihong Fan (Shanghai University of Finance and Economics); Byoung Heon Jun; Elmar Wolfstetter (Humboldt University at Berlin)
    Abstract: We consider a licensing mechanism for process innovations that combines a license auction with royalty contracts to those who lose the auction. Firms’ bids are dual signals of their cost reductions: the winning bid signals the own cost reduction to rival oligopolists, whereas the losing bid influences the beliefs of the innovator who uses that information to set the royalty rate. We derive conditions for existence of a separating equilibrium, explain why a sufficiently high reserve price is essential for such an equilibrium, and show that the innovator generally benefits from the proposed mechanism.
    Keywords: Patents, licensing, auctions, royalty, innovation, R&D, mechanism design.
    JEL: D21 D43 D44 D45
    Date: 2010–01
  8. By: Bartel, Ann P. (Columbia University); Lach, Saul (Hebrew University, Jerusalem); Sicherman, Nachum (Columbia University)
    Abstract: We present a dynamic model where the probability of outsourcing production is increasing in the firm’s expectation of technological change. As the pace of innovations in production technologies increases, the less time the firm has to amortize the sunk costs associated with purchasing and adopting new technologies to produce in-house. Therefore, purchasing from market suppliers, who can afford to use the latest technology, becomes relatively cheaper. The predictions of the model are tested using a panel dataset on Spanish firms for the time period 1990 through 2002. In order to address potential endogeneity problems, we use an exogenous proxy for technological change, namely the number of patents granted by the U.S. patent office classified by technological class. We map the technological classes to the Spanish industrial sectors in which the patents are used and provide causal evidence of the impact of expected technological change on the likelihood and extent of production outsourcing. No prior study has been able to provide such causal evidence. Our results are robust to the inclusion of detailed characteristics of the firms as well as firm fixed effects.
    Keywords: outsourcing, technological change
    JEL: J21 L23 L24 O33
    Date: 2009–12

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