nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2011‒06‒18
six papers chosen by
Roland Kirstein
Otto von Guericke University Magdeburg

  1. Patent examination at the State Intellectual Property Office in China By Johannes Liegsalz; Stefan Wagner
  2. Prizes, Patents, and Technology Procurement: A Proposed Analytical Framework By Brennan, Timothy J.; Macauley, Molly; Whitefoot, Kate
  3. Mitigating "Anticommons" Harms to Science and Technology Research By Paul A. David
  4. The Nexus between Labor Diversity and Firm's Innovation By Pierpaolo Parrotta; Dario Pozzoli; Mariola Pytlikova
  5. Product innovation when consumers have switching costs By Evens Salies
  6. Open Innovation in a Dynamic Cournot Duopoly By I. Hasnas; L. Lambertini; A. Palestini

  1. By: Johannes Liegsalz (BMW AG); Stefan Wagner (ESMT European School of Management and Technology)
    Abstract: The number of patent applications filed at the Chinese State Intellectual Property Office SIPO grew tremendously over the last decades and the SIPO has become the world’s third largest patent office by 2009. In this paper, we provide an overview of the institutional background of patent examination in China. Moreover, we empirically analyze the determinants of the grant lags applicants have to expect at the SIPO. The multivariate duration analysis is based on the population of 443,533 patent applications filed at the SIPO between 1990 and 2002. The average grant lag is 4.71 years with considerable variation across 30 different technology areas. Interestingly, we find that Chinese applicants are able to achieve faster patent grants than their non-Chinese counterparts (even after controlling for various other determinants of grant lags). This might be an indication of a differential treatment of Chinese applicants which would be in violation of Art. 3 (National Treatment) and Art. 4 (Most-favored Nation Treatment) of TRIPS that has been signed by China in 2001.
    Keywords: patent system, patent examination, State Intellectual Property Office China, duration analysis
    Date: 2011–05–31
  2. By: Brennan, Timothy J. (Resources for the Future); Macauley, Molly (Resources for the Future); Whitefoot, Kate
    Abstract: Prizes are receiving increasing attention in policy and entrepreneurial communities as means to promote innovation, but their distinguishing features remain inadequately understood. Models of patents treat winning a patent as winning a prize; other models distinguish prizes primarily as public lump-sum (re)purchase of a patent. We examine advantages of prizes based on the ability to customize rewards, manage competition, generate publicity, and cover achievements otherwise not patentable. We propose a two-dimensional comparative framework based first on whether the procuring party knows its needs and technology, its needs but not its technology, or neither. The second dimension is the risk that the investment in research will prove profitable, where the greater the risk, the more the procuring party should share in it through ex ante cost coverage or payment commitment. Such a framework may be extended to cover other means of technology inducement, including grants, customized procurement, and off-the-shelf purchase.
    Keywords: prizes, procurement, contracts, patents, public sector, technological change, innovation, productivity
    JEL: O31 D21 H41
    Date: 2011–05–27
  3. By: Paul A. David (Department of Economics, Stanford University)
    Abstract: There are three analytically distinct layers of the phenomenon that has been labeled “the anticommons” and indicted as a potential impediment to innovation resulting from patenting and enforcement of IPR obtained on academic research results. This paper distinguishes among “search costs”, “transactions costs”, and “multiple marginalization” effects in the pricing of licenses for commercial use of IP, and examines the distinctive resource allocation problems arising from each when exclusion rights over research inputs are distributed among independent owners. Where information use-rights are gross complements (either in production or consumption), multiple marginalization—seen here to be the core of the “anticommons” – is likely to result in extreme forms of “royalty stacking” that can pose serious impediments to R&D projects. The practical consequences, particularly for exploratory scientific research (contrasted with commercially-oriented R&D) are seen from a heuristic analysis of the effects of distributed ownership of scientific and technical database rights. A case is presented for the contractual construction of “research resource commons” designed as efficient IPR pools, as the preferable response to the anticommons. Creation Date: 2011-05 Revision Date:
    Keywords: law and economics, IPR, licensing, anticommons, patent hold-ups, royalty stacking, database rights, contractual commons, efficient pools
    JEL: L24 O31 O34 O38
  4. By: Pierpaolo Parrotta (Aarhus School of Business and Social Sciences, Aarhus University); Dario Pozzoli (Aarhus School of Business and Social Sciences, Aarhus University); Mariola Pytlikova (Aarhus School of Business and Social Sciences, Aarhus University)
    Abstract: In this paper we investigate the nexus between rm labor diversity and innovation using a linked employer-employee data from Denmark. Specically, exploiting information retrieved from the comprehensive database and implementing a proper instrumental variable strategy, we are able to identify the contribution of workers diversity in cultural background, skills and demographic characteristics to valuable rm's innovation activity. The latter is measured by: (1) the rm's propensity to apply for a patent, (2) the number of patent applications (intensive margin) and (3) the rm's ability to patent in different technological areas (extensive margin). We nd that skill and ethnic diversity plays an important role in propelling rm's innovation outcomes. Conversely, the effect of demographic diversity typically vanishes once detailed rm-specic characteristics are included as control variables.
    Keywords: Labor diversity, patenting activity, extensive and intensive margins.
    JEL: C23 J24 L20
    Date: 2011–01
  5. By: Evens Salies (Observatoire Français des Conjonctures Économiques)
    Abstract: Economists have long recognized that in free markets, incentives to innovate will be diluted unless some factors grant innovators with a temporary monopoly. Patenting is the most cited factor in the economic literature. This survey concentrates on another factor that confers innovators with firstmover advantage over their competitors, namely consumer switching costs, whereby a consumer makes an investment specific to her current seller, which must be duplicated for any new seller. In this survey, we list several components of switching costs that are relevant as regards to firm innovation behaviour. The aim of this classification is twofold. First, consumer switching cost theory has matured to the point that some classification of switching costs for both understanding innovative firm behaviour and building policy-oriented models is necessary. Second, the classification included in this paper addresses the confusion that has been existing so far regarding the distinction between ‘good’ or ‘bad’ switching costs, perceived or paid switching costs, and between switching and search costs. This paper then surveys the existing literature on the effect of switching costs on product innovation by firms and the way they compete for consumers. We also raise several important regulation and competition policy questions, using examples from the real world.
    Keywords: Business Economics, Cognitive & Behavioural Economics, Competition policy, Consumer switching cost, Game Theory, History of Economic Thought, Industrial Competition, Innovation, Marketing, Microeconomics, Regulation, Search costs
    JEL: B21 D4 D83 L13 L14 L52 L96
    Date: 2011–03
  6. By: I. Hasnas; L. Lambertini; A. Palestini
    Abstract: We analyze an Open Innovation process in a Cournot duopoly using a differential game approach where knowledge spillovers are endogenously determined via the R&D process. The game produces multiple steady states, allowing for an asymmetric solution where a firm may trade off the R&D investment against information absorption from the rival.
    JEL: C73 L13 O31
    Date: 2011–05

This nep-ipr issue is ©2011 by Roland Kirstein. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.