nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2011‒10‒01
eight papers chosen by
Roland Kirstein
Otto von Guericke University Magdeburg

  1. The Private and Social Costs of Patent Trolls By James Bessen; Jennifer L. Ford; Michael J. Meurer
  2. A quality index for patent systems By Bruno Van Pottelsberghe; Matthis de Saint-Georges
  3. Trading and Enforcing Patent Rights By Galasso, Alberto; Schankerman, Mark; Serrano, Carlos
  4. Creativity and the Family Tree: Human Capital Endowments and the Propensity of Entrepreneurs to Patent By Link, Albert N.; Ruhm, Christopher J.
  5. Small Worlds in Networks of Inventors and the Role of Science: An Analysis of France. By Francesco Lissoni; Patrick Llerena; Bulat Sanditov
  6. Long-Run Effects of Public-Private Research Joint Ventures: The Case of the Danish Innovation Consortia Support Scheme By Kaiser, Ulrich; Kuhn, Johan Moritz
  7. Intellectual Property Rights as Development Determinants By Theo S Eicher; Monique Newiak
  8. EU Enlargement, Parallel Trade and Price Competition in Pharmaceuticals - What’s to Blame? Derogation or Perception? By Granlund, David; Yesim Köksal, Miyase

  1. By: James Bessen (Research on Innovation, Boston University School of Law, Berkman Center for Internet and Society (Harvard)); Jennifer L. Ford; Michael J. Meurer
    Abstract: In the past, non-practicing entities (NPEs) — firms that license patents without producing goods — have facilitated technology markets and increased rents for small inventors. Is this also true for today’s NPEs? Or are they “patent trolls” who opportunistically litigate over software patents with unpredictable boundaries? Using stock market event studies around patent lawsuit filings, we find that NPE lawsuits are associated with half a trillion dollars of lost wealth to defendants from 1990 through 2010, mostly from technology companies. Moreover, very little of this loss represents a transfer to small inventors. Instead, it implies reduced innovation incentives.
    Keywords: patent, litigation, litigation cost, non-practicing entities, software patents
    JEL: O31 O34 K41
    Date: 2011
  2. By: Bruno Van Pottelsberghe; Matthis de Saint-Georges
    Abstract: This paper presents a quality index for patent systems. The index is composed of nine operational design components that help shape the transparency of patent systems and affect the extent to which they comply with patentability conditions. Seven factors are related to rules and regulations (e.g. grace period, opposition process and continuation-inparts), while two factors measure patent offices’ resource allocation (i.e. workload per examiner and incentives). The index is computed for 32 national patent systems, it displays a high heterogeneity across countries. Cross-sectional quantitative analyses suggest that the demand for patent rights -or the propensity to patent- is lower in patent systems with a higher quality index, controlling for research efforts, patent fees and the “strength” of enforcement mechanisms.
    Keywords: Patent system; Quality; Patent prosperity; Intellectual property
    JEL: O30 O31 O34 O38 O57
    Date: 2011–05
  3. By: Galasso, Alberto; Schankerman, Mark; Serrano, Carlos
    Abstract: We study how the market for innovation affects enforcement of patent rights. Conventional wisdom associates the gains from trade with comparative advantage in manufacturing or marketing. We show that these gains imply that patent transactions should increase litigation risk. We identify a new source of gains from trade, comparative advantage in patent enforcement, and show that transactions driven by this motive should reduce litigation. Using data on trade and litigation of individually-owned patents in the U.S., we exploit variation in capital gains tax rates as an instrument to identify the causal effect of trade on litigation. We find that taxes strongly affect patent transactions, and that reallocation of patent rights reduces litigation risk, on average. The impact of trade on litigation is heterogeneous, however. Patents with larger potential gains from trade are more likely to change ownership, suggesting that the market for innovation is efficient. We also show that the impact of trade on litigation depends on characteristics of the transactions.
    Keywords: capital gains taxation; litigation; market for innovation; patents
    JEL: H24 K41 O32 O34
    Date: 2011–09
  4. By: Link, Albert N. (University of North Carolina at Greensboro, Department of Economics); Ruhm, Christopher J. (University of Virginia)
    Abstract: In this paper we show that the patenting behavior of creative entrepreneurs is correlated with the patenting behavior of their fathers, which we refer to as a source of the entrepreneurs’ human capital endowments. Our argument for this relationship follows from established theories of developmental creativity, and our empirical analysis is based on survey data collected from MIT’s Technology Review winners.
    Keywords: patents; entrepreneurship; human capital endowments
    JEL: J24 L26 O34
    Date: 2011–09–21
  5. By: Francesco Lissoni; Patrick Llerena; Bulat Sanditov
    Abstract: · Using data on patent applications at European Patent Office, we examine the structural properties of networks of inventors in France in different technologies, and how they depend from the inventive activity of scientists from universities and public research organizations (PROs). We revisit earlier findings on small world properties of social networks of inventors, and propose more rigorous tests of such hypothesis. We find that academic and PRO inventors contribute significantly to patenting in science‐based fields. Such contribution is decisive for the emergence of small world properties.
    Keywords: networks, inventors, academic patenting, small world.
    JEL: O31 O34
    Date: 2011
  6. By: Kaiser, Ulrich (University of Zurich); Kuhn, Johan Moritz (CEBR, Copenhagen)
    Abstract: Subsidized research joint ventures (RJVs) between public research institutions and industry have become increasingly popular in Europe and the US. We study the long-run effects of such a support scheme that has been maintained by the Danish government since 1995. To cope with identification problems we apply nearest neighbor caliper matching and conditional difference-in-difference estimation methods. Our main findings are that (i) program participation effects are instant for annual patent applications and last for three years, (ii) employment effects materialize first after one year and (iii) there are no statistically significant effects on value added or labor productivity. We further show that these overall results are primarily driven by firms that were patent active prior to joining the RJV and that there are no statistically significant effect for large firms. Both types of firms are disproportionally represented in the support program we study.
    Keywords: public-private partnership, research joint venture, research and development, research subsidies
    JEL: O31 O38
    Date: 2011–09
  7. By: Theo S Eicher; Monique Newiak (University of Washington and University of Munich)
    Abstract: Intellectual property rights (IPRs) have been identified as key drivers of economic performance in R&D based growth models, but their impact on development has not been fully explored in development accounting exercises. We introduce IPRs to the development accounting literature, using Two-Stage Least Squares Bayesian Model Averaging (2SBMA) to address endogeneity and model uncertainty at the instrument and income stages. We show that IPRs exert similar effects as “Rule of Law,” which has long been heralded as a core development determinant in cross country regressions. Our results thus provide robust evidence that both dimensions of property rights, physical and intellectual, are crucial prerequisites to economic development. Most importantly, we document that IPRs those that are simply written into law, but are unenforced, exert no effect on development. Instead, it is the level of enforced IPRs that causes development.
    Date: 2011–09
  8. By: Granlund, David (Department of Economics, Umeå University); Yesim Köksal, Miyase (Department of Economics, School of Business, Economics and Law, University of Gothenburg)
    Abstract: Given the cost of trade and availability of pharmaceuticals, the driving force for parallel trade is the price difference between the source (exporting) and the destination (importing) country. An increase in the price difference or in the availability of pharmaceuticals for parallel trade should increase price competition in the destination country. Using 2003-2007 data from Sweden we investigated whether EU enlargement in 2004, when new countries with low pharmaceutical prices joined the EU, increased competition from parallel imports. Drugs facing competition from parallel imports are found to have on average 17% to 21% lower prices than they would have had if they had never faced such competition. But, contrary to expectation, EU enlargement is not found to have increased this effect, which might be explained by derogations and changes in consumer perceptions of parallel imports.
    Keywords: EU enlargement; parallel trade; pharmaceuticals; price competition
    JEL: I11 L51 L65
    Date: 2011–09–16

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