nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2012‒10‒27
three papers chosen by
Roland Kirstein
Otto von Guericke University Magdeburg

  1. Dysfunctions of the patent system and their effects on competition By David Encaoua; Thierry Madiès
  2. Conflict resolution, public goods and patent thickets By Dietmar Harhoff; Georg von Graevenitz; Stefan Wagner
  3. Business-Driven Innovation: Is it Making a Difference in Education?: An Analysis of Educational Patents By Dominique Foray; Julio Raffo

  1. By: David Encaoua (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Thierry Madiès (Department of Economics - University of Fribourg - University of Fribourg)
    Abstract: In this paper the authors argue that the contemporary tensions between patents and competition no longer reside in the traditional trade-off between the exclusionary right given to an inventor to encourage innovation, and the welfare loss induced by the market power associated to this right. They rather consider that the three following distortions of the patent system create important conflicts between patents and competition on the product market, the technology market, and the innovation market. The first distortion concerns the existence of dubious or weak patents. Too many patents are granted to applications of bad quality, in terms of the usual patentability criteria. This increases the uncertainty attached to patents, reduces the credibility of the system and calls into question the justification of the patent as a protective mechanism. Second, the configuration of a patent, originally designed in the context of an isolated innovation, is not adapted to the context of sequential or intergenerational innovations, in which an innovation relies on earlier patented inventions. Even though sequential innovation calls for fine delimitations between successive generations of innovators, the strengthening of intellectual property, including the extension of the patentable subject matters opened the door to opportunistic behavior and adversely affected the needed flexibility to favor technological exchanges. Third, the emergence of complex technologies, in which the use of a large number of fragmented patents is necessary to produce a new product, implies the necessity to coordinate the various patent holders' behavior. The potential entrants in these complex technologies are struck by the coordinated behavior of the patent holders, and this is illustrated in different settings such as the pooling of complementary patents and the licensing of essential patents by the members of a Standard Setting Organization. Very often, patents serve to create ambushes or to capture unjustified rents through excessive license fees, which in turn create barriers to entry for new competitors in the innovation market. Two important consequences of these distorsions are derived. On the one hand, the resolution of these conflicts cannot rely exclusively on the application of the antitrust law. Even if these distortions seriously affect competition in the three markets of products, technology and innovation, antitrust rules are unable to resolve the specific effects rose from distortions of the contemporary patent system. On the other hand, the existence of these distortions leads to a very expensive judicial implementation of the patent system. The multiplication of the conflicts due to a strategic use of patents, particularly in the information and communication technology, in biotechnology and medicine raises the question of the adaptation of the legal status of patents to the contemporary technological developments.
    Keywords: probabilistic right; private settlement; sequential innovation; patent pools; technological standard setting organization.
    Date: 2012–10
  2. By: Dietmar Harhoff (Munich School of Management, LMU Munich); Georg von Graevenitz (University of East Anglia in London); Stefan Wagner (ESMT European School of Management and Technology)
    Abstract: Litigation and post-grant validity challenges at patent offices provide an important mechanism for correcting erroneous patent grants. However, such challenges will only be initiated if the (expected) private gains from challenging a granted patent right exceed the respective costs. Two important aspects may influence the likelihood of challenges. First, there is a public goods problem: firms may refrain from challenges if they anticipate that others will also benefit from the revocation of a weak patent. Second, as more firms are caught up in patent thickets, challenges to weak patents will become too costly as they invite counter-challenges. We use data on opposition proceedings initiated against patents granted at the European Patent Office (EPO) to study the importance of these mechanisms. This paper identifies a significant increase in the incidence of opposition in technical fields characterized by high concentration of patent ownership. Additionally, in fields with a large number of mutually blocking patents, the incidence of opposition is sharply reduced, particularly amongst those firms that are caught up in and driving the growth of patent thickets. Thus, while post-grant reviews may help to resolve problems in some areas, they are less suited to deal with patent thickets and contexts with dispersed patent ownership. We discuss the implications of these results for efforts to deal with patent thickets and weak patents.
    Keywords: patent, patent thicket, post grant validity challenge
    JEL: K11 K41 O34
    Date: 2012–09–13
  3. By: Dominique Foray; Julio Raffo
    Abstract: This paper analyses business-driven innovation in education by looking at education-related patents. It first draws a picture of the challenges for innovation in the formal education sector, which suffers from a poor knowledge ecology: science is hardly linked to core teaching and administrative practices. It then turns to a common indicator of innovation: patents. In the case of education, patents typically cover educational tools. An analysis of education-related patents over the past 20 years shows a clear rise in the production of highly innovative educational technologies by businesses, typically building on advances in information and communication technology. While this increase in educational innovations may present new opportunities for the formal education sector, the emerging tool industry currently targets the nonformal education rather than the formal education system. We shortly discuss why business entrepreneurs may be less interested in the market of formal education.<BR>Cet article porte sur l’innovation entrepreneuriale dans le secteur de l’éducation, à partir d’une analyse des dépôts de brevets dans le secteur éducatif. Premièrement, il propose un tableau des défis de l’innovation dans le secteur de l’éducation formelle, dont l’écologie du savoir est faible : la science y est peu liée avec le coeur des pratiques pédagogiques et administratives. L’étude porte ensuite sur un indicateur courant de l’innovation : les brevets. Dans le cas de l’éducation, les brevets couvrent généralement des « outils » éducatifs. L’analyse des brevets éducatifs durant les vingt dernières années montre une claire croissance de la production de technologies éducatives hautement innovantes par des entreprises privées, qui s’appuient souvent sur les progrès des technologies d’information et de communication. Bien que cette croissance des innovations éducatives puisse donner de nouvelles opportunités au secteur formel de l’éducation, l’industrie émergente d’outils éducatifs cible actuellement les secteurs informels d’éducation. Nous discutons brièvement les raisons pour lesquelles les entrepreneurs privés semblent moins intéressés par le secteur de l’éducation formelle.
    Date: 2012–10–03

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