nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2015‒02‒05
eleven papers chosen by
Giovanni Ramello
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Patents and the global diffusion of new drugs By Iain Cockburn; Jean O. Lanjouw; Mark Schankerman
  2. Trading and enforcing patent rights By Alberto Galasso; Mark Schankerman; Carlos J. Serrano
  3. Finite-length Patents and Functional Differential Equations in a Non-scale R&D-based Growth Model By Lin, Hwan C.; Shampine, L.F.
  4. Combinatorial Innovation and Research Strategies: Theoretical Framework and Empirical Evidence from Two Centuries of Patent Data By Clancy, Matthew
  5. The Factors Related to the Minimum and Maximum Survival of Patents against Challenges to Validity By Yutaka Niidome
  6. Innovation and SMEs Patent Propensity in Korea By Han, Junghee; Heshmati, Almas
  7. Knowledge spillovers from clean and dirty technologies By Antoine Dechezlepretre; Ralf Martin; Myra Mohnen
  8. Localized Knowledge Spillovers: Evidence from the Agglomeration of American R&D Labs and Patent Data By Buzard, Kristy; Carlino, Gerald A.; Hunt, Robert M.; Carr, Jake; Smith, Tony E.
  9. The geography and evolution of complex knowledge By Pierre-Alexandre Balland; David L. Rigby
  10. Copyright and creation: a case for promoting inclusive online sharing By Bart Cammaerts; Bingchun Meng; Robin Mansell
  11. Video killed the radio star? Online music videos and digital music sales By Tobias Kretschmer; Christian Peukert

  1. By: Iain Cockburn; Jean O. Lanjouw; Mark Schankerman
    Abstract: This paper studies how patent rights and price regulation affect how fast new drugs are launched in different countries, using newly constructed data on launches of 642 new drugs in 76 countries for the period 1983-2002, and information on the duration and content of patent and price control regimes. Price regulation strongly delays launch, while longer and more extensive patent protection accelerates it. Health policy institutions, and economic and demographic factors that make markets more profitable, also speed up diffusion. The effects are robust to using instruments to control for endogeneity of policy regimes. The results point to an important role for patents and other policy choices in driving the diffusion of new innovations. This project was initiated by Jean (Jenny) Lanjouw. Tragically, Jenny died in late 2005, but had asked us to complete the project. This took much longer than expected because it involved complete reconstruction of the data set and empirical work. It is essentially a new paper in its current form, but it remains an important part of Jenny’s legacy and a topic to which she devoted much of her intellectual and policy efforts. We hope she would be satisfied with our work which, for us, was a labor of love.
    Keywords: Patents; pharmaceuticals; diffusion; drug launches; price regulation
    JEL: I18 K19 L65 O31 O33 O34 O38
    Date: 2014–09
  2. By: Alberto Galasso; Mark Schankerman; Carlos J. Serrano
    Abstract: We study how the market for innovation affects enforcement of patent rights. We show that patent transactions arising from comparative advantages in commercialization increase litigation, but trades driven by advantages in patent enforcement reduce it. Using data on trade and litigation of individually owned patents in the United States, we exploit variation in capital gains tax rates across states as an instrument to identify the causal effect of trade on litigation. We find that taxes strongly affect patent transactions, and that trade reduces litigation on average, but the impact is heterogeneous. Patents with larger potential gains from trade are more likely to change ownership, and the impact depends critically on transaction characteristics.
    JEL: L81 E6
    Date: 2013–06
  3. By: Lin, Hwan C.; Shampine, L.F.
    Abstract: The statutory patent length is 20 years in most countries. R&D-based endogenous growth models, however, often presume an infinite patent length. In this paper, finite-length patents are embedded in a non-scale R&D-based growth model, but any patent’s effective life may be terminated prematurely at any moment, subject to two idiosyncratic hazards of imitation and innovation. This gives rise to an autonomous system of mixed-type functional differential equations (FDEs). Its dynamics are driven by current, delayed and advanced states. We present an algorithm to solve the FDEs by solving a sequence of standard BVPs (boundary value problems) for systems of ODEs (ordinary differential equations). We use this algorithm to simulate a calibrated U.S. economy’s transitional dynamics by making discrete changes from the baseline 20 years patent length. We find that if transitional impacts are taken into account, optimizing the patent length incurs a welfare loss, albeit rather small. This suggests that fine-tuning the world’s patent systems may not be a worthwhile effort.
    Keywords: Patent Length, Innovation, Delay Differential Equation, Advance Differential Equation, Transitional Dynamics, Endogenous Growth
    JEL: C63 O31 O34
    Date: 2014–10
  4. By: Clancy, Matthew
    Abstract: I develop a knowledge production function where new ideas are built from combinations of pre- existing elements. Parameters governing the connections between these elements stochastically determine whether a new combination yields a useful idea. Researchers use Bayesian reasoning to update their beliefs about the value of these parameters and thereby improve their selection of viable research projects. The optimal research strategy is a mix of harvesting the ideas that look best, given what researchers currently believe, and performing exploratory research in order to obtain better information about the unknown parameters. Moreover, this model predicts research productivity in any one field declines over time if new elements for combination or new information about underlying parameters are not discovered. I investigate some of these properties using a large dataset, consisting of all US utility patents granted from 1836 to 2012. I use fine-grained technological classifications to show that optimal research in my model is consistent with actual innovation outcomes, and that the model can be used to improve the forecasting of patent activity in different technology classes. 
    Keywords: innovation; patents
    JEL: O31 O34
    Date: 2015–01–22
  5. By: Yutaka Niidome (National Graduate Institute for Policy Studies)
    Abstract: In order to shed new light on the methodology of empirical studies on factors relating to patent validity, this study uses criteria based on the difference of the scope of protection at the time of grant and after the challenge as the dependent variable, and includes some new and recently studied independent variables related to the patent application and prosecu-tion. Thus, 267 Japanese patents with application dates between October 2001 and De-cember 2004 which were subsequently challenged in invalidation trials were categorized into three outcomes; (1) “complete survival”, (2) “partial survival” and (3)“complete loss”. Groups (1)+(2) and (3), or groups (1) and (2)+(3) were compared using logistic regression analysis to identify factors relating to the minimum and maximum survival of patents, re-spectively. The results showed a different set of variables significantly correlating with the minimum and maximum survival, indicating differences in the qualitative impacts of the variables on patent validity. Policy implications are also considered.
  6. By: Han, Junghee (Chonnam National University); Heshmati, Almas (Jönköping University, Sogang University)
    Abstract: This paper analyzes the patent propensity as an outcome of innovative activities of regional SMEs. To achieve the aims, we apply robust regression analysis to estimate the models to test 5 research hypotheses using 263 firm level data located at Gwangju region in Korea. Our empirical results show that a firm's industry characteristics, such as machinery and automotive parts industry, is negatively related with propensity to patent innovation. Also, unlike expectations, the InnoBiz firms designated as innovative SMEs by the government are not performing differently than general firms. Only the CEO's academic credentials are positively related with propensity to patent. From the findings, we can conclude that patenting propensity is not directly related with a firm's characteristics but mainly to CEO's managerial strategy. Also, we cannot find evidence for policy effectiveness from public support given to InnoBiz firms as part of the state policy to nurture photonic industry to boost regional economic development. Given the lack of strong policy effects, a new industry policy should be considered to actively promote SMEs innovativeness.
    Keywords: patent propensity, photonic industry, SMEs growth, R&D, innovation, InnoBiz, Korea
    JEL: C51 D22 O31 O32
    Date: 2015–01
  7. By: Antoine Dechezlepretre; Ralf Martin; Myra Mohnen
    Abstract: How much should governments subsidize the development of new clean technologies? We use patent citation data to investigate the relative intensity of knowledge spillovers in clean and dirty technologies in two technological fields: energy production and transportation. We introduce a new methodology that takes into account the whole history of patent citations to capture the indirect knowledge spillovers generated by patents. We find that conditional on a wide range of potential confounding factors clean patents receive on average 43% more citations than dirty patents. Knowledge spillovers from clean technologies are comparable in scale to those observed in the IT sector. The radical novelty of clean technologies relative to more incremental dirty inventions seems to account for their superiority. Our results can support public support for clean R&D. They also suggest that green policies might be able to boost economic growth through induced knowledge spillovers.
    Keywords: Innovation spill-overs; Climate Change; Growth; Patents; Clean technology; Optimal climate policy
    JEL: H23 O30 O54 O55 Q58
    Date: 2014–09
  8. By: Buzard, Kristy (Syracuse University); Carlino, Gerald A. (Federal Reserve Bank of Philadelphia); Hunt, Robert M. (Federal Reserve Bank of Philadelphia); Carr, Jake (The Ohio State University); Smith, Tony E. (University of Pennsylvania)
    Abstract: We employ a unique data set to examine the spatial clustering of private R&D labs, and, using patent citations data, we provide evidence of localized knowledge spillovers within these clusters. Jaffe, Trajtenberg, and Henderson (1993, hereafter JTH) provide an aggregate measure of the importance of knowledge spillovers at either the state or metropolitan area level. However, much information is lost regarding differences in the localization of knowledge spillovers in specific geographic areas. In this article, we show that such differences can be quite substantial. Instead of using fixed spatial boundaries, we develop a new procedure — the multiscale core-cluster approach — for identifying the location and size of specific R&D clusters. This approach allows us to better capture the geographic extent of knowledge spillovers. We examine the evidence for knowledge spillovers within R&D clusters in two regions: the Northeast Corridor and California. In the former, we find that citations are from three to six times more likely to come from the same cluster as earlier patents than in comparable control samples. Our results are even stronger for labs located in California: Citations are roughly 10 to 12 times more likely to come from the same cluster. Our tests reveal evidence of the attenuation of localization effects as distance increases: The localization of knowledge spillovers is strongest at small spatial scales (5 miles or less) and diminishes rapidly with distance. At the smallest spatial scales, our localization statistics are generally much larger than JTH report for the metropolitan areas included in their tests.
    Keywords: Spatial clustering; R&D; Knowledge spillover;
    JEL: O31 R12
    Date: 2015–01–01
  9. By: Pierre-Alexandre Balland; David L. Rigby
    Abstract: There is consensus among scholars and policy makers that knowledge is one of the key drivers of long-run economic growth. It is also clear from the literature that not all knowledge has the same value. However, too often in economic geography and cognate fields we have been obsessed with counting knowledge inputs and outputs rather than assessing the quality of knowledge produced. In this paper we measure the complexity of knowledge across patent classes and we map the distribution and the evolution of knowledge complexity across U.S. cities from 1975 to 2004. We build on the 2-mode structural network analysis proposed by Hidalgo and Hausmann (2009) to develop a knowledge complexity index (KCI) for Metropolitan Statistical Areas (MSAs). The KCI is based on more than 2 million patent records from the USPTO, and combines information on the technological structure of 366 MSAs with the 2-mode network that connects cities to the 438 primary (USPTO) technology classes in which they have Relative Technological Advantage (RTA). The complexity of the knowledge structure of cities is based on the range and ubiquity of the technologies they develop. The KCI indicates whether the knowledge generated in a given city can be produced in many other places, or if it is so sophisticated that it can be produced only in a few select locations. We find that knowledge complexity is unevenly distributed across the U.S. and that cities with the most complex technological structures are not necessarily those that produce most patents.
    Keywords: Knowledge complexity, cities, patents, network analysis, economic geography, United States
    Date: 2015–01
  10. By: Bart Cammaerts; Bingchun Meng; Robin Mansell
    Abstract: The creative industries are innovating to adapt to a changing digital culture and evidence does not support claims about overall patterns of revenue reduction due to individual copyright infringement. The experiences of other countries that have implemented punitive measures against individual online copyright infringers indicate that the approach does not have the impacts claimed by some in the creative industries. A review of the UK Digital Economy Act 2010 is needed based on independent analysis of the social, cultural and political impacts of punitive copyright infringement measures against citizens, and the overall experience of the creative industries.
    JEL: L91 L96
    Date: 2013–09
  11. By: Tobias Kretschmer; Christian Peukert
    Abstract: Sampling poses an interesting problem in markets with experience goods. Free samples reveal product quality and help consumers to make informed purchase decisions (promotional effect). However, sampling may also induce consumers to substitute purchases with free consumption (displacement effect). We study this trade-o_ in the market for digital music where consumers can sample the quality of songs by watching free music videos online. Identification comes from a natural experiment in Germany, where virtually all videos that contain music are blocked on a popular video platform due to a legal dispute with representatives of the rights-holders. We show that promotional and displacement effects cancel out in the sales performance of individual songs, whereas online music videos trigger sales of albums.
    Keywords: Sampling; displacement; promotion; natural experiment
    JEL: D83 L82 M37
    Date: 2014–04

This nep-ipr issue is ©2015 by Giovanni Ramello. 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.