nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2016‒09‒25
three papers chosen by
Giovanni Ramello
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Invalid but infringed? An analysis of the bifurcated patent litigation system By Cremers, K.J.; Gaessler, Fabian; Harhoff, Dietmar; Helmers, Christian; Lefouili, Yassine
  2. Technological diffusion as a recombinant process By Petros Gkotsis; Antonio Vezzani
  3. Taxing Royalty Payments By Juranek, Steffen; Schindler, Dirk; Schjelderup, Guttorm

  1. By: Cremers, K.J.; Gaessler, Fabian; Harhoff, Dietmar; Helmers, Christian; Lefouili, Yassine
    Abstract: In bifurcated patent litigation systems, claims of infringement and validity of a patent are decided independently of each other in separate court proceedings at different courts. In non-bifurcated systems, infringement and validity are decided jointly in the same proceedings at a single court. We build a model that shows the key trade-off between bifurcated and non-bifurcated systems and how it affects the incentives of plaintiffs and defendants in patent infringement cases. Using detailed data on patent litigation cases in Germany (bifurcated) and the U.K. (non-bifurcated), we show that bifurcation creates situations in which a patent is held infringed that is subsequently invalidated. We also show that having to challenge a patent’s validity in separate court proceedings under bifurcation implies that alleged infringers are less likely to do so. We find this to apply in particular to more resource-constrained alleged infringers. Finally, we find parties to be more likely to settle in a bifurcated system.
    Keywords: Litigation, patents, bifurcation
    Date: 2016–09
  2. By: Petros Gkotsis (European Commission – JRC); Antonio Vezzani (European Commission – JRC Author-Workplace-Homepage:
    Abstract: In this work we analyse patterns of technological development using patent applications at the United States Patent and Trademark Office (USPTO) over the 1973-2012 period. Our study focuses on the combinations of technological fields within patent documents and their evolution in time, which can be modelled as a diffusion process. By focusing on the combinatorial dimension of the process we obtain insights that complement those from counting patents. Our results show that the density of the technological knowledge network increased and that the majority of technological fields became more interconnected over time. We find that most technologies follow a similar diffusion path that can be modelled as a Logistic or Gompertz function, which can then be used to estimate the time to maturity defined as the year at which the diffusion process for a specific technology slows down. This allows us to identify a set of promising technologies which are expected to reach maturity in the next decade. Our contribution represents a first step in assessing the importance of diffusion and cross-fertilization in the development of new technologies, which could support the design of targeted and effective Research & Innovation and Industrial policies.
    Keywords: technological diffusion, patents, knowledge
    JEL: O33 O31 C10
    Date: 2016–09
  3. By: Juranek, Steffen (Dept. of Business and Management Science, Norwegian School of Economics); Schindler, Dirk (Dept. of Accounting, Auditing and Law, Norwegian School of Economics); Schjelderup, Guttorm (Dept. of Business and Management Science, Norwegian School of Economics)
    Abstract: The digital economy is characterized by the use of intellectual property such as software, patents and trademarks. The pricing of such intangibles is widely used to shift profits to low-tax countries. We analyze the role of a source tax on royalty payments for abusive transfer pricing, and optimal tax policy. First, we show that mispricing of royalty payments does not affect investment behavior by multinationals. Second, it is in the vast majority of cases not optimal for a government to set the source tax equal to the corporate tax rate. The reason is that shutting down abusive transfer pricing activities needs to be traded off against mitigating the corporate tax distortion in capital investment. The latter can be achieved by some tax deductibility of royalty payments. If the true arm's length transfer price equals zero or for special corporate tax systems that treat debt and equity alike (i.e., for ACE and CBIT), it will be optimal to equate both tax rates.
    Keywords: Royalty taxation; intellectual property; multinationals; profit shifting
    JEL: F23 H21 H25
    Date: 2016–09–16

This nep-ipr issue is ©2016 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.
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