nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2017‒04‒30
four papers chosen by
Giovanni Ramello
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Interplay between patents and standards in the information and communication technology (ICT) sector and its relevance to the implementation of the WTO Agreements By Wu, Xiaoping
  2. Creative Destruction in the Era of Open Innovation: Empirical investigation into the relationship between patenting and survival of Japanese firms By IKEUCHI Kenta; MOTOHASHI Kazuyuki
  3. A Welfare Economic Interpretation of FRAND By Jens Leth Hougaard; Chiu Yu Ko; Xuyao Zhang
  4. Information Constraint of the Patent Office and Examination Quality: Evidence from the effects of initiation lags By NAGAOKA Sadao; YAMAUCHI Isamu

  1. By: Wu, Xiaoping
    Abstract: The interplay between patents and standards in the information and communication technology (ICT) sector has been intensively debated at international, regional and national levels over the past decades. In essence, the debate is firstly about the extent and impact of patent holdup and holdout in the ICT sector, and then about how to eliminate or reduce these practices. While standard setting organizations (SSOs), industry bodies, as well as judicial and administrative authorities have made great efforts to solve the issue of patent holdup and holdout, there is still an ongoing struggle among divergent stakeholders. Patent holdup and holdout directly impacts the innovation and dissemination of patented technology, the harmonization and implementation of standards, and international trade, which are promoted by the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) and the Agreement on Technical Barriers to Trade (TBT Agreement). This working paper provides an overview of the current debate on patent holdup and holdout in the ICT sector, analyses existing policy measures and their limitations, and then highlights the relevance of the WTO to this debate.
    Keywords: patent,patent holdup,patent holdout,standards,standard setting organizations,FRAND,competition,injunctions,royalties,WTO TRIPS,WTO TBT
    JEL: K11 K13 K30 O34
    Date: 2017
  2. By: IKEUCHI Kenta; MOTOHASHI Kazuyuki
    Abstract: This paper uses patent filings as an indicator of innovation and investigates the relationship between innovation and the survival of young firms, based on a dataset linking the Economic Census and the Institute of Intellectual Property (IIP) Patent Database for Japanese firms. We construct indicators showing the organization of innovative activities, such as external collaboration on inventions and the type of collaborative partners, and disentangle two competing factors on innovative activities, i.e., technological capability (positive influencing firm survival) and commercial risk (negative influencing firm survival). We find that positive impacts surpass negative ones in general, and this tendency strengthens when patents have relatively greater potential market value. In addition, collaboration with universities invariably leads to a higher probability of survival, while the impact of collaboration with other firms depends on firm size, namely, a certain level of managerial resources to overcome the complexity involved in open innovation is required to achieve gains from collaboration.
    Date: 2017–03
  3. By: Jens Leth Hougaard (Department of Food and Resource Economics, University of Copenhagen); Chiu Yu Ko (Department of Economics, National University Singapore); Xuyao Zhang (Lee Kuan Yew School of Public Policy, National University Singapore)
    Abstract: Setting an industry-wide standard is crucial for information and communication technologies for interoperability, compatibility and efficiency. To minimize holdup problems, patent holders are often required to ex-ante commit to licensing their technologies under Fair, Reasonable and Non-Discriminatory (FRAND) terms. Yet, there is little consensus, in both courtrooms and industries, on the exact meaning of FRAND. We propose a welfare economic framework that enables a precise distinction: fairness in the distribution of royalty payments among patent users, and reasonableness in setting the size of the compensation to the patent holder, where both the size and the distribution of payments are determined in a non-discriminatory way making sure that similar firms are treated similarly. We illustrate our approach in various classic models from industrial organization, and discuss further potential applications.
    Keywords: FRAND-licensing, Fair royalties, Standard setting, Patent, Shapley value
    JEL: D63 K2 L3 L44
    Date: 2017–04
  4. By: NAGAOKA Sadao; YAMAUCHI Isamu
    Abstract: We examine how significantly the information constraint of the patent office affects its examination quality in terms of type I and type II errors (wrong grants and wrong rejections). For identification, we exploit the exogenous policy change in Japan which accelerated the timing of examination. Such acceleration increased significantly both the grant rate and the frequency of appeals against the rejections of the patent office, despite the higher examination request rates. These results reveal that more information constraint increases both types of errors, but the increase in wrong grants is dominant, consistent with the design of the patent examination system where an examiner has the burden of proof in rejections and the applicant has the chance to challenge the rejections. These effects become stronger in technology sectors with stronger information constraint: those sectors which have both short technology cycles and early examination requests so that the age of relevant prior art at examination is young. We also show that longer initiation lags for an international application with foreign priority significantly reduces its grant rate. These findings suggest that the patent office is under information constraint and a better information infrastructure will significantly improve patent quality.
    Date: 2017–03

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