nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2017‒11‒05
three papers chosen by
Giovanni Ramello
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. The determinants of international patenting decisions of Spanish firms By Pilar Beneito; María E. Rochina-Barrachina; Amparo Sanchis
  2. What is the Value of Re-use? Complementarities in Popular Music By Jeremy Watson
  3. An Economic Model of Patent Exhaustion By Olena Ivus; Edwin L.-C. Lai; Ted Sichelman

  1. By: Pilar Beneito (Department of Economic Analysis, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); María E. Rochina-Barrachina (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); Amparo Sanchis (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)
    Abstract: This paper analyses the determinants of firms’ decisions to patent abroad. We use dataspanning 2005-2013 of Spanish firms from PITEC, a panel database carried out by theINE (The National Statistics Institute). We focus on patenting firms and consider thatfirms’ decisions to apply for patents in foreign patent offices may be driven by twokinds of motivations: first, to exploit the patent in international markets where there ispotential demand for the invention and, second, to protect the invention abroad whenthe quality of the invention is high enough. In the first case we refer to market-drivendeterminants and, in the second case, to innovation type-driven determinants. Weempirically analyse these factors using information on firms’ sales in differentgeographic international markets, and also indicators of the quality and scope of theinnovations. We distinguish among EPO, USPTO and PTC patents, and estimate, first,a multivariate probit model to determine the factors underlying the decision to apply forpatents in these foreign offices. Second, we estimate a multivariate model to explain theshares of patent applications in each one of the offices.
    Keywords: international patenting, innovative firms, multivariate probit
    Date: 2017–08
  2. By: Jeremy Watson (Boston University Questrom School of Business, Department of Strategy and Innovation, 595 Commonwealth Avenue, Boston, MA 02215)
    Abstract: Digitization has drastically lowered the costs of replicating and distributing music, enabling piracy on the demand side, as well as supply side re-use and recontextualization. This paper examines cumulative creativity and re-use through the release of derivative works in the popular music industry. Combining novel data on "digital sampling" and cover songs with a new proprietary Spotify data-set tracking online music streaming, I study how the introduction of a derivative work impacts the market for the underlying good upon which it is based. With my data-set covering 11,682 artists and their daily streaming demand between 2015 and 2016, I utilize a matched-sample difference-in-differences estimator to find that, on average, re-use causes a 3% increase in demand for the treated artists. This effect is significantly mediated by prominence -- with the effect neutralized for highly prominent artists, while artists of low prominence have a larger 6% boost in listening. Novel re-uses of artists that have not been subject to extensive past re-use appear to have the largest effect, resulting in an average 15% increase in online streaming. These results highlight an advertising effect of re-use, suggest that derivative works have limited ex post competition with upstream works, and point toward the potential benefits of permissive intellectual property rights licensing.
    Keywords: copyright, intellectual property, digitization, cumulative innovation, technology strategy, content industries
    JEL: L24 O31 O34
    Date: 2017–10
  3. By: Olena Ivus; Edwin L.-C. Lai; Ted Sichelman
    Abstract: The doctrine of “patent exhaustion†implies that the authorized sale of patented goods “exhausts†the patent rights in the goods sold and precludes additional license fees from downstream buyers. This paper offers the first formal economic model of domestic patent exhaustion that incorporates transaction costs in consumer licensing, and examines how a shift in patent policy from absolute to presumptive exhaustion, in which the patent owner can opt- out of exhaustion via contract, affects social welfare. The results show that when transaction costs are low, presumptive exhaustion is socially optimal, because it allows welfare-enhancing price discrimination via downstream licensing. Conversely, when transaction costs are high, the regime of presumptive patent exhaustion leads to a greater loss of static efficiency, because transaction cost frictions offset the benefits of price discrimination, but dynamic benefits in promoting ex ante investment in product quality may outweigh any static inefficiencies.
    Keywords: intellectual property, patent exhaustion, first sale doctrine, patent licensing
    JEL: F10 O31
    Date: 2017

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