nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2020‒06‒08
six papers chosen by
Giovanni Ramello
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Intellectual property reform in the laboratory By Benslimane, I.; Crosetto, P.; Magni-Berton, R.; Varaine, S.
  2. The Importance of Tacit Knowledge: Dynamic Inventor Activity in the Commercialization Phase By Maurseth, Per Botolf; Svensson, Roger
  3. ClearCorrect: Intellectual Property, 3D Printing, and the Future of Trade By Rimmer, Matthew
  4. Optimal Patent Policy for Pharmaceutical Industry By Izhak, Olena; Saxell, Tanja; Takalo, Tuomas
  5. The Myths and Facts of Patent Troll and Excessive Payment: Have Non-Practicing Entities (NPEs) Been Overcompensated? - A Commentary By Blogg, Jonathan
  6. Digital piracy and the perception of price fairness. Evidence from a field experiment By Michal Krawczyk; Joanna Tyrowicz; Anna Kukla-Gryz

  1. By: Benslimane, I.; Crosetto, P.; Magni-Berton, R.; Varaine, S.
    Abstract: This study attempts to experimentally capture the effects of democratic reform of intellectual property (IP) and measure how a vote "against IP" can disappoint the most talented innovators and reduce their creativity. Contrary to expectations, the results show that such a vote increases overall creativity. Actually, the most talented innovators do not vote in favor of IP. Rather, those who vote in favor of IP are those who benefit relatively more from royalties. Surprisingly, no correlation is found between these two populations: the IP in our experiment seems not to reward the best players, but the players choosing an ’autarkic’ strategy of relying on their own creationsand forego cross-fertilization with other players. These are not particularly brilliant players thatopt for a rent-seeking strategy that maximises gainsfromthe IP systemitself. There are plausible arguments to argue that this result is at least partly valid in the real world, especially for complexand highly sequential innovations where it has been proven that patent trolls and anti-competitivestrategies are important. These findings lead us not to recommend IP constitutional protections,because there are no major "tyranny from the majority" concerns.
    JEL: O34 D90 D72
    Date: 2020
  2. By: Maurseth, Per Botolf (Department of Economics); Svensson, Roger (Research Institute of Industrial Economics (IFN))
    Abstract: Inventors generally know more about their inventions than what is written down in patent applications. Because they possess this tacit knowledge, inventors may need to play an active role when patents are commercialized. We build on Arora (1995) and model firm-inventor cooperation in the commercialization of a given invention. Tacit knowledge warrants inventor activity. However, imperfect IPRs may reduce inventors’ incentives to engage in the commercialization process. We analyze when first-best inventor activity is achieved in a two-stage contract. In the empirical part, we analyze when inventor activity is important for the successful commercialization of patents by using a detailed patent database. The database contains unique information on inventor activity, patent commercialization modes and the profitability of commercialization. In the empirical estimations, we find that inventor activity has a strong positive correlation with profitability when a patent is sold or licensed to another firm. When a patent is sold or licensed in the second phase, it is still inventor activity in the first phase that matters for profitability. Thus, our interpretation is that tacit knowledge and close cooperation between inventors and external firms are often crucial for the successful commercialization of patents.
    Keywords: Tacit knowledge; Inventor activity; Patents; Commercialization
    JEL: O31 O33 O34
    Date: 2020–05–28
  3. By: Rimmer, Matthew (Queensland University of Technology)
    Abstract: This paper considers the relationship between intellectual property and trade in the context of 3D printing. Modern 3D printing has not only disrupted the discipline of intellectual property, but it has also provided profound challenges for the regulation of trade and globalization. Part II provides a case study of the patent dispute between ClearCorrect and Align Technology. The ruling of the Court of Appeals for the Federal Circuit will have larger ramifications regarding the jurisdiction of the International Trade Commission in respect of the digital economy. Part II further considers subsequent patent disputes between the parties before the United States Patent and Trademark Office. Part III considers how the trade dispute between the United States and China will affect 3D printing and examines whether 3D printing will reverse the United States’ pattern of manufacturing offshore. Part III further notes the collateral impact of tariffs upon 3D printing and considers the adoption of 3D printing in China and the issues that may arise in terms of intellectual property ownership, intellectual property infringement, and intellectual property licensing. Part IV considers larger contextual issues raised by international organizations with respect to intellectual property, trade, and 3D printing.
    Date: 2018–12–31
  4. By: Izhak, Olena; Saxell, Tanja; Takalo, Tuomas
    Abstract: We show how characterizing optimal patent policy for the pharmaceutical industry only requires information about generic producers’ responses to changes in the effective duration and scope of new drug patents. To estimate these responses, we use data on Paragraph IV patent challenges, and two quasi-experimental approaches: one based on changes in patent laws and another on the allocation of patent applications to examiners. We find that extending effective patent duration increases generic entry via Paragraph IV patent challenges whereas broadening protection reduces it. Our results imply that pharmaceutical patents should be made shorter but broader.
    Keywords: patent policy, pharmaceuticals, generic entry, innovation, imitation, Business regulation and international economics, I18, K20, L13, O34, O31,
    Date: 2020
  5. By: Blogg, Jonathan
    Abstract: The much-cited article ‘the Myths and Facts of Patent Troll and Excessive Payment: Have Non-Practicing Entities (NPEs) Been Overcompensated ’ by Jack J. Lu is fundamentally flawed and based on data which cannot be retrieved. The key error results from poorly defined samples, selected to substantiate the statement that hold-up does not exist and that Non-Practicing Entities are not overcompensated. Even if the article had succeeded in adequately selecting the samples subject to the analysis, the document would still fall short of determining what constitutes a comparable licensing agreement. Also, the findings cannot be verified as the article does not disclose the underlying data that leads to the conclusion that NPEs are not overpaid. Hence, the paper falls short of meeting three fundamental requirements of empirical research. There is no adequate selection of the two samples that are compared (the NPE sample and a vaguely defined sample of ‘other companies’), there is also no adequate selection of comparable rates and last but not least, the data cannot be retrieved. Other than that, the research paper suffers from the application of concepts which are not defined and lacks adequate references to the academic literature. These aspects taken together mean that it is not possible to draw any sorts of conclusions on the grounds of the analysis presented and render the article obsolete.
    Keywords: hold-up, Non Producing Entities, NPEs, licensing rate, valuation, Patents, unfair excessive pricing
    JEL: K1 K21 K3 O3 O34
    Date: 2020–04
  6. By: Michal Krawczyk (University of Warsaw; Group for Research in Applied Economics (GRAPE)); Joanna Tyrowicz (Group for Research in Applied Economics (GRAPE); University of Warsaw; Institut für Arbeitsrecht und Arbeitsbeziehungen in der Europäischen Union (IAAEU); Institute of Labor Economics (IZA)); Anna Kukla-Gryz (University of Warsaw)
    Abstract: We study a relationship between perceived price fairness and digital piracy. In a large-scale field experiment on customers of a leading ebook store we employ the Bayesian Truth Serum to elicit the information on acquiring books from unauthorized sources (often referred to as digital piracy). We provide empirical evidence in support of the conjecture that willingness to ‘pirate’ is associated with having experienced subjective overpricing. We propose and verify the relevance of two mechanisms behind this link: reactance theory and moral cleansing/licensing. The results indicate that pricing policy perceived as fair may reduce the scope for digital piracy.
    Keywords: unauthorized download; digital piracy; fair price; online sales; Bayesian Truth Serum
    JEL: P31 D24 O47
    Date: 2019

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