nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2021‒06‒21
five papers chosen by
Giovanni Ramello
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Leveraging Standard Essential Patents for Capturing Innovation Rents: The Strategic Disclosure of License Rules By Dong HUO; Jianwei DANG; MOTOHASHI Kazuyuki
  2. Growth and Welfare Effects of Interventions in Patent Licensing Negotiations By Kishimoto, Shin; Suzuki, Keishun
  3. (When) Does Patent Protection Spur Cumulative Research Within Firms? By Ashish Arora; Sharon Belenzon; Matt Marx; Dror Shvadron
  4. The Intellectual Property Protection System of the Foreign Investment Law: Basic Structure, Motivation and Game Logic By Luo Ying
  5. Employment and Productivity Dynamics and Patent Applications Related to the Fourth Industrial Revolution (Japanese) By IKEUCHI Kenta

  1. By: Dong HUO; Jianwei DANG; MOTOHASHI Kazuyuki
    Abstract: A general view of standard essential patents (SEPs) is that they provide profiting opportunities by licensing-out, in general, under the FRAND (Fair, reasonable and non-discriminatory) terms. However, a large part of SEPs holders declares "generous" free-license terms, thus abandon direct profiting opportunities. A patent can be used not only for appropriating rent from itself, but also for using it as a leverage to sustain the patent holder's competitive position in the market. This paper empirically addresses the determinants of such motivation for patenting (leverage strategy), by using the license terms of SEPs (free vs. royalty-bearing, and the inclusion of reciprocal terms). Using intellectual property rights disclosure data of IETF, a standard development organization, this paper investigates both firm-level and patent-level factors in shaping the license terms based on three-stage estimation of structural equations. Two types of strategy, "generic" leveraging against all potential competitors in a technology market and "specific" leveraging for keeping firm's competitive position to specific competitor as a licensee, are identified, and it is found that the former motivation works stronger for SEPs holders.
    Date: 2021–03
  2. By: Kishimoto, Shin; Suzuki, Keishun
    Abstract: Policy makers sometimes intervene in patent licensing negotiations to guide licensing fees, but the impacts of such interventions on economic growth and welfare are relatively unknown. This paper develops a novel Schumpeterian growth model featuring a cooperative game-theoretic framework that describes negotiations about licensing fees. We find that the growth effect of intervention is negative if firms can raise unlimited external funds for their R&D investment. However, when the amount of external funds available is limited, both the growth and the welfare effects of intervention can be positive. This result means that interventions are desirable when the internal funds of firms are the main source of their R&D investment.
    Keywords: Patent licensing negotiations, Schumpeterian growth, Cooperative game, Patent protection, Financial constraints.
    JEL: C71 D45 O30
    Date: 2021–05–28
  3. By: Ashish Arora; Sharon Belenzon; Matt Marx; Dror Shvadron
    Abstract: We estimate the effect of patent protection on follow-on investments in corporate scientific research. We exploit a new method for identifying an exogenous reduction in the protection a granted patent provides. Using data on public, research-active firms between 1990 and 2015, we find that firms decrease follow-on research after a reduction in patent protection, as measured by a drop in internal citations to an associated scientific article. This effect is stronger for smaller firms and in industries where patents are traded less frequently. Our findings are consistent with a stylized model whereby patent protection is a strategic substitute for commercialization capability. Our results imply that stronger patents encourage follow-on research, but also shift the locus of research from big firms toward smaller firms and startups. As patent protection has strengthened since the mid-1980s, our results help explain why the American innovation ecosystem has undergone a growing division of innovative labor, where startups become primary sources of new ideas.
    JEL: O30 O32 O34
    Date: 2021–06
  4. By: Luo Ying
    Abstract: The intellectual property protection system constructed by China's Foreign Investment Law has opened a new phase of rule of law protection of intellectual property rights for foreign-invested enterprises, which is an important institutional support indispensable for optimizing the business environment under the rule of law.The development of the regime was influenced by the major concerns of investors' home countries, the "innovation-driven development" strategy, and the trend towards a high level of stringent protection of international intellectual property and investment rules.In addition, there is a latent game of interests between multiple subjects, which can be analyzed by constructing two standard formal game models according to legal game theory.The first game model aims to compare and analyze the gains and losses of China and India's IPR protection system for foreign-invested enterprises to attract foreign investment.The second game model is designed to analyze the benefits of China and foreign investors under their respective possible behaviors before and after the inclusion of IPR protection provisions in the Foreign Investment Law, with the optimal solution being a "moderately cautious" strategy for foreign investors and a "strict enforcement" strategy for China.
    Date: 2021–06
  5. By: IKEUCHI Kenta
    Abstract: In recent years, the development of new digital-related technologies such as artificial intelligence (AI) and Internet-of Things (IoT) and their industrial applications have been attracting attention. These technological developments collectively are called the "Fourth Industrial Revolution" which is set to bring about major changes in industrial structure. On the other hand, previous research using national / industrial level data has pointed out that progress in digitization widens the productivity gap between companies and reduces the dynamics of the market. Therefore, this research analyzes the relationship between the development of technologies related to the Fourth Industrial Revolution such as artificial intelligence and IoT and market dynamics using Japanese firm-level micro datasets. The patent data is combined with the Basic Survey of Japanese Business Structure and Activities, Census of Manufacture, Economic Census for Business Frame, Economic Census for Business Activity and Establishment and Enterprise Census of Japan to build firm-level panel data and to examine how the research and development activities related to the Fourth Industrial Revolution, such as artificial intelligence and IoT, are associated with the productivity and employment growth of business establishments and firms, and discuss the policy implications. The results of this study show that the development of technologies related to the Fourth Industrial Revolution such as AI and IoT are associated with the dynamics of productivity and employment in firms. The development of AI-related technologies has particularly benefited large firms, with limited benefits to small and medium-sized firms.
    Date: 2021–03

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