Are More Important Patents Approved More Slowly and Should They Be?

Innovative activities often are heavily regulated. Reviews conducted by administrative agencies take time and are not perfectly accurate. Of particular concern is whether, by design or not, such agencies discriminate against more important innovations by taking more time to perform their reviews. We study the relationship between the length of patent review and the importance of inventions in a theoretical model. We find that, controlling for the importance of innovations, the welfare-maximising patent approval delay decreases over time. Second, controlling for a patent's position in the new technology cycle, the optimal examination time decreases with the importance of patents. We test our predictions on US GM crop patent data from 1988 to 1998. The evidence supports the predictions of the theoretical model

A Tale of Two Metrics: Research Assessment vs Recognised Excellence

We build an economics department entirely composed of Nobel Prize winners and evaluate it using standard research assessment metrics. Performing the same evaluation on existing departments, we find that the rating of our Nobel Prize department does not stand out from other departments. Compared to recent research evaluations, our Nobel Prize department's ranking is less stable. This suggests a significant effect of score "targeting" induced by the ranking exercise. We find some evidence that modifying the assessment criteria to increase the totatl number of publications considered can help distinguish the top

The Relationship Between Intellectual Property Law and Competition Law: An Economic Approach

This paper presents an economic analysis of the relationship between Intellectual Property (IP) Law and Competition Law. Contrary to some of the recent debate, our analysis emphasises the separation of IP Law and Competition Law: IP law should concern itself with assigning and defending intellectual property rights, while Competition Law should concern itself with the use of those rights. This separation extends to the enforcement of the law as well, where we argue that once property rights have been assigned, no further distinction based on intellectual or non-intellectual property should be made. While the IP/Competition Law interface has some specificity due to the types of behaviours that tend to arise more frequently where IP is concerned, we argue for a set of principles for Competition Policy that include restraint, a commitment not to revisit ex post the rights granted by IP law, and a commitment to make large changes in property right regimes only when very large changes in ex post regulation occur

Competition, Regulation, and Intellectual Property Management in Genetically Modified Foods: Evidence from Survey Data

We present survey results regarding a series of hypotheses on industry structure, regulation and patent policy towards GM food crops, focussing on the stages of the industry that generate innovations and approved products for sale to the farming sector. Licensing as a means of delegating litigation and regulatory costs comes out as one of the most consistent themes in our responses. We link this practice to a two-tiered industry structure, a weak relation between litigation threat and research trajectory, and a perception by our respondents that patents - as well as patent design - are 'one step removed' from their research decisions

Grantbacks, Territorial Restraints and the Type of Follow-On Innovation: The "But for..." Defence

We analyse the effect of grantback clauses in licensing contracts. While competition authorities fear that grantback clauses might decrease the licensee?s ex post incentives to innovate, a standard defence is that grantback clauses are required for the patent-owner to agree to license its technology in the first place. We examine the validity of this ?but for? defence and the equilibrium effect of grantback clauses on the innovation incentives of the licensee for both non-severable and severable innovations. Under the 2004 EU Technology Transfer Guidelines , and the guidelines for some other jurisdictions, grantback clauses that apply to ?non - severable? (read ?infringing?) innovations are considered to be less controversial than clauses that apply to ?severable? innovations. We show, to the contrary, that grantback clauses do not increase the patent- holder?s incentives to license when non-severable innovations are at stake but they do when severable innovations are concerned ? suggesting that the ?but for? defence might be valid for severable innovations but not for non-severable ones. Moreover we show that, for severable innovations, grantback clauses can increase the range of parameters for which follow-on innovation by the licensee occurs

How Basic is (Patented) University Research? The Case of GM Crops

One of the main reasons for subsidising university research is the widespread belief that it generates proportionally more positive knowledge externalities than corporate research. Over the last two decades, however, this belief has been shaken by the increasingly aggressive patenting of university-based innovation. This perception was supported by Henderson, Jaffe and Trajtenberg (1998) who found both a sharp increase in university patenting and a decrease in the relative 'importance' of university innovation over the later part of their 1965-1992 sample. In this paper, we have compared the knowledge externalities generated by university and corporate patents related to GM crop research. Our main measure of knowledge externalities is the total number of third party cites generated by a patent. Our main result is that patented university research is not associated with greater knowledge externalities than corresponding corporate patents. If anything, corporate patents appear to generate greater numbers of net citations. This basic conclusion survives when we control for a number of variables that could affect citation counts (e.g. patent examiner effects) and when we break our sample into sub-periods. This does not imply that university patents are similar to corporate patents in every respect. We find two main differences. Firstly, there is some evidence that the shape of the distribution of citations is not identical for the two groups of patents as university patents appear to experience a more sluggish start than their corporate brethren. Secondly, even controlling quite narrowly for areas of specialisation, university patents receive a disproportionate number of cites from other university patents. These two results suggest that there are some fundamental differences in the types of knowledge flows generated by university and corporate patents

Incentives to Create Jobs: Regional Subsidies, National Trade Policy and Foreign Direct Investment

A national authority wishes to attract foreign direct investment (FDI) to create local jobs. We analyse the optimal national trade policy faced with the possibility that local authorities might offer subsidies to convince a multi-national enterprise (MNE) to invest in their jurisdiction. With centralised decision-making or with allocation of investment to particular localities, the central authority's optimal policy is to use a high tariff to avoid payment of any subsidy to the MNE. Despite this, some socially undesirable (but locally desirable) FDI cannot be avoided. If local authorities compete to offer subsidies to attract local investment, then the central government's optimal policy is to try to discourage FDI by choosing a low tariff. Again, despite this some socially undesirable - and even locally undesirable - FDI prevails. We conduct our analysis both assuming an upper bound on tariffs, as would be consistent with trade liberalisation, and allowing tariffs to vary freely. The effect of this trade liberalisation depends heavily on the system of granting local subsidies: if the system is rather centralised, trade liberalisation decreases the range of parameters for which FDI occurs; if the system is decentralised and competitive, it increases this range

Patent Pendency, Learning Effects, and Innovation Importance at the US Patent Office

We replicate and extend the results of Regibeau and Rockett (2010) on a new data set. We confirm that importance of a patent and the delay in approval at the patent office are negatively related. This relation survives even if we do not control for learning effects and so suggests that carefully defining the technology is sufficient to recover the negative relation. We use new measures to test for the existence of patent "thickets", thereby ruling out some strategic considerations in delay behaviour. It appears that delay is attributable to patent office, not filer, behaviour in our sample. A more careful analysis of the possible effect of examiner workload finds that larger workloads per examiner are associated with shorter approval time, lending credence to Lemley and Shapiro's concern that heavy workloads force examiners to devote too little time to each patent review

Assessment of Potential Anticompetitive Conduct in the Field of Intellectual Property Rights and Assessment of the Interplay Between Competition Policy and IPR Protection

The interface between competition policy and intellectual property rights is of growing importance. A main aspect of this interface, addressed in the Technology Transfer Guidelines, is the type of licensing agreements that might have significant anti-competitive effects. This report provides an economic analysis of such agreements, focussing on cross-licensing, patent pools, grant-backs, pass-throughs and the use of licensing and IPR divestment as merger remedie

Are More Important Patents Approved More Slowly and Should They Be?

Innovative activities often are heavily regulated. Reviews conducted by administrative agencies take time and are not perfectly accurate. Of particular concern is whether, by design or not, such agencies discriminate against more important innovations by taking more time to perform their reviews. We study the relationship between the length of patent review and the importance of inventions in a theoretical model. We build a simple model of the US patent review process. The model predicts that, controlling for a patent's position in the new technology cycle, more important innovations would (and should) be approved more quickly. Also, the approval delay is likely to decrease as an industry moves from the early stages of an innovation cycle to later stages. These predictions are in line with the evidence we obtain from a data set of US patents granted in the field of genetically modified crops from 1983 to 1999. Our analysis also helps to reconcile the results on the relationship between importance and delay found in previous studies