The propensity to patent in oligopolistic markets

We analyze the strategic protection decision of an innovator between a patent and secrecy in a setting with horizontally differentiated products. By introducing the patenting decision into the well known circular city model, the impact of the disclosure requirement linked to a patent application as well as the problem of legally inventing around a patent can be taken into account. Asymmetry in the circular market leads to a consumer migration effect. We find that secrecy may be the innovator's profit maximizing strategy whenever the mandatory disclosure of information enhances the market entry of competitors. --patenting decision,secrecy,disclosure requirement,patent breadth,horizontal product differentiation,circular city

The propensity to patent with vertically differentiated products: An empirical investigation

This paper empirically investigates a firm's propensity to patent. It thereby builds on a theoretical model on a firms' patenting decision in a market with vertically differentiated products. We deduce and empirically test several hypotheses from the theoretical results regarding patenting and rival's market entry decision presented in Zaby (2009). Our main finding is that in industries which are characterized by easy-to-use knowledge spillover, the technological lead of the inventor is reduced to such an extent that the propensity to patent increases. Furthermore, the intensity of patent protection has a delaying impact on rival's market entry. --patenting decision,secrecy,disclosure requirement,patent height,vertical product differentiation

The propensity to patent with horizontally differentiated products: An empirical investigation

In this paper we empirically investigate the theoretical results obtained in Zaby (2009). From the theoretical model, which introduces the decision to patent into a setting with horizontally differentiated products we deduce several hypotheses and test these empirically. We find that the propensity to patent increases when market entry costs decrease. Furthermore, if the disclosure requirement linked to a patent has an impact, the propensity to patent decreases with the strength of the disclosure effect. --patenting decision,secrecy,disclosure requirement,market entry,horizontal product differentiation

Giving away the game? The impact of the disclosure effect on the patenting decision

This article explores the propensity to patent in the light of the disclosure effect. Unlike earlier approaches concerned with the patenting decision, we take into account that a disclosure effect may decrease the merits of patenting by facilitating inventing around the patent for competitors. In our theoretical model, we find that the disclosure effect - contingent on the competitive environment of the inventor - possibly has substantial negative effects on the propensity to patent. An empirical investigation of the theoretical results finds support for the proposed effects

Another brick in the wall? Technology leaders, patents, and the threat of market entry

Technology leaders protecting a technological headstart with a patent are provided with a powerful legal measure to restrict market entry. We analyze the impact of knowledge spillover on the decision to patent and the effect of varying patent breadth on the threat of market entry. An empirical test of our theoretical results suggests that (i) a large technological lead is protected by a patent only in industries with high knowledge spillover, and that (ii) patent breadth can mitigate the market entry threat

A look at both sides of the coin: investigating the protective and the disclosure effect of patenting

This paper presents a theoretical and empirical investigation of the two basic effects of patenting: the positive effect of temporarily mitigating competition, and the negative effect of mandatory disclosure of a patent application. Providing empirical evidence for the presented theoretical results we find that (i) a technological lead and the propensity to patent are negatively related as opposed to common intuition, (ii) in industries with imperfect appropriability in case of secrecy the extent of the technological lead is positively associated with the propensity to patent, and that (iii) the intensity of patent protection mitigates the competitive threat a patentee faces

The strategic use of fuzziness in patent specifications

Innovators seek to protect their intellectual assets by patenting them, at the same time trying to avoid any disclosure of critical knowledge. Given that a patent specification has to include a clear description of the patented matter so that anybody “skilled in the art” is enabled to reproduce the invention, the non-disclosure intention seems contradictory to patent law. This paper provides a model identifying the incentives for firms to deliberately obscure their inventive knowledge in a patent specification

The Propensity to Patent in Oligopolistic Markets

We analyze the strategic protection decision of an innovator between a patent and secrecy in a setting with horizontally differentiated products. By introducing the patenting decision into the well known circular city model, the impact of the disclosure requirement linked to a patent application as well as the problem of legally inventing around a patent can be taken into account. Asymmetry in the circular market leads to a consumer migration effect. We find that secrecy may be the innovator’s profit maximizing strategy whenever the mandatory disclosure of information enhances the market entry of competitors

The research use exemption from patent infringement - boon or bane?

Unternehmen und Forschungsinstitute haben durch Ausnahmeregelungen im Patentrecht die Möglichkeit, kostenfrei auf patentrechtlich geschütztes Know-How Dritter zurückzugreifen, ohne eine Klage wegen Patentrechtsverletzung fürchten zu müssen. Die nationalen Gesetze unterschieden sich deutlich nach Art und Umfang der Ausnahmeregelung. Daher stellt sich die Frage, ob und wie sich diese Unterschiede auf die Innovationsneigung von Unternehmen auswirken. Eine Studie des Zentrums für Europäische Wirtschaftsforschung (ZEW) zeigt, wie die Patentgesetzgebung mit Ausnahmeregelungen für Forschungszwecke ein ausgewogenes Verhältnis zur Förderung des technologischen Fortschritts finden kann, zur Diffusion neu gewonnener Erkenntnisse beiträgt, gleichzeitig jedoch genügend Anreize für Investitionen in die Generierung neuer Erkenntnisse verbleiben. Zur Untersuchung dieser Fragestellungen modellieren die Wissenschaftler zunächst unterschiedlich stark ausgeprägte Versionen einer Ausnahmeregelung für Forschungszwecke innerhalb eines kumulativ verlaufenden Innovationsprozesses. In einem zweiten Schritt werden die theoretisch abgeleiteten Aussagen anhand empirischer Daten aus einer Online-Umfrage, die in Deutschland und Australien durchgeführt wurde, untermauert. Die Ergebnisse zeigen, dass die Wirkung von Patentausnahmen wesentlich von derem genauen Zuschnitt abhängt und es daher keinen generellen Aussagen zur Innovations- und Diffusionswirkung von Forschungsausnahmen geben kann

The Strategic Use of Fuzziness in Patent Specifications The Strategic Use of Fuzziness in Patent Specifications The Strategic Use of Fuzziness in Patent Specifications

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar. Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Non-technical summary For providing protection for intellectual property, patent law requires the comprehensive description of the invention, its making and using. The goal of this disclosure requirement is to provide newly generated knowledge to the public, and thus, to foster technological progress. Since a patent affects competition on the market for ideas and the product market, the patenting decision incorporates a strategic decision. Economic literature commonly ignores that the extent to which a patent actually discloses information about the invention itself is a strategic decision of the applicant. In this paper, a three-stage theoretical model illustrates the decision process of a patent applicant. A follow-on invention can successfully be made by a potential follower who bases his research on the original patent. The applicant can choose between either a fuzzy or a distinct formulation in the patent specification whereas he has to take into account two countervailing effects: On the one hand, a fuzzy description decreases the usability of a patent for the followers as it increases their research costs and at the same time their probability of success to achieve the follow-on invention. On the other hand, fuzziness decreases the granting probability. This model can also be linked to the quality of patent examination. Even if the quality is high (i.e. the granting probability for a fuzzy patent is lower than the one for a distinct patent) some cases exist for which fuzzy description is more profitable for the inventor despite the higher risk of not receiving the grant. These results allow careful recommendations for policymakers and patent offices. If the goal of patent policy is an appropriate incentive system which yields clear and precise patent descriptions in order to foster technological progress, the granting probability should be strongly reduced for fuzzy specifications. A possible way to achieve this could be the request for a proof of concept and/or experimentation data. This may improve the quality of examination and the quality of knowledge disclosure via patents. Such a procedure would be analogous to the publication procedures of scientific results, for which a precise description of data, measurement and methods is required. Das Wichtigste in Kürze The Strategic Use of Fuzziness in Patent Specifications Alexandra K. Zaby † * and Diana Heger ‡ * Abstract Innovators seek to protect their intellectual assets by patenting them, at the same time trying to avoid any disclosure of critical knowledge. Given that a patent specification has to include a clear description of the patented matter so that anybody "skilled in the art" is enabled to reproduce the invention, the non-disclosure intention seems contradictory to patent law. This paper provides a model identifying the incentives for firms to deliberately obscure their inventive knowledge in a patent specification