The doctrine of patentable subject matter precludes basic inventions such as abstract
ideas and laws of nature from patent protection. However, current economic
thinking of the patent systemstresses the necessity of rewarding pioneering inventors
in the cumulative innovation process. In a two-stage innovation modelwhere the first
stage invention (basic invention) has no stand-alone value and the pioneer can also
participate in the second stage, I show that patent protection to the basic invention
may increase rather than hamper the second stage performance. Rejecting patents
on the basic invention can promote technology progress when the pioneer has high
capacity, but the follower has low capacity to engage in the second stage innovation
