A Patentability Requirement For Sequential Innovation

This paper investigates patent protection when there is a long sequence of innovations and firms repeatedly supersede each other. There can be insufficient incentives for R&D if successful firms earn market profit only until competitors achieve something better. To solve this problem, patents must provide protection against future innovators. This paper proposes using a patentability requirement aminimuminnovation size required to get a patent toserve this purpose. I showthat a patentability requirement can stimulate R&D investment and increase dynamic efficiency. Intuitively, requiring firms to pursue larger innovations can prolong market incumbency because larger innovations are harder to achieve. Longer market incumbency then implies an increased reward to innovation, stimulating R&D investment.

[1]  Ted O'Donoghue,et al.  Patents in a Model of Endogenous Growth , 2004 .

[2]  R. Hunt,et al.  Nonobviousness and the Incentive to Innovate: An Economic Analysis of Intellectual Property Reform , 1999 .

[3]  Suzanne Scotchmer,et al.  Patent Breadth, Patent Life, and the Pace of Technological Progress , 1998 .

[4]  T. V. Dijk,et al.  Patent Height and Competition in Product Improvements , 1996 .

[5]  S. Scotchmer,et al.  Protecting Early Innovators: Should Second-Generation Products Be Patentable? , 1996 .

[6]  Suzanne Scotchmer,et al.  Patent Breadth, Patent Life and the Pace of Technological Improvement , 1995 .

[7]  Nancy L. Stokey.  R&D and Economic Growth , 1995 .

[8]  Jerry R. Green,et al.  On the Division of Profit in Sequential Innovation , 1995 .

[9]  S. Lippman,et al.  Barriers to Imitation and the Incentive to Innovate , 1995 .

[10]  Howard F. Chang,et al.  Patent Scope, Antitrust Policy, and Cumulative Innovation , 1995 .

[11]  G. Grossman,et al.  Innovation and growth in the global economy , 1993 .

[12]  J. Vickers,et al.  A Model of the Evolution of Duopoly: Does the Asymmetry between Firms Tend to Increase or Decrease? , 1993 .

[13]  E. Helpman.  Innovation, Imitation, and Intellectual Property Rights , 1992 .

[14]  Manfredi M.A. La Manna,et al.  Optimal patent life vs optimal patentability standards , 1992 .

[15]  S. Scotchmer,et al.  Standing on the Shoulders of Giants: Cumulative Research and the Patent Law , 1991 .

[16]  R. Nelson,et al.  On the Complex Economics of Patent Scope , 1990 .

[17]  Jerry R. Green,et al.  Novelty and Disclosure in Patent Law , 1990 .

[18]  C. Shapiro,et al.  Optimal Patent Length and Breadth , 1990 .

[19]  P. Klemperer.  How Broad Should the Scope of Patent Protection Be , 1990 .

[20]  G. Grossman,et al.  Quality Ladders in the Theory of Growth , 1989 .

[21]  P. Romer.  Increasing Returns and Long-Run Growth , 1986, Journal of Political Economy.

[22]  John Vickers,et al.  The Evolution of Market Structure When There Is a Sequence of Innovations , 1986 .

[23]  Jennifer F. Reinganum.  Innovation and Industry Evolution , 1985 .

[24]  D. Gregori,et al.  Inside the Black Box: Technology and Economics , 1984 .

[25]  Thomas M. Smith,et al.  A History of Mechanical Inventions , 1961, Nature.

[26]  J. Schumpeter.  Capitalism, Socialism and Democracy , 1943 .

[27]  S. Scotchmer,et al.  Patents as an Incentive System , 1996 .

[28]  Katharine Rockett,et al.  Optimal Patent Design and the Diffusion of Innovations , 1996 .

[29]  Nathan Rosenberg,et al.  Exploring the black box: Telecommunications: complex, uncertain, and path dependent , 1994 .

[30]  C. Davidson,et al.  Patent Enforcement and Economic Growth , 1991 .

[31]  J. Tirole.  The Theory of Industrial Organization , 1988 .

[32]  S. Winter,et al.  Appropriating the Returns from Industrial Research and Development , 1987 .

[33]  Edwin Mansfield,et al.  R&D and Innovation: Some Empirical Findings , 1984 .

[34]  D. Newbery,et al.  Preemptive Patenting and the Persistence of Monopoly , 1982 .

[35]  Zvi Griliches,et al.  R&D, Patents, and Productivity , 1981 .

[36]  William D. Nordhaus,et al.  Invention growth, and welfare , 1969 .

[37]  K. Arrow.  Economic Welfare and the Allocation of Resources for Invention , 1962 .

[38]  Louis C. Hunter,et al.  Steamboats on the Western Rivers: An Economic and Technological History , 1949 .