How Do Patents Affect Research Investments?

Abstract

While patent systems have been widely used both historically and internationally, there is nonetheless a tremendous amount of controversy over whether patent systems-in practiceimprove the alignment between private returns and social contributions. In this paper, I describe three parameters-how the disclosure function affects research investments, how patent strength affects research investments in new technologies, and how patents on existing technologies affect follow-on innovation-needed to inform the question of how patents affect research investments, and review the available evidence which has attempted to empirically estimate these parameters.

Patent rights, innovation, and firm exit

“…One of the most prominent legal scholars in the area argues that much of the patent policy discussion is “faith‐based,” with “participants on both sides of the IP debates increasingly taking out positions that simply do not depend on evidence at all” (Lemley, ). In a recent article, Williams () provides a thoughtful and balanced analysis of the issues and the evidence on how patent rights affect innovation and welfare and identifies the gaps in our empirical knowledge that need to be filled to reach definitive conclusions. As she puts it, “While patent systems have been quite widely used both historically and internationally, there is nonetheless a tremendous amount of controversy over whether the patent system is—in practice—improving the alignment between private returns and social contributions.”…”

Do Patents Enable Disclosure? Evidence from the Invention Secrecy Act

“…Despite years of research, economists have not come to an agreement on the extent to which the patent system indeed encourages innovation. Both Williams (2017) and Sampat (2018) come to this conclusion after extensive reviews of the literature. Regarding disclosure more specifically, Sampat (2018, p.20) notes that "the quantitative effects of the disclosure function of patents on rates of innovation are not well known.…”

The disciplinary effect of post-grant review – Causal evidence from European patent opposition

“…From a welfare perspective, decreases in disclosure matter, given that enhancing knowledge transfer is one of the core intended benefits of the patent system (Williams, 2017). In view of the decrease in forward-citation-weighted applications, this might be of particular concern.…”