Intellectual Property Rights and Innovation: A Panel Analysis

Abstract

We investigate the relationship between intellectual property rights (IPR) and innovation, for a panel of 48 countries between 1998-2011. Prior empirical studies mainly focus on strength of patent regulations largely ignoring the enforcement of such laws in practice. We employ a new index that accounts for the enforcement related component of the patent system and the Ginarte and Park (1997) index of patent regulatory strength. We thus include two crucial elements of a national patent system, the de jure position relating to book law and IPR regulations, and the de facto position relating to IPR enforcement. We consider nonlinearities between IPR and innovation, and we find that both nonlinearities and the enforcement aspect are significant in explaining the relationship between innovation and IPR systems.

The Effect of European Intellectual Property Institutions on Chinese Outward Foreign Direct Investment

“…While the significance level of the result is weak, it reveals a potentially different and intriguing pattern in that Chinese OFDI could be attracted by both strong and weak IP systems, but not moderate ones. Hypothesis 1b is therefore not confirmed, however we find some evidence that European countries offering a moderate level of IP institutional strength may send negative mixed signals to Chinese investments (Papageorgiadis & Sharma, 2016). European IP institutions of moderate strength may be unpredictable for Chinese firms which would prefer to avoid the risk of entering potentially lengthy and costly IP enforcement efforts when defending their IP assets or when being sued for the infringement of the IP of third parties.…”

“…On the one hand, Chinese firms with established IP portfolios could be faced with high transaction costs when engaging in IP enforcement activities in such host markets, making it difficult to effectively profit from their IP. This is because it is questionable if countries with medium IP institutional strength can provide the necessary environment in which firms can effectively and efficiently enforce and exploit their IP rights (Papageorgiadis & Sharma, 2016). On the other hand, Chinese firms with IP light business models may invest less in countries with medium IP institutional strength since the likelihood of facing successful IP enforcement actions against them is also higher and unpredictable.…”

Intellectual Rights: Challenges of the 21st century

“…Intellectual Property and Global Innovation. The idea that intellectual property is an important factor in global innovation is now widely accepted in the academic literature [1][2][3][4][5][6][7][8][9][10][11][12][13][14][15][16][17][18][19][20]; and the majority of the pertinent published research portrays IP generally as supporting rather than inhibiting global innovation.…”

Factors contributing to the strength of national patent protection and enforcement after TRIPS

“…In the next section, we briefly discuss the two complementary measures used as proxies for two distinct aspects of the strength of patent systems, the strength of patent enforcement and the strength of patent law on the books (Papageorgiadis and Sharma, 2016).…”