Working Paper: CEPR ID: DP13969
Authors: Fabian Gaessler; Dietmar Harhoff; Stefan Sorg
Abstract: We investigate the causal effect of patent rights on cumulative innovation, using large-scale data that approximate the patent universe in its technological and economic variety. We introduce a novel instrumental variable for patent invalidation that exploits personnel scarcity in post-grant opposition at the European Patent Office. We find that patent invalidation leads to a highly significant and sizeable increase of follow-on inventions. The effect is driven by cases where the removal of the individual exclusion right creates substantial freedom to operate for third parties. Importantly, our results suggest that bargaining failure between original and follow-on innovators is not limited to environments commonly associated with high transaction costs
Keywords: cumulative innovation; patents; bargaining failure; freedom to operate; opposition
JEL Codes: K41; L24; O31; O32; O33; O34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| patent invalidation (L49) | follow-on inventions (O36) |
| patent invalidation (L49) | freedom to operate (L17) |
| freedom to operate (L17) | follow-on inventions (O36) |
| patent invalidation (L49) | forward citations (Y50) |